New Regulation: Vancouver Allows 3-8 Residential Units on a Single Detached House Lot

Did you know that Vancouver is implementing a policy allowing 3-8 residential units on a single detached house lot? How will this impact Vancouver’s housing prices? Let’s dive into the details.

Have you heard of the “Missing Middle” housing type? Today, we’ll provide you with detailed information.

This document, compiled by Vancouver real estate agent and builder Gary Gao, aims to address your needs in buying and building in Greater Vancouver. Please like and subscribe to our channel. Feel free to visit our real estate website at BurnabyHouse.com and our building design website at CitiDesign.ca. Links are available in the comments below.

Firstly, a brief overview of this week’s real estate market: Since spring, the housing market in Greater Vancouver has been hot, with multiple offer situations becoming common. The unexpected interest rate hike by the Bank of Canada this week has sparked speculation about policymakers possibly maintaining high-interest rates for a more extended period. Will Vancouver’s housing market cool down? Opinions vary.

Gary believes the Greater Vancouver housing market might stagnate or undergo a minor adjustment, but a significant drop in prices this year seems unlikely. The market has adapted to the rate hike, and the percentage of homeowners affected by the rate increase is relatively small. Even in the case of defaults and auctions, the overall real estate market impact would be limited. Foreign buyers have been largely squeezed out of Vancouver’s real estate market, but due to the livability of the Greater Vancouver region, the influx of new immigrants, and the growing housing demand, most of Vancouver’s real estate market is still supported by the wealth already in the market, not the income of the local working class. The continuous interest rate hikes by the government, aimed at curbing inflation, seem to have neglected the working class homeowners. After all, tenants, as long as they don’t move, enjoy the protection of locked rental rates, while the monthly mortgage payments for the working class increase significantly during loan renewals. Some suggest selling the house, but selling and renting a new place could result in high rents due to inflation and tight housing supply, low vacancy rates, and the need for costly rent.

Secondly, the benchmark interest rate, prime rate, is already at a high of 6.9%, and the likelihood of a new substantial interest rate hike is low. After all, the government aims for a soft economic landing rather than a collapse.

Now, let’s get to the main topic of this video: Missing Middle Housing and Vancouver City Government’s new initiative to encourage increased residential supply.

In various Vancouver communities, such as Cambie Corridor, new housing options are being constructed through policies like the Secured Rental Policy. This means that on major city arteries, you can now see rental buildings as high as six stories. Planning work is also underway around Rupert and Renfrew SkyTrain stations. Currently, many new residential development projects are visible in all corners of the city. However, most new projects are limited to downtown or areas along Cambie Street. There are almost no new housing projects in other areas because the housing options in all RS ZONE (single detached dwelling zones) are very limited, which is what we call “missing middle” housing types, referring to the housing types between single detached houses and apartments.

The “missing” refers to the building types that are absent, such as row houses, townhouses, fourplexes, low-rise apartments, and other types of buildings.

In Vancouver, under the current regulations, most lands are not allowed to build new housing. This map of Vancouver shows that about half of the city is designated as RS ZONE (single detached dwelling zones), allowing only laneway houses or duplexes, and that’s about it!

In Vancouver, 50% of the land is designated as RS (single detached) zone, but over 90% of these lots have single houses built on them. Vancouver wants to change this situation.

The city aims to provide consistent building layouts, heights, uses, and floor areas with simple and clear requirements instead of complex calculations.

“Missing Middle” types – townhouses and duplexes have their own characteristics compared to single houses or apartments. They can provide outdoor space and streets like single houses, more down-to-earth than apartments, and the prices are very affordable. Most “missing middle” housing does not require strata fees, whereas a two to three-bedroom condo can incur monthly strata fees of several hundred dollars. Living in “missing middle” housing can save you hundreds of dollars.

Constructing an apartment building is a very complex process that requires land consolidation, obtaining a large number of planning approvals, participating in city council meetings, public hearings, and other tedious processes. However, building “missing middle” housing can more simply add more housing. It can be done gradually on a single plot, reducing the red tape in the construction process, allowing more people to move into denser housing areas and form more walkable communities.

