As Canada’s largest city, Toronto is no stranger to change. The city’s neighbourhoods are now set for another shake-up following a recent council decision to amend Toronto’s planning laws.
Multiplexes of up to four units will soon be allowed in every area of the city as Toronto struggles to meet soaring demand for housing.
“We are working non-stop to get more housing built across Toronto. Allowing multiplexes in our low-rise neighbourhoods brings more types of housing to our city and supports a more equitable approach to growth,” said Deputy Mayor Jennifer McKelvie.
What Should Toronto Landlords do?
With Toronto’s population expected to reach 3,347,888 by 2031 and 3,604,222 by 2041, the demand for housing will only grow. This leaves landlords with an opportunity, and a choice.
Should you split your property into multiple units to capitalize on the newly relaxed planning laws and increase your revenue?
It depends.
The Cons
While more occupancy obviously means more income, landlords should be fully prepared for the extra obligations this entails. Carving up your property into several separate units requires a huge renovation and an equally huge budget.
Inflation shows no sign of slowing – in fact, it rose again in April to hit 4.4%. As money loses its value, prices are skyrocketing. The building materials and labour required for your reno will stretch even the most flexible of budgets as costs climb.
You’ll also need to consider the legalities of your new multiplex. Asking your current tenants to leave so that you can carry out the renovations is legal, but only under certain conditions.
An N13 eviction, better known as a renoviction, occurs when a landlord asks their tenant to move out because they want to do some work on the property. The work has to be so extensive that a building permit is required and tenants have a right to move back into the property once the reno is completed. Essentially, you will have to offer them one of the units at the same rate they are currently paying you once your renovations are completed.
Ontario is further strengthening the rules around renovictions, stating that landlords must:
- Obtain a report from a ‘qualified person’ stating that the property must be empty for renovations to take place
- Let the tenant know the status of the renovation if they plan to move back into to the unit
- Give tenants a 60-day grace period to return, once renovations are finished
The Pros
Of course, converting your rental doesn’t necessarily mean knocking it down and building a 4-unit property in its place. A less expensive option is turning it into a duplex. This should be relatively straightforward, although it would mean installing another kitchen and full bathroom in your additional unit, as well as creating separate entrance areas.
This type of renovation may be justifiable for the long-term prospect of higher rent on a second unit. To cut costs even more, consider opting for a basement apartment where you have a suitable lower-level space.
Still can’t decide? Ask the experts!
There’s no right or wrong answer to whether you should consider a multiplex. It depends on your own unique situation and factors such as:
- Location – where is your property located? Is it in a high demand area? What sort of tenants do you want to attract and will they want to live there?
- Rent – you won’t be able to charge as much for smaller units as a large so do the math to figure out if it’s worth the cost of renovating
- Budget – don’t forget to budget not just for today’s prices, but also future inflation
If you’re still unsure, reach out to the experienced property managers at Highgate. We understand that this is a big decision that requires careful consideration and planning. After three decades in the GTA real estate market, we’re very familiar with both the legal and financial impact of renovating rental properties and can help you make your decision.
We’ll assess your property, give you advice on whether a multiplex is a viable option, and, if you decide to go ahead, help you with the renoviction process. We can even help you find trustworthy tenants once the property is ready for occupancy. Get in touch with our team today to get started!
