Rental suites lowering broker preapprovals

Rental suites lowering broker preapprovals

A new report suggesting a quarter of B.C. homeowners rent out a portion of their home is offering a word to the wise for brokers looking to convert preapprovals.

A survey of over 850 B.C. homeowners points to the trend, finding nearly 25 per cent of them rent out a portion of their house to non-family members.

Whether that’s a basement suite in the home, or a garage converted to a "coach house," those income-generating units are increasingly viewed as essential to winning the kind of mortgage amount many clients need to get into the community of their choice -- or even their second, third or fourth choice.

The report, says its author, Square One insurance, reinforces a 2009 study completed by the City of Vancouver. It estimates between 23 per cent and 27 per cent of single-family houses have suites.

"The high percentage of people renting out a portion of their houses is understandable given today's economy and the high price of real estate across the province," says Daniel Mirkovic, Square One's president & CEO. "In fact, we suspect the actual percentage is considerably higher. Some people may be reluctant to disclose this information to their home insurance provider if they haven't secured necessary municipal approvals and permits."

Some leading Vancouver brokers already rely on rental units to ensure clients access some of the city’s most desirable neighbourhoods. Clients who don’t consider that option are more likely to sit on pre-approvals waiting for the kind of home price correction economists see in Vancouver’s future.

But that strategy may ultimately fail them, with a slowing real estate market having failed to significantly lower seller price expectations, according to local Realtors.

Brokers are routinely taking it upon themselves to do the numbers for clients and show them how granny flats and other income suites can bring homeownership within reach, at the same time leaving the actual home search to the client.