Providing a Market Rent for Secondary Suites (March 2023)

Market rent is often requested by lenders to better understand debt servicing ratios. Market Rent can be given to most self-contained living units, given they have private access, a full working kitchen and bathroom. This is easy enough for apartment units, townhomes, and single family homes. But what if the home has a legal suite, an illegal suite, or two even two suites? 

What’s the deal with market rent for illegal or unauthorized suites?  Here is a blurb from the Appraisal Institute of Canada. 

Given the changes in the housing market across the country, many are turning to additional sources of income to assist in financing their home or investment property. AIC Members continue to play a major role in safeguarding the real estate market by providing objective and independent opinions on value. 

AIC Members CANNOT provide market rents if the existing rental unit: 

is not allowed by the zoning bylaw and does not have the appropriate permits required to meet safety, health and housing standards (occupancy, fire, electrical, etc.) required by the Province (Territory) or municipality.

Before providing a Market Rent for an existing secondary suite, An AIC Member must: 

1. Confirm the municipal zoning bylaw allows secondary suites.
2. Inspect the secondary suite to confirm if it is a self-contained unit that includes: kitchen/cooking facilities, bathroom, living area, sleeping area, separate entrance (criteria may different across provinces or municipalities).
3. Contact the municipality for permit information.

AIC Members CAN provide market rents for new homes or secondary suites under construction, accessory dwellings and most main or secondary rental provided they are legal. AIC Members are not insured to provide market rent for unauthorized or illegal suite as this is contrary to CUSPAP and AIC Professional Standards

I hope this clears things up. The Appraisal Institute provides clear instructions on how to handle all rental situations. If you are having issues with your appraisal and believe the appraiser to be acting contrary to these guidelines, please contact Adlaw Appraisals Ltd. for a review. 

Get more appraisal FAQ’s at HERE!

Thank you for reading,