I have recently been in discussions with multiple individuals regarding the Nova Scotia Secondary and Backyard Suite Incentive Program and have realized that there is confusion on the topic. I figured I would do my best to explain the differences between the “Incentive Program in Relation to Secondary and Backyard Suites” and the “Municipal Planning Strategy for Backyard and Secondary Suites” as these have very different meanings but sound very similar.

Municipal Planning Strategy

The Municipal Planning Strategy was revamped back in September 2020. The idea of this strategic plan was to complete communities and meet affordable housing targets. It is important to remember that this plan was to be self-funded by the homeowner.

For more information and to understand the difference between secondary and backyard suites, please check out my previous blog written back in February 2023: https://koreeburt.com/blog.html/secondary-back-yard-suites-7850120

Incentive Program in Relation to Secondary and Backyard Suites

Now let's get into the Nova Scotia Secondary and Backyard Suite Incentive Program. This is where I am seeing some confusion. Both programs allow you to build a secondary suite; the difference between the two is that one option has a forgivable loan and the other doesn't.

This incentive program is available to eligible homeowners who plan to build a secondary suite within their existing property or on the property of their existing home. Homeowners may receive up to 50% of eligible project costs, to a maximum of $40,000.

Eligible project costs include:

• Labour and materials

• Design fees

• Purchase and placement of a prefabricated suite

• Taxes and other associated costs with the application for and building of the suite

How does this all work and what is required to receive the forgivable loan?

First, qualifying homeowners will be required to sign a Promissory Note and an Operating Agreement. The loan will be provided to the homeowner AFTER construction is complete. Homeowners must have the available funds up front to complete the project, obtain an occupancy permit, and submit the invoices to the program staff. A portion of the loan will be forgiven each year that the homeowner meets the tenant eligibility requirements. This is important to note. Once the project is completed and approved, the program provides a letter of Conditional Approval that outlines the conditions of the loan. The loan is not outright forgiven until after the 5-year period and all tenant eligibility requirements have been met.

In order for the loan to be forgiven over 5 years, the homeowner and tenant must meet the criteria for either the supportive housing or affordable housing streams. There also needs to be a year-to-year or month-to-month lease signed for the 5 years that the loan is active on the suite. (Short-term leases are not allowed while there is still a loan on the suite.)

Supportive Housing Stream:

• Is 65 years of age or older and/or a person living with a disability.

• The homeowner is 65 years or older and/or a person living with a disability.

Affordable Housing Stream:

• An individual or household whose income is below income limits and to whom the unit will be rented at below-average market rates.

Under this incentive program, you are agreeing to provide affordable housing. Affordable housing is when the rent is below average market rent. If you are renting under the affordable housing stream, there are certain limits that you must rent under.

For example, below are the household limits and average market rent caps in HRM:

Household income limit:

• $47,000 for a 1-bedroom suite

• $60,000 for a 2-bedroom suite

• $67,500 for a 3+ bedroom suite

The average market rent (with a 20% reduction to accommodate affordable housing criteria):

• $880.00 a month for a 1-bedroom suite

• $1,124.00 a month for a 2-bedroom suite

• $1,334.00 a month for a 3+ bedroom suite

In conclusion, it's essential to differentiate between the Municipal Planning Strategy for Backyard and Secondary Suites and the Nova Scotia Secondary and Backyard Suite Incentive Program. While both aim to address housing needs, they operate very differently.

Understanding how these programs work is crucial, especially regarding eligibility criteria, loan forgiveness conditions, and tenant requirements. I encourage anyone who is thinking of going down either one of these routes to thoroughly research and know exactly what you as a homeowner have to gain or loose based on your own personal scenario. These programs are not a one size fits all and have many moving parts that I believe need to be fully understood before starting any construction.

As housing continues to be a pressing issue, initiatives like these play a big role in providing inclusive communities and addressing housing affordability challenges. 

If you have any further questions about these programs, get in touch. I am always here to help =) 

~ Real Estate & More With Kor!