Creating Affordable Housing with the BC Secondary Suite Incentive Program

Unlocking Affordable Housing Opportunities for British Columbia Homeowners

Are you a homeowner in British Columbia looking to make a meaningful impact in your community? The Secondary Suite Incentive Program (SSIP) might be the answer you've been searching for. This innovative program is designed to empower homeowners to create more affordable housing in their neighborhoods by offering financial support to establish new secondary suites on their properties. By participating in this program, you can contribute to the solution for affordable housing and potentially receive up to 50% of your renovation costs, capped at a maximum of $40,000. This financial assistance comes in the form of a forgivable loan, which means that it doesn't need to be repaid if you follow the program's terms.

Eligibility Requirements

To qualify for the Secondary Suite Incentive Program, you must meet specific criteria. This includes being a registered owner of the property, a Canadian citizen or permanent resident, and residing in the property as your primary home. Additionally, the combined gross annual income of all homeowners on the property's title should be less than $209,420 in the previous tax year.

Your property should be located within one of the 161 incorporated municipalities in British Columbia and have a BC Assessment value below B.C.'s homeowner grant threshold, which was $2,125,000 in 2023.

The secondary suite you plan to create should be a new, legal self-contained unit with a kitchen and a full bathroom. Laneway homes and garden suites are eligible, but improvements to existing rental units are not. This unit should also have received municipal building permits on or after April 1, 2023.

Application Details

The application process for the Secondary Suite Incentive Program will open in April 2024 and will be approved on a first-come, first-served basis until the annual funding is exhausted. As a prospective applicant, it's advisable to review the eligibility criteria carefully and prepare the necessary information for your application.

Upon approval, successful applicants will receive confirmation from BC Housing along with requirements for the next steps, including additional documentation needed to receive the rebate. The program will offer a rebate in the form of a forgivable loan, which will be registered on the property title for five years. This loan will be forgiven at a rate of 20% per year, provided that you meet specific program requirements.

Forgivable Loan Terms

The forgivable loan, which includes BC Housing's legal costs of $2,000, will be forgiven at 20% each year. For example, if you receive the full $40,000 rebate, it will work as follows:

• Upon occupancy and approval: You receive the $40,000 rebate, and a forgivable loan of $42,000 is registered on your property.

• After Year 1: 20% ($8,400) is forgiven, leaving a remaining loan balance of $33,600.

• After Year 2: Another 20% is forgiven, reducing the loan balance to $25,200.

• After Year 3: The loan balance drops to $16,800.

• After Year 4: The remaining loan is $8,400.

• After Year 5: The final 20% is forgiven, and BC Housing will discharge the loan, leaving you with no repayment obligations.

Interest and Repayment

Interest will accrue based on the current prime rate of interest charged by the Royal Bank of Canada, plus 2.00%. The Principal Amount will be forgiven at a rate of 20% every year, starting on the first anniversary of receiving the Loan funds, provided you comply with all terms and conditions. If the Principal Amount is forgiven at 20% each year, any accrued interest will also be forgiven. No payments are required on the principal or interest during the forgiveness period, as long as you meet the program's terms and conditions.

Program Scope and Funding

The Secondary Suite Incentive Program is a pilot program with a commitment to support at least 3,000 homeowners over three years. Funding in the first year is $40 million, enough to accommodate 1,000 applications at the maximum loan of $40,000. Online applications are set to open in April 2024.

Eligible Costs for Rebate

The costs eligible for the rebate must be directly related to the creation of the secondary suite. These include architectural and design fees, structural modifications, electrical work, fixtures, appliances (up to $2,500), building and trade permit fees, materials, contractor labor, and applicable taxes. However, costs like extensions, conversions, homeowner labor, and landscaping are not eligible for the rebate.

Pre-Approval and Existing Suites

Unfortunately, pre-approval for the rebate is not available. To be eligible for the program, you will need to have received an approved municipal permit. The program is open to homeowners who meet the eligibility criteria and who received a building permit on or after April 1, 2023.

Post-Program Period

After the five-year forgiveness period, landlords must continue to follow their obligations under the Residential Tenancy Act. They can issue annual rent increases to existing tenants based on the maximum allowable increase set by the Residential Tenancy Branch each year. Once the loan has been fully forgiven, there are no restrictions on rent charges when entering into a rental agreement with new tenants.

Understanding Principal Residence

A principal residence is the home where an owner lives permanently for at least six months per year and is used for various official purposes like tax returns, vehicle registration, and government-issued identification.

Eligible Suite Types

The program supports secondary suites attached to the primary residence and laneway homes/garden suites, as long as they remain on the same title. The new unit must be self-contained, with access to living facilities for daily activities.

What Does "Below Market Value" Mean?

For a rental to be considered affordable and eligible under the BC Secondary Suite Incentive Program, the tenant's rent must not exceed the Rent Affordability Limit for the area.

Rental Restrictions

The tenant for the secondary suite cannot be an immediate family member (child, parent, or sibling) of the homeowner(s).

Required Documents

To apply, you'll need various documents, including identification, proof of Canadian citizenship or permanent residence, proof of income, proof of residency in the home to be modified, an approved building permit from your municipality, and an estimated cost of construction.

Changes in Eligibility

If you no longer meet the program's criteria before the end of the five-year period, you will be responsible for repaying any outstanding principal balance and accrued interest. This may occur due to reasons such as selling the property during the forgiveness period or failing to meet the terms and conditions of the forgivable loan.

The Secondary Suite Incentive Program is an incredible opportunity to make a positive impact on your community and provide affordable housing solutions. By leveraging this program, you can not only enhance your property but also contribute to the broader goal of affordable housing in British Columbia. Mark your calendars for April 2024 and get ready to make a difference in your community!