Earlier this month, Toronto City Council approved the construction of garden suites on residential properties. While this is a great step in easing the city’s current housing problems, what does this mean for homeowners? And what do you need to know about insuring garden suites?
What is a garden suite?
A garden suite is a detached housing unit usually located in the backyard of a residence. These smaller homes remain under the same ownership as the main home and share all utilities with it.
Garden suites will have their own fully operational bathroom, kitchen, and other essential utilities like heating and electricity.
Generally, these suites are intended to be separate rental housing or can be used by family members to allow for added space in the home. Unlike laneway houses, garden suites do not need to be adjacent to a public lane.
While there are conditions regarding the location, size, depth, and width of the proposed home and property it is to be built on, garden suites are a great way to add affordable housing in residential neighbourhoods.
What the new garden suite regulation means
If you have longed to build a carriage house on your property, or you want to be able to accommodate your ageing parents in your home but don’t have enough space in the structure, the council’s approving garden suites could be the key to a solution.
The new regulation means that there is less hurdle-jumping involved in getting a permit, and it ensures that structures being built for accommodation are safe and in accordance with zoning regulations.
One of the main advantages of the new regulation is that it helps to address the city’s accommodation needs. With the existing property being used to accommodate more individuals, it allows for greater residential opportunities to be created.
As a homeowner, this new regulation means there is an opportunity to maximize the profit-making potential of your home by creating an additional residence on the property. By building affordable accommodation in your backyard, not only can you help out people looking for a place in the city, but the income you generate can help you pay off your mortgage or be put into savings for future use.
Did you know: Individuals hoping to build a garden suite will need to post a public notice on their property when their permit is submitted. This ensures that adjacent properties are aware of the potential build and allows the city to monitor the construction and collect data about it.
How to insure your garden suite
When adding any new structure to your home, you want to make sure you’ve got the right insurance. A garden suite is no different. Having protection from property damage and liability are essential, so you’ll want to get the best deal on insurance you can find.
If your home insurance plan has Detached Private Structures or Outbuildings coverage, you may have some protection for the additional structure. Usually, this coverage is for 10-25% of your total home coverage. So if your home is insured for $1 million, you would have $100,000-250,000 of coverage for your garden suite.
If you believe you require more than 10-25% coverage for your garden suite, you can speak to your insurance provider about purchasing additional insurance.
When purchasing insurance for your home and garden suite, consider whether you are going to rent both your home and the suite, or simply the suite itself. If you will be renting both units, your insurer may treat your property as 1 rented dwelling with 2 units and 2 families. In this instance, the additional suite will be treated as a unit instead of an individual dwelling.
If you are residing in the main unit of the home and renting out the garden suite, your insurance would be treated the same as a normal homeowner’s policy with tenants in the unit.
Of course, there are a lot of factors that can come into play when insuring your garden suite. You’ll want to speak with the local planning and building department before you begin building any structure, as municipal by-laws may affect what you can and cannot build.
Be sure to consult your insurance provider to determine what coverage they offer for detached private structures, as you may discover they do not have the protection you require. Compare insurance quotes to ensure you’re getting the best rate possible.
Remember: if you intend on using your garden suite as a rental unit, it’s a good idea to make it a requirement of your tenants to have their own tenant insurance in place. And you should also consider purchasing a landlord insurance policy to protect yourself ahead of time.
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The benefits of a rental suite vs. the cost to build and insure
So how much does it cost to build a garden suite? Building an additional suite on your property isn’t cheap – it could run you about $200,000-300,000 just to build the property, and an additional $75+ a month to insure it.
In order to pay for the build, you may be required to take out an additional mortgage or line of credit. This can seem like a major setback, but when you look at it in relation to using the suite as a rental property, it might not be such a risk.
Once your garden suite is built, you can offset your mortgage and any additional money you will be spending on utilities and insurance through the rental income you receive.
For instance, if the debt you accumulate is payable at a rate of $1,500 a month, and your insurance and utilities on the property run $200 a month, you could charge $1,700 for rent and break even. In a market as hot as Toronto, this rent is still reasonable, so a family would be able to find suitable accommodation while you’re not out any money.
Keep in mind that since you will probably be paying off the build for some time, it might take a while to turn a profit. With smart investing, though, you can accrue interest on the rent payments, which can then be used however you see fit – for instance, on maintenance and upkeep on the property.
Building a garden suite on your property is not only a great way to generate some additional income, but it is also a benefit to individuals who are looking for affordable housing solutions.
The bottom line
If your property allows for it, consider speaking to a representative of your municipality to discover what options for garden suites are available to you. Take the time and compare mortgage rates and Toronto home insurance quotes to ensure you get the best rate possible.