Secondary Suites Subsidy - Pilot Project
In early 2022, Prince Edward County Council approved $200,000 from the reserve for affordable housing to develop a secondary suite pilot program to increase the supply of long-term rentals.
The pilot is intended to provide homeowners and small landlords (fewer than 10 units) with non-repayable loans of up to $25,000 to create or substantially renovate secondary units. Funding is an interest-free, non-repayable loan that is forgiven on the condition that the unit is rented to long-term tenants for a minimum of 15 years.
Please note that this program is currently closed. It will be brought to Council in 2023 for consideration.
Projects will be reviewed by municipal staff to determine project and applicant eligibility. Preference will be given to projects that:
- have building permits, construction drawings, confirmed contractor, etc in place.
- have space for at least 3 vehicles.
- can be completed in 2022.
- can be connected to municipal services (water / sewer,)
- are located within walking distance of Main Streets,
- reduce physical barriers related to housing (e.g. ramps, handrails, grab bars, cues for doorbells/fire alarms, etc.)
The following are not eligible projects:
- Retirement homes, long-term care homes (including nursing homes), and crisis care facilities.
- Units not subject to compliance with the Residential Tenancies Act, 2006.
- Cosmetic changes and routine maintenance.
- Construction / renovations carried out on the property prior to approval.
- Be 18 years or older with the application signed by all members of the household who are registered on the deed.
- Be a Canadian Citizen, Landed Immigrant, or have Refugee Claimant Status and have no deportation order under the Immigration Act (Canada) against any member of the household or no departure order or exclusion order under the Immigration Act (Canada) has become effective with respect to any member of the household who is also a registered owner of the property.
- Not be in arrears with the municipality (property taxes, water billing payments, other).
- Not have any building, bylaw or zoning orders against the applicant or the property.
- Have property insurance that is paid up-to-date with coverage to its full replacement value.
- Have a mortgage that is paid up-to-date.
- Not be in the process of applying for bankruptcy or have an active bankruptcy filed personally, or for their business.
- Agree to rent their secondary suite as long-term rental.
- Agree to pay back the loan in full and with interest if any aspects of the repayment terms and conditions are not adhered to.
- Agree to provide a copy of the annual tenancy agreement to the municipality.
- The period of loan forgiveness commences on the project completion date.
- The maximum amount of funding is $25,000.00.
- If approved, the loan will be both registered on title and discharged from the title, both at the expense of the recipient.
- Eligible costs include work required to create or substantially renovate a secondary suite, including but not limited to plumbing, electrical, framing and insulation, drywall/fire separation, doors and windows, kitchen/bathroom fixtures and cupboards, applicable taxes, building permit fees, legal fees, certificates, appraisal fees, inspection fees, drawings and specifications, and more.
- The homeowner is responsible for all project costs that exceed the funding approved by the municipality.
- Once the application is approved, payments will be made directly to the homeowner, in line with building permit inspection passes. A payment schedule will be developed upon approval of the application. For example, a $25,000.00 loan may be released as follows:
– $6,250.00 – fees (legal, drawings, issue of building permits)
– $6,250.00 – pass of plumbing, framing inspection
– $6,250.00 – pass of insulation, drywall, fire separation inspection
– $6,250.00 – pass of final inspection / occupancy
If approved, the municipality will provide a funding agreement to the property owner outlining the scope of work, funding commitment, payment schedule, and the roles and responsibilities of the homeowner and the municipality.
- Ontario Building Code compliance during the renovation will be overseen through regular inspections.
- Recipients must submit a copy of the tenancy agreement on an annual basis to the municipality.
- The municipality reserves the right to undertake an on-site inspection on an as-needed basis.
The applicant is considered to be in default and the loan must be promptly repaid in full, and with interest, if any of the following situations occur before the 15-year period has been served:
- The unit or project is sold.
- The unit is not being rented as a long-term rental.
- Misrepresentation related to eligibility for the program is determined.
- There are building code or fire code infractions.
- Property taxes are not paid up-to-date.
