Secondary Dwelling Units & Tiny Homes

With the drastically increasing cost of housing (both ownership and renting), it is obvious to everyone that we need more housing units and greater affordability. Tiny Homes can be part of the solution, but not likely on their own.  The passing of (provincial) Bill 23 housing has made it far easier for many people to add a second or even third dwelling unit to their property, but there are still many hurdles for such developments. There are building code regulations, zoning by-law requirements, conservation policies, rail and agricultural setbacks, let alone neighbourhood character, architectural or cultural heritage restrictions, and public/political opposition.

Most people are unaware of all the restrictions on their land and just assume that they can build with impunity. Those who do know about the restrictions may still be surprised by some lesser-known ones. Building a Tiny Home instead of a standard-sized home as a secondary dwelling can avoid several of the restrictions affecting a property, but it likely won’t sidestep all of them.

So what exactly is a Tiny Home?

A Tiny Home is essentially a home in every way, but it is typically very small. According to the Ontario Building Code (OBC), the minimum floor area permitted for a dwelling is 17.5 m² or about 188 ft² square feet. Not many tiny homes are built this small, but they are usually around 500ft2 square feet or less. Another thing that tiny homes typically have in common is the careful design choices made to efficiently use space within the home.

In Ontario, tiny homes often do not have a second floor. The OBC requires full-sized, standard stairs to get up and down, which are not generally space-efficient. The essence of a tiny home is an efficient, minimalist lifestyle, and there can be huge savings compared to standard housing.

Secondary Dwelling Units (ADUs) and Bill 23

In simple terms, a Secondary Dwelling Unit is a second (or sometimes third), self-contained dwelling space on a property.  Also called Additional Dwelling Units (ADUs), these units are often required to be smaller than the ‘primary’ unit and always require their entrances/exits.  ADUs can take many forms, such as an interior renovation; a separate floor; a building extension; or an entirely separate building (including a tiny home). In any of these cases, there are many regulations and requirements governing how and where they may be created.  Usually, the least restricted option is an interior renovation or addition.  This is because there are far fewer restrictions on what you can do inside/to an already existing building.

So what are the major pitfalls to look out for?

The largest restrictions that often get overlooked come down to following the OBC and being sure that the new unit will have proper servicing.  ‘Servicing’ means things like electricity, potable water and wastewater connections.  In some cases, all of the zoning requirements and OBC regulations could be met by a design, but there is not enough servicing capacity for any new dwellings in the area, which would prevent the build.  The OBC also requires a full set of stairs if there is a second floor or even just a loft area in a dwelling, regardless of size.

Another thing that is often overlooked is that Bill 23 (More Homes Built Faster Act) allows up to 3 dwelling units on a single property, two of which must be contained in the ‘primary’ building typically within an urban/settlement area.  All the regulations and by-law requirements aside, there are major costs beyond simple construction to be aware of before beginning as well.

Isn’t Tiny Home supposed to be cheap?

Yes, in comparison to a standard-sized home.  However, certain costs are often overlooked when looking at the cost savings of a Tiny Home.  On the savings side, the materials, labour, utilities and maintenance will be cheaper than for a standard-size home.   However, certain costs are largely the same, such as: utilizing the site’s existing services, occupation permits; and building permits(sometimes based on floor area); plus the costs for planning applications if current permissions don’t allow the proposal.

Planning applications?  I thought I was allowed to have 3 units by right!

Unfortunately, there are many issues that can still prevent the construction of 3 dwelling units on a property.  If a property is outside of the urban area (not connected to municipal services) then Bill 23 won’t apply.  Also, if a property is within certain distances of farm operations, conservation-protected watercourses, rail lines, quarries, etc. then those will drastically limit development opportunities.

Certain limitations can be negotiated or ignored with mitigating circumstances or studies proving negligible impacts, but doing so will require planning work and municipal approvals.  A Minor Variance (MV) can be attempted for very minor adjustments to zoning restrictions, while a Zoning by-law Amendment (ZLA) in Ontario can be attempted for more significant deviations from them.

An Official Plan Amendment (OPA) can also be attempted for drastic changes, but are often only possible if the current official plan is old and in need of updating.  The costs involved get much higher with each level, with MV costs in the thousands, ZBA in the tens of thousands and OPA costs sometimes reaching over one hundred thousand dollars.

Wow, so how do I know if I should even try?

Checking if a Tiny Home or ADU is permitted is a good first step and getting professional help in doing so will take most of the guesswork out of the process.  Hiring a professional planner can give you accurate information about the current permissions, obstacles and options for a property and what planning applications or permits will likely be needed.  Not skipping this step is likely to save you a bunch of money and could even give you a cheap way to know for sure if building a Tiny Home or ADU is feasible on your property.

Otherwise, if you go it alone, you could end up applying for the wrong thing, getting denied and wasting a significant amount of money on designs with nothing to show for it.  It is also possible to talk directly with municipal staff, but they often do not have “your” best interests at heart as they can only comment on the policies before them, not how to navigate through them. Whereas a private development planner would be looking out for your interests specifically, and fighting for them when town staff “don’t like” your proposal or approach.

I thought municipalities were desperate for new housing, didn’t they?

The housing crisis is real and most municipalities need more housing.  Specifically more affordable housing.  With the rental market being so full as well, more rental opportunities are also very much in need throughout the province.  Tiny homes and ADUs can be part of the solution, but many municipalities have yet to update their zoning by-laws to effectively incorporate them.

Also, the elected officials responsible for making decisions on planning matters can sometimes be against this sort of development, because the people voting for them don’t want them in their neighbourhoods.  Not In My Back Yard (NIMBY) is an unfortunate sociological idea where one has less care for areas that don’t affect them but have great opposition to the same activity in their neighbourhood.

Do the benefits outweigh the potential drawbacks?

The benefits of building a Tiny Home are manyfold, but the hurdles to get there can be enormous.  Knowing what hurdles your property has is key to understanding if building a Tiny Home as an ADU is viable on your land (and affordable).  Again, hiring a professional planner will make this knowledge simple to obtain and they can give you a good idea about the specific costs involved for any of the planning processes required.  Usually, the long-term benefits do greatly outweigh the drawbacks of having a Tiny Home ADU on your property, whether it is simply a financial investment or a separate home for relatives or even guests.

Final thought

Navigating Ontario’s housing landscape—from Tiny Homes Ontario regulations to Bill 23 housing complexities—can feel overwhelming, but you don’t have to tackle it alone. At UrbanInMind.ca, we specialize in simplifying the process, offering expert guidance on ADU regulations in Ontario, zoning by-law amendments, and strategic planning to turn your property’s potential into reality.

Whether you’re exploring affordable housing solutions in Ontario or need help sidestepping hidden hurdles, our team ensures compliance, cost-efficiency, and clarity every step of the way.

Ready to unlock your property’s possibilities? Let UrbanInMind be your partner in building smarter, smaller, and sustainably. Contact us today to start your journey.