“There are up to 40,000 illegal suites in the city of Surrey — nearly double the 20,000 previously reported.”

“The appraiser stands at the foot of the empty lot, asked to assess its value — as if the home to be is already built.
He comes armed with floor plans sent to the city for approval.
In his eight years on the job in Surrey, he’s now seen thousands just like this.
The plans show an outlying deck and a basement with rec rooms, kids rooms, sewing rooms — “all these rooms that make no sense,” he tells The Province.
He is then handed another set of floor plans, either by the builder or homeowner.
“The revised floor plan? They show secondary suites going in,” says the appraiser, who estimates there are up to 40,000 illegal suites in the city — nearly double the 20,000 previously reported.
“The day (homeowners) get their final occupancy, the day it’s done — they enclose the rear patio and now you’ve just added another 1,000 square metres to your house.”
Not only are thousands of Surrey’s homeowners collecting undeclared income, he says, they are also saving on taxes when the suites are popped into place after city approval.
The owner of an in-demand design firm in Surrey says he’s aware of the illegal suite issue, but insists his company creates plans in accordance with zoning requirements.
“We discuss with the homeowners/ home builders as to their requirements and then prepare house plans,” he said.
“Our design company plays no role during or in the construction of the homes.”

“Of the nearly 4,000 residences developed in Surrey in 2012, 1,500 were single family units, namely in Newton and South Surrey.
The city issued permits for 427 secondary suites at 67 coach houses in 2012.
Surrey’s manager of bylaw enforcement, Jas Rehal, says his staff and the city’s building department communicate their bylaws and policies to developers.
“Generally, they’re abiding,” he said.
“These suites in Surrey, they’re all over the city,’ said Rehal. “When brought to our attention, we go out there, state the fee … once a suite is identified, we start billing.”
Annual fees for a secondary suite range between $500 and $1,300, which includes infrastructure costs such as garbage pickup and water use.
It can cost a homeowner up to $10,000 to properly outfit a home with separate piping, wiring and a firewall to make a suite legal.”

– from ‘Surrey’s illegal suites look like an epidemic to some’, Mike raptis, The Province, 4 Mar 2013

Jesse (YVRHousing) calls these suites ‘townhouses rotated 90 degrees’, and we think that’s spot on.
They are products of high prices: owners build and manage them to allow themselves to over-reach on price in the hope of further price increases.
This is an inefficient, clumsy and ugly way for a city to increase density.
– vreaa

47 responses to ““There are up to 40,000 illegal suites in the city of Surrey — nearly double the 20,000 previously reported.”

  1. …”inefficient, clumsy and ugly.”… TskTsk… I thought we were going to lighten up a bit on the ElBherthanis, ED?

    [NoteToEd: in your best EastEnder, WorkingClass PythonPalin accent: “It’s the land ‘o opportunity, Guv! They’re givin’ ‘i away… Simply givin’ i’ away in Calgary.” Psst… whatever you do, just don’t tell Mayor Watts or Premier What’sHerNameAgain?…]

  2. Ralph Cramdown

    It’s hard to call this behaviour ‘illegal’ if, once discovered, all that happens is an inspection and a fee increase. How about an order to rip out all work done without permits and a large fine?

    And a complaints based protocol? Gimme air, all that’s needed is a statistical scrutinization of water and electric bills with inspections of the top 10% of users.

    • Never gonna happen. It’s in the city’s best interest to offload as much of the liability onto the homeowner while supposedly making a dent in the affordable housing dilemma. For the very same reasons, we have seen a surge in the # of “unlicensed” daycares all over the country.

    • What about creating a small tax credit (BC only) for the renters. Once they report their address and they claim their rental credit against their address…..then you know who is not reporting their rental income….then you know if the have a legal suites. If their rental suite is not legal,, then you can send your city appraiser to check on the building…

      • Real Estate Tsunami

        Lee, brilliant!
        But wont fly, would upset ethnic vote.

      • ls in arbutus

        Wow, that is a great idea!!

      • Don’t they have that in Ontario already?

      • UBCghettodweller

        I like it. To be fair, those who report their suite and the landlords already have the suite registered, there should be a tax advantage or some perk extended to the landlord as well, at least as a gesture of good faith.

        I’m a strong believer in using both the carrot and the stick.

      • Realtor behavior

        That’s what renters can do in ON, claming rent for tax credit. TO have enough immigrants to vote, I believe!

