ADUs/ARUs for 2025, will the insurance and policies offered by Finance Canada (CMHC) be the catalyst for this innovative housing solution?
ADUs/ARUs (Accessory Residential Units) have been around for centuries, they were generally build on properties of wealthy estates or luxury properties in urban cities, often referred to as a "Guest House" or "Garden Suite". These fully functioning smaller homes (kitchen/bathroom/1&2 bdrm/Living room etc..) generally stand alone, separated from the main house, often having there own secondary access (parking) as well as a garage or carport.
The modern day ADU/ARU housing design has evolved due to shifting demographics, modern methods of construction (MMC) as well as external market forces which have made housing an almost impossible investment for many lower and mid-market consumers. There is also the aging 55-75 (age in place) demographic seeking quality housing or rental space to downsize from there current housing solution.
2020-2023 witnessed the introduction of ADU/ARU policies/bylaws by most municipalities across the country (Canada). However, if we look at the uptake on this new housing policy we see that almost nothing has been built in past 48 months. That's because the adopted ADU policies still mirror the traditional house building permit process. Regular homeowners would need to hire a team of traditional home design/building professionals to execute a 350-750 sqft secondary unit on their existing R1 property. This bureaucratic municipal process takes to much time and excessive upfront capital investment and ultimately kills the new ARU housing project.
That said, there is one municipality (that I know of) that due to an exodus of lower wage workers decided to streamlined the entire ADU/ARU municipal design build process https://www.collingwood.ca/rapid-aru. The progressive visionary leadership of the Municipality of Collingwood, ON has launched there 2nd revision of there Rapid Additional Residential Unit Initiative 2.0 (see link above)
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Unfortunately, this progressive ARU housing policy has not produced the housing units needed to slow or stop the labour migration challenge. There was another roadblock to trial, pilot projects and further adoption of ARU housing systems, money(easy access to capital).
On October 10, 2024 the Canadian Government (CMHC) announced that it would be backing mortgages for up to 3 new ARU units on an existing R1 residential lot with a 30yr mortgage (amortization). This program becomes available Jan 15, 2025, and hopefully some of the banks see an opportunity to market and offer this product to Canadian R1 owners looking to invest in ARU housing. Note: see terms and conditions for ARU investing at link above
2025 will be an exciting year for ARU housing. It will be a year of pilot projects and momentum from ARU manufacturers to the entire supply chain from fabrication to installation (execution). The early adopters of ARUs will show the market the tremendous benefits of investing in secondary suites. Housing is a national issue and ARUs can be part of our total housing solution, ask your municipality (mayor/councillors) about progressive ARU housing policy, and ask your banker about ARU mortgages.
Thank you for this detailed and thoughtful analysis, Tim! You’ve captured the key challenges and opportunities around ARU/ADU housing, especially the importance of streamlined municipal processes and accessible financing. At Grand River Modular, we’ve focused on addressing these hurdles with our Minisi Model—a pre-permitted, Ontario-compliant ADU designed to reduce delays and upfront barriers for homeowners. With the upcoming CMHC-backed mortgage options, 2025 has the potential to drive significant growth in ARU adoption, especially for those looking to create sustainable and affordable housing solutions. If anyone is exploring ADUs or ARUs as part of their property plans, we’d be happy to help. Visit?https://grandrivermodular.com/minisi/, email?[email protected], or call 519-830-3346