f you're planning to buy a home with a secondary suite — especially if you're counting on that rental income to help qualify for your mortgage — this is a must-read. Recent policy changes from Canada's appraisal associations, new provincial legislation, and Victoria's landmark zoning overhaul have fundamentally changed the landscape.
Not all suites are created equal. Let's break down the three types and what each means for your mortgage, your risk, and your investment.
Legal suites are the gold standard. They're built with permits, meet all building codes, and are fully compliant with zoning bylaws. Think: proper fire separation, appropriate egress, and municipal approval. Mortgage lenders love these — no issues using rental income to qualify.
If the suite has an existing tenant paying decent rent that you're willing to assume, that income will be considered toward your gross income when applying for a mortgage. It's not necessarily a mortgage offset, but it will allow you to qualify for a larger mortgage than you otherwise would.
If the suite is vacant, your bank will likely request an appraiser to complete a market rental report using local comparables. That report typically costs around $300–$400.
🔔 Buyer Tip: If you're inheriting an existing tenant, gather all tenancy agreements and rent payment records before your mortgage application. If the suite is vacant, budget for the appraisal rental market report upfront.
Legal non-conforming suites were built legally under previous rules but don't meet today's zoning requirements. They're "grandfathered in" — you can still use them, but they must meet basic safety standards.
These used to be acceptable for lenders too... but not anymore.
Both appraisal associations in Canada — the AIC (Appraisal Institute of Canada) and CNAREA (Canadian National Association of Real Estate Appraisers) — have clearly stated that no appraiser will be allowed to provide market rent reports for non-conforming suites, with very limited exceptions. If you're intending to borrow with contributions from a rental suite — either by using the additional income or even trying to value the suite itself — it must, in almost all cases, be a presently legal use.
The limited exceptions? CNAREA appraisers may use an Extraordinary Assumption if there is evidence that a municipality is actively changing its bylaws to legalize suites in the near future — and thankfully, that's exactly what's happening across BC right now (more on that below).
🔔 Buyer Tip: If non-conformance stems solely from zoning restrictions, there's real hope. Ask your appraiser or lender whether they can make an exception given your municipality's timeline for legalizing secondary suites under BC's SSMUH legislation. The answer may surprise you.
Find the Victoria Secondary Suite Guidelines
Illegal suites were created or altered without permits. They don't comply with the building code or current zoning bylaws. Appraisers are now prohibited from writing market rent letters for them — full stop.
Bylaw enforcement on Vancouver Island is typically complaint-driven. Problems usually start when neighbours complain. Once the municipality gets involved, they'll generally try to help you get into compliance, but the list of requirements can be long: plumbing, electrical, fire ratings, sometimes even raising the roof.
⚠️ Risks include:
· Stop work orders (if you're renovating without permits)
· Occupancy permit revocation
· Hydro meter removal
· Litigation placed on land title
· Insurance coverage gaps if something goes wrong
· Financing issues with your lender
🔔 Buyer Tip: : Sometimes an illegal suite can be renovated to become legal, and there can be real value in that opportunity — especially with today's financing options. Assess the renovation requirements to achieve municipal compliance and BC Building Code standards. The cost of conversion may be well worth the investment.
The province's Homes for People plan, announced in November 2023, is driving sweeping changes to housing supply across British Columbia. Under the Small-Scale Multi-Unit Housing (SSMUH) program, secondary suites are being legalized in all communities province-wide. Most BC communities now allow 3–6 units on single-family lots.
Key deadline: Local governments must update their bylaws to comply with SSMUH requirements by June 30, 2026.
The province has also set housing supply targets for municipalities in three cohorts. Communities that fall short face real consequences — the province appointed advisers to review Oak Bay and West Vancouver after they missed their targets.
Download the provincal guide on having a home with a suite.
Victoria exceeded its Year 1 housing target by a wide margin — delivering 1,477 units against a target of 659, hitting 224% of its goal. That includes new construction, infill housing, new secondary suites, accessory dwelling units, and other forms of new housing supply.
Other standouts: City of Delta hit 109% of its target (561 units), and the District of North Vancouver met its target at 100%. Vancouver delivered 4,143 units against a 5,200 target — 80%, which is solid progress.
There are 47 municipalities on what's been dubbed the provincial "naughty list" — communities that aren't meeting housing targets. This includes cities like Burnaby, Surrey, Langford, and smaller communities like White Rock, Pitt Meadows, and North Cowichan. The province has added 10 new "priority communities" in its latest cohort, with orders aiming to boost supply by about 40,000 homes over the next five years.
On October 2, 2025, Victoria City Council adopted Victoria 2050 — a new Official Community Plan and comprehensive zoning modernization. This is the first major overhaul of Victoria's zoning bylaw in over 40 years.
The biggest change for suite buyers: Victoria properties can now have both a detached garden suite and an in-home secondary suite on the same lot. This was historically prohibited and represents a significant opportunity for homeowners and investors.
The zoning modernization also eliminated approximately 400 of the old 900 zones, dramatically simplifying the regulatory landscape.
As of January 15, 2025, homeowners can refinance their insured mortgage to fund secondary suite construction:
· Refinance up to 90% of the home's post-renovation value
· Property value up to $2 million
· Amortization up to 30 years
· Must be owner-occupied (you or a close relative must live in it)
· The suite cannot be used as a short-term rental (minimum 90 consecutive days)
This is a major new tool for homeowners looking to add or legalize a suite.
· BC's provincial secondary suite incentive program stopped accepting applications on March 30, 2025.
· The federal Canada Secondary Suite Loan Program ($80,000 at 2% interest) was announced in late 2024 but was never launched — it was cancelled in Budget 2025, with the government citing overlap with the CMHC refinancing changes.
So what's the premium for a home with a suite versus one without? Data from House Hunt Victoria shows the average premium has historically been about 3%. That may not sound like much, but since the mortgage stress test was introduced in 2018, demand for homes with suites has surged as buyers' purchasing power was cut and more people became reliant on suite income to qualify.
Looking at single-family homes with a suite in Victoria's core areas — Saanich, Langford, View Royal, Esquimalt, and Victoria proper — there are currently 172 homes on the market, ranging from $840,000 to $11.4 million, with an average asking price of $1.9 million and a median price just shy of $1.6 million.
The sweet spot? Homes with suites in the $1M–$1.2M range see the most demand and often attract multiple offers. If you're shopping in that range, you need to sharpen your pencil and get ahead of the curve.
Before you write an offer, make sure you know:
· Is the suite legal, legal non-conforming, or illegal?
· Are there permits on file with the municipality?
· Does it have all the licensing required by that specific municipality? (Remember — there are 13
municipalities in Greater Victoria, and every one is different.)
· Can an appraiser provide a market rent report?
· Is the rental income provable with leases and bank statements?
· If it's non-conforming, can it reasonably be converted to a legal suite? Is the infrastructure there? Do you have the capacity?
· Will your lender or appraiser make an exception on your mortgage application to use that suite income?
· If it's illegal, what will it take to either remove it or bring it up to code?
Contact Dustin Miller at 8X Real Estate to be setup on a list of homes in your price range with suites anywhere in Greater Victoria, whether the be legal, non-conforming, or illegal.
Dustin Miller is the managing broker of 8X Real Estate. When he's not on the road, he is on his computer looking at real estate. You can often find Dustin at his office enjoying a bowl of won-ton soup.
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