      • The last thing you want as a renter is a credit from the government. Immediately, your rent increases by the amount of the credit. Tax payers dollars go straight to the homeowner. Never forget the unintended side effects.

  3. These share the same bloodlines as the original 50 yr old Vancouver Specials, do they not? Of course, they don’t build ’em nowadays like they used to.

  4. Getto of Surrey knows all about it. It’s hard to get a vote if you go after the residents, so they just look the ofter way. Nothing new.

  5. Don’t ask, don’t tell, this is a “problem” too big to deal with.

  6. Too Bad CRA doesn’t investigate….I wonder how many could afford their mortgage payments if they had to pay taxes on their rental income? Funny how tax evasion doesnt seem so bad when your the one making money ! LOL!

    • Without rental income, many buyers wouldn’t qualify for financing. Anyone going this route without later disclosing income on tax return should be prepared to receive one of those dreaded brown envelopes from CRA many months after their taxes were filed. How hard would it be for CRA to cross reference CHMC’s database? Not very. What CRA really needs to be on the lookout for are sellers of rental properties (disguised as “principal” residences) that having been reaping all sorts of windfall profits tax free for many years/decades.

    • On the flipside, when your taxes go up you will know who to blame: the speculators who are not “paying their fair share.” Think about that when you are filling out your taxes over the next several weeks.

      Also, the developers should be heavily fined if they are participating in this activity.

      Furthermore, the prices of houses would go down if these landlords were not funnelling every penny (oops) of their rental incomes into the payments without having to pay any taxes.

  7. UBCghettodweller

    >separate piping, wiring and a firewall to make a suite legal.

    BWAAHAHAHAHAHAHAH. Seriously guys? Being a accustomed to living in basement suites, some mouldy, others not, I don’t think I’ve seen this once, even in the ones that were the more above board declared ones.

  8. Quick! Somebody better tell Fitch about all those extra, ‘uncounted’ suites!… [it could affect their fundamental/stochastic modelling]…

    [G&M] – Canadian home prices overinflated by 20 per cent: Fitch

    The rating agency’s estimate of how inflated prices are was included Monday in details of a new financial model that it is proposing to use to estimate the potential losses on pools of residential mortgages, which form the backbone of a number of securities that Fitch rates.

    The agency said that, based on its sustainable home price model, it estimates “at the time of publication, that prices are overvalued by approximately 20 per cent in real terms across Canada, with regional variations.”

    http://tinyurl.com/bnd7hlb

    [NoteToEd: Speaking of Fitch’s ‘NewFinancialModel’, it is with great pleasure than I can reveal to you and DearReaders its hitherto secret algorithms: http://tinyurl.com/dyzouls ]

  9. “Oh, Robo!… you filthy, filthy beast!.. Don’t you… don’t you… dare… touch me there… No… not there…. There! Ever again!”, HostageComment plaintively exclaimed… whilst taking care to strategically re-adjust her crumpled bodice in such a way as to leave no doubt in the DastardlyRoboRedaktor’s imagination as to what, specifically, he had been ‘forbidden’ to touch…

  10. This is not just a Surrey phenomenon.
    Next door to my east Van abode is a recent build. Newest .7 fsr. Two basement suites on a 33 X 114 lot. Next door to that is a .6 fsr, also with two additional ground level suites. None registered. Additional strain on infrastructure with no municipal tax revenue is clearly a problem. I have suggested that owners and tenants refrain form leaving their numerous vehicles in front of my house with limited success. Problem is that there are no restrictions on residential parking for residents of the street. 3 hour limit only applies to non residents. So, if I report them, I lose any claim to on street parking. They have also taken to using any unfilled space in my garbage can when set out for collection. No win.

    • Ralph Cramdown

      Bone up on the BC building code and any municipal bylaws, then go to your building permits department, and maybe your city councillor, and strongly encourage them to take the maximum steps allowed by law. I say bone up first because it’s been my (limited) experience that these guys don’t know what power they have under the acts and bylaws. They mostly just inspect the law-abiding when called to.

  11. I love how tax evasion is encouraged and condoned in this province, where the average “suite” owner fails to declare rental income, and then thinks its not “technically” tax evasion.

    If the media portrayed at businessmen not declaring his income, the public would generally agree that it was tax evasion and he would be condemned as not contributing his “fair share.” If the media portrayed a homeowner as not declaring his illegal suite income, the public would turn a blind eye noting that “everyone does it” and that you “pretty much have to have that rental income to afford a house nowadays?” Amazing how we can justify things….