This approach can also promote the convenience of commercial and facility services in the community. In addition, the new regulations do not require a large number of parking spaces, encouraging people to walk or bike to work and enjoy nearby cafes, fostering a more grounded housing experience and increasing your sense of belonging to the community.

Between 1985 and 2014, nearly 27,000 homes in Vancouver’s RS zones were demolished and rebuilt, leading to rising living costs. Many RS communities in Vancouver have also seen a significant decrease in the number of school-aged children. In fact, some communities have experienced a general population decline, with places like West Point Grey experiencing an actual decrease in population, local stores closing, and enrollment in nearby schools decreasing. There simply isn’t enough population to sustain the normal operation of these places.

The city government is working to standardize all RS zones, provide clear and concise information, and increase permit processing efficiency.

All nine zones (RS-1, RS-2, etc.) are merged into a new RS zone.

In most RS zones in Vancouver, the city proposes allowing up to six units on one plot. For example, on a typical 33 by 122 feet Vancouver lot, you can build three to four homes, and on larger lots, you can even build up to six homes. These units can be one building or two separate buildings, one facing the street and the other facing the laneway.

The new housing area’s floor area is reduced from a Floor Space Ratio (FSR) of 0.70 to 0.60.

Floor Space Ratio (FSR) is a number obtained by dividing the building’s floor area on the plot by the plot’s area.

All floors are on the ground, with no upper setbacks required.

All new housing’s floor area is located on the ground.

The new housing’s Floor Space Ratio (FSR) is reduced from 0.70 to 0.60, and the laneway house’s FSR is increased from 0.16 to 0.25.

The basement depth is reduced from 5 feet to 4 feet.

All nine RS zones are merged into one RS zone.

The Floor Space Ratio (FSR) of new laneway houses (LWH) is increased from 0.16 to 0.25.

Laneway houses (0.25 FSR or 1000 square feet for a standard lot) allow a full two-story without upper setbacks.

Let’s count how many units you can get: a detached house + a laneway house can yield five units: 3 legal, 2 illegal. Of course, renting out illegal units is not allowed by the government.

On most RS lots, the city proposes building multi-unit buildings containing 4-6 residential units.

Standard lots allow 4 residential units, larger lots allow 6 residential units, and large lots that offer 100% rental housing allow 8 residential units.

The Floor Space Ratio (FSR) for multi-unit buildings is 1.0.

Owners can choose from various design options, including detached buildings or courtyard-style buildings, which can be entirely above ground or partially underground.

No requirement to provide parking spaces, but they can be provided at the rear of the lot.

Multi-unit buildings are targeted at families looking to buy homes, with an average residential area of about 1,000 square feet.

To limit land price increases, multi-unit housing applications need to choose one of the following options: pay fees, provide homes for sale below market prices, or sign a 100% market rental housing agreement.

Building multi-unit buildings require adding underground rainwater tanks and substations.

In summary, the new construction of “missing middle” housing provides Greater Vancouver residents with more diverse housing options.

So, are you eager to try finding a plot with us, designing and building such homes?

The recent detached house market in Vancouver is very active, with strong interest in acquiring detached house lots in Vancouver.

Regarding whether Burnaby and Richmond will implement similar policies, Gary believes the likelihood is low.

Although Burnaby will implement new regulations for laneway houses this year, the city is more inclined to maintain the unique characteristics of single-detached house areas.

In downtown areas like Metrotown, Brentwood, and Lougheed, high-density development zones, solving the housing supply issue is a priority.

Richmond has already constructed many townhouses and city homes, and there are plans to plan more high-rise building areas along Highway 3.

Therefore, in the next 10-15 years, even though Greater Vancouver may see a large number of “missing middle” homes, Burnaby and Richmond may not introduce similar policies.

Will Vancouver’s new policy affect Burnaby and Richmond housing prices? Gary believes it won’t because some people want to buy large lots and live in large houses. They can go to Burnaby or Richmond for real estate. Burnaby and Richmond can provide more affordable single-detached house communities and living environments. For example, most of Burnaby’s single houses’ lots can build a building area of 0.4 or 0.2 plus 1400 square feet Floor Space Ratio (FSR), and the basement only needs not to exceed the main floor area, not counting the Floor Space Ratio. Lots with laneways can also build a laneway house with a maximum area of 1500 square feet.