- The unit has been vacant for 60 consecutive days or more after project completion, without prior approval by the municipality.
- Funding is used for other purposes not related to completion of a secondary unit.
Note: The homeowner is responsible for any legal costs incurred by the municipality as a result of action taken. Any legal costs will be added to the outstanding balance of the loan.
How much funding can I qualify for?
The maximum amount of funding is $25,000.00.
What is a ‘non-repayable loan?’
The Secondary Suite Program funding is considered a forgivable loan. Repayment is not required so long as the terms of the loan agreement are adhered to.
Is the loan secured?
Yes, the loan must be secured by registering the loan title through a lawyer. The home homeowner is responsible for the cost of registering the loan on title and discharging the mortgage registration once the loan is forgiven or repaid.
Why is the loan secured?
All secondary suites loans are secured to ensure that the municipality receives notice when a home is sold. It also helps ensure that the homeowner and/or their estate advise the municipality of any event of default.
Can I start the work before the application is approved?
Any work completed prior to final approval is not eligible for reimbursement.
Can I own multiple properties?
Yes, however you need to disclose this fact when applying. To be eligible for funding, homeowners / small landlords can own fewer than 10 rental properties.
Can I rent my unit out on a short-term basis?
No, the program is to increase the supply of long-term rentals in Prince Edward County. Renting the unit as short-term accommodation is not permitted and would be considered a default on the agreement.
Can the property be a legal duplex, Boarding Lodging Rooming House or apartment building?
No, funding can only be used to create or legalize secondary suites in zoned residential properties in line with the County of Prince Edward Comprehensive Zoning By-law.
Are there timing requirements?
Preference will be given to applications where work can be completed in 2022.
Can I do the work myself?
Work can be done by the homeowner. Any work completed must be in compliance with Ontario Building Code and Fire Code.
What if the cost to create the secondary suite is higher than the funding amount?
Any costs over and above the funding amount are the responsibility of the homeowner.
How do I know if my property is eligible for a secondary suite?
The County of Prince Edward Comprehensive Zoning By-law allows for secondary suites in residentially zoned properties. See Section 4.35 of The County of Prince Edward Zoning By-law which includes the current regulations for Second Dwelling Units. To confirm whether your property is zoned for a secondary suite, please contact The County of Prince Edward Planning Department.
When the apartment is done, how soon do I have to rent it out?
Within two months.
Can I move into the secondary suite and rent out the primary part of my house?
Yes, the homeowner has the option to live in the secondary suite and rent out the primary home, as long as the primary home is then rented long-term. The program is designed to increase the supply of long-term rentals.
Who can I rent to?
The homeowner selects their own tenant(s).
How much rent can I charge?
The homeowner can choose the rent to be charged to the tenant each month.
What are the rights and responsibilities of landlords and tenants?
Information about the rights and responsibilities for landlords and tenants can be found on the following websites:
Do I have to have a signed lease with the tenant?
Yes, a lease agreement is required and must be submitted to the municipality annually as part of the inspection requirements. The Province has released a mandatory standard lease agreement form for new tenants as of April 30, 2018 through the ‘Residential Tenancy Agreement’.
Does the County assist with placement of tenants?
No, it is the homeowner’s responsibility to occupy the unit in a timely manner.
What if I decide not to rent out the apartment?
This is considered a default of the loan agreement. The full ‘unforgiven’ loan would become due and payable with interest.
What happens if I decide to sell my house?
If you sell prior to the end of the 15-year term, the full amount of the loan would be considered ‘unforgiven’ and shall be due and payable in full, with interest. The homeowner is also responsible for the legal fees to discharge the loan secured by the County by registration of a mortgage on title.
Can I voluntarily repay the loan?
Yes, repayment of unforgiven portion of the loan can be made in a lump sum. All funds returned to the Secondary Suite Program are returned to the Reserve for Affordable Housing.
For more information about the secondary suites subsidy, or to verify whether your property meets the zoning criteria for a secondary unit, email: firstname.lastname@example.org