    Meanwhile, the federal government is facing a massive debt and deficit. If the CRA went after the tens of thousands of homeowners with undeclared rental income, we could be balancing the books and paying down the debt much faster.

    Of course, as a lowly renter, the CRA just came after me for another $100 bucks after they re-assessed my portfolio earnings and found that $400 dollars was not accounted for when I transferred portfolio management companies.

    I am happy to pay it as a law abiding citizen….

    But I am not happy that I am subsidizing a bunch of law breakers….

    This re-assessment has just pissed me right off. I am going to be phoning CRA and making an anonymous tip on every single house that I know has a suite…I will call every three months to ensure follow-up.

    This double standard has got to stop….

    • I think CRA don’t care is because they currently have way bigger fish to fry, like all those building contractors making $100K+/yr in undeclared cash income. The secondary suite is a really small potatoe not even worth their time. Not to mention the fact that most homeowners can easily write off most of the income against expenses like mortgage interest, insurance, property taxes, etc, etc. Actually it is the insurance company that can screw the homeowner over more as any undeclared rentals in the house can make the insurance policy null and void. 🙂

      • CRA cares if you are pulling in 10 to 20 thousand a year and not declaring it as income. The problem is they are a Federal agency while secondary suites come under municipal bylaw. If municipalities were to hand over information on those suites there would be taxes to pay. And don’t forget the proceeds from the sale of a house with a rental suite is treated differently than a private residence for tax purposes. Incidentally, the regulations covering landlord obligations including taxation are a part of the Landlord and Tenant act. It specifically sets out that owners who let pemises must pay taxes. They are considered a business. Read it here:

        http://www.tenants.bc.ca/ckfinder/userfiles/files/Landlord%20Guide%20(English).pdf

        Or just go to CRA and download the handy form T77 and be sure to send a free copy to the neighbor (with the illegal suite) who has been irritating you and bragging about how rich they got on their house these past few years.

      • Ralph Cramdown

        They’re not frying any fish at all. “This is the first time the Canada Revenue Agency, the largest department with 45,000 employees, has issued notices since Finance Minister Jim Flaherty unveiled his budget. Notices will be going to 400 auditors in the areas of criminal investigations, special enforcement and voluntary disclosure programs.” — From the Notional Past, June 27, 2012.

      • I have heard several times in various media interviews that CRA generally don’t go after tax cheats unless the rate of return is 300% or higher. Part of the reason is the expenses involved and there is a big backlog of investigations they don’t view anything less as worth their time. Shows you just how much tax cheating there is in this country.

        Yes they would care if you aren’t declaring in $20K rental income but given the hurdle rates and the fact that net income is likely much lower, I don’t think they will go after that many people.

      • And that is why it pays to have an amicable divorce if you plan on keeping the house for yourself.

  12. The inspection process is useless by the way. inspectors must give notice to homeowner, generally at least 24 or 48 hours, before they can come to inspect. Even then the homeowner might not be obligated to allow them entrance as they can say the inspectors lack a search warrant. A lot of experienced Surrey landlords can disconnect all appliances, move into storage, put up dry wall in front of the outlets, etc in afternoon and so can easily any inspection and no having to incur any fines or anything. All these stuff is make life worse for the tenants since they can be kicked out with minimal notice so the landlords can do the quick reno. And yes, the rental agreements includes clauses just for this kind of events, and if you don’t agree, then you don’t rent.

    A tax credit scheme similar to daycare is likely better at catching this kind of activity and tax it properly. However those are easy to get around as well and CRA can’t simply pass the info to municipality without violating some privacy laws.

  13. Btw, even if housing prices are low, these type of things will still be going on, except then it will be tax free additional cash to be spend rather than going into the mortgage.

    • Real Estate Tsunami

      Are you saying that lower house prices will not lead to lower rents?

      • why would I lower rent if people are willing to pay my current asking rent?? I’m no saint and I don’t rent out of charity and I don’t imagine many others are either. If good tenants are willing to pay $1K/month to rent say my basement, why would I rent for less?

  14. You don’t need separate wiring or piping for a legal suite. The bare essentials:

    1. Separate ventilation OR smoke-triggered damper. Usually they opt to close off the vents and install baseboard heaters. Pretty cheap to do.

    2. 5/8 Type X drywall on ceiling OR the “better” smoke alarm (photo electric / ionizing combo I think).

    3. Separate entrance door (not slider), OR 5/8″ Type X drywalled common entry hall for both units.

    4. Minimum bedroom window sizes (also true for any bedroom window in the entire house – not usually an issue).

  15. Co-worker of mine small time developer
    He builds those stucco two stories. He told me builds the house with one legal sweet after inspection puts a second one in.
    Vancouver and Burnaby he is not developing right now because lots are to expensive.

  16. “…firewall to make the suite legal.” ROTFLMAO! We have a freaking bathroom door between us and the common laundry room, with the hinges on the exterior side. My landlord couldn’t wrap her head around how that was a problem when we pointed it out.

    When we moved here three years ago Telus told us they couldn’t hook us up with a telephone and internet because the grid in our area was full. I assume because they’re servicing two or three families per residence instead of one that was in the plans. We got Shaw instead. Naughty, naughty, they charged us and downstairs full price for cable and internet when it was all coming off the same line. Naughty naughty. They claimed that they fixed that and brought in a new line off the street for downstairs, but when Telus came a month ago and installed all new wiring they said we were still sharing an internet connection. We switched from Shaw because the internet was aggravatingly slow. Now we know why. Wonder how many other people are paying full price for half the service.

    • …”paying full price for half the service.”…

      There’s a great joke that would round out that remark… but we’d probably lose our MPAA PG-13 rating…

      [NoteToEd: See! Occasionally, I am capable of erring on the side of restraint.]

  17. Craigslist adds basement sweets for rent in the British properties nothing says Baller like yeah I live in a house in the British properties but I need to rent out the sweet to afford the mortgage and of course I pay tax on the money I recive for rent.

  18. I like how the Bing Thom article over on VCI puts “single family” in quotes, basically saying: we all know these are multi family dwellings, why don’t we deal with this fact?

  19. Re: CRA audits… I really do wonder what the criteria is… After my experience I would swear they all get drunk, paste your sin on the wall with a hand full of others and start throwing darts. Yup, I’ve been audited… I do my own taxes, I usually don’t bother claiming small amounts… Result of audit: CRA owed me something like $23 by the end of it…. So they spent I don’t know how many man hours to pour over my 4 inches of paperwork only to give me a bigger refund… I like to think that experience has put me on the good girl list and I won’t have to sent them all my junk again 🙂

  20. This is not as simple as it looks. When housing was cooling down in lower mainland only surrey was fairing well.Houses were affordable coz of rental income.
    The rent is affordable in surrey just coz of these suites.I pay 600 in basement suite whereas its 1100 in condo/apartment unit.I cant afford 1100.
    If land lords pay more they r gonna charge more.

  21. How do I find out if I’m renting an illegal suite? I just know that there is a door connecting my suite with the upstairs part of the house. If so, what would the average rent be for a 2 bedroom suite and/or how much are landlords allowed to charge for rent?

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  24. I live in a basement suite in Surrey! It’s illegal this house has 2 of them our suites rent is 850 the one in back is 1150 . That’s 2000 a month unclaimed on taxes and landlord brags there is 16 ppl all total living in this place. We are moving . The noise is crazy ! Breakers poping. No heat last winter . No hot water Luke warm hard to wash dishes . The fridge stopped working lost all our food they did nothing
    This is crazy there getting away with this our government sucks I’m ashamed to be a Canadian.

  25. 596 29th Ave E: skinny skinny long lot bought in summer of 2014 for $966K and resold four months later for $905K. With closing costs, that’s an expensive hair cut. Now, it’s listed with a new-build at $2.899M – $568K over last assessed. Crazy money for a skinny staged house and laneway in a blech location. Blech. The noise of the buzzing fridges will be omniprescent. Maddening. Convenient to the graveyard.

  26. 8150 Prince Edward: thrown up in 2015 – obviously built with the hope of HAM – but no intelligent Chinese would waste $3.048M on a house in this crappy location – west-facing, near the bottom of the hill, and too close to a T intersection. That the agent extolls the fact that there is an illegal “studio” suite is par for the course. Nice shot of the toilet though – with the reflection of the photographer in the granite tile – would work in the film Psycho. You’d have to be nearing the age when you’re looking at granite headstones to cough up this amount of cash, along with a lungful of phlegm, for this turkey – a stupendous ask.

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