When the BC NDP government introduced new housing legislation in November 2023, it focused on the “missing middle.”
The idea was to enable more density in existing neighbourhoods and more housing options within financial reach by enabling “small-scale, multi-unit housing” or SSMUH (pronounced “smoo”), such as multiplexes.
The legislation required municipalities of more than 5,000 people to amend their bylaws to allow for three to four units on lots previously zoned for single-family or duplex use, and six units on larger lots previously zoned for single-family or duplex use and close to frequent transit networks.
Bill 44 went on to be adopted by nearly all B.C. communities, but experts say the hard part is only just beginning.
Builders told BIV that while small-scale, multi-unit housing has now been unlocked across the province, there hasn’t yet been uptake on a large scale, given high construction costs and other impediments.
The local multiplex industry is a hodgepodge of boutique builders, many of whom aim to assist homeowners with the entire process. They often have strong relationships with vendors and trades, yielding time savings and cost control.
Some builders focus on buying “end-of-life” properties in order to redevelop them into multiplexes, while others offer joint ventures or “co-development” opportunities to mom-and-pop homeowners.
Standardization and economies of scale may still be far off. The business opportunity is certainly there—67,000 single-family lots have been rezoned in Vancouver—but so far, multiplexes are only being built in piecemeal fashion.
“It’s a new area everyone’s exploring,” said Suraj Jhuty, co-principal of Vancouver-based Theorem Developments.
There are two basic types of multiplex projects. A single-family home can be torn down and multiple units erected from scratch, or additional units can be appended to an existing single-family structure.
In Vancouver, the latter is generally reserved for character homes eligible for the city’s character retention program, which encourages homeowners, builders and developers to retain existing character homes. During construction, a home would be moved to the front of the lot, and infill housing would be built behind it.
“You have to have a pre-1940 house, and you have to put a covenant on the property saying that you won’t tear down that house after it’s been renovated,” said Bryn Davidson, co-owner and lead designer of Vancouver-based Lanefab Design/Build.
“We’ve done a number of these projects, but it’s not a very wide-scale thing and it takes a lot more time.”
James Livingstone, managing partner of Lightwell Homes, said his company has 14 multiplex projects in Vancouver at present. He said his clients generally fit into three buckets.
There are developers who are switching to multiplexes from duplexes or single-family homes, homeowners who hire a custom homebuilder to build a multiplex from the ground up, hoping to earn rental income in the future, and those somewhere in the middle.
This includes joint ventures or “co-development” arrangements where developers and homeowners partner up under agreements that vary widely.
One benefit of the new SSMUH system is that the process can go much faster, Livingstone said. There is no zoning and no public hearing.
Generally, it takes less than 12 months to receive a building permit, and then another 12 or so months for construction, he said.
As for cost, Livingstone said it depends on the size and number of units, but that the total cost can range from about $4 million to $8 million. Private lenders or credit unions often provide the debt portion covering 70 per cent to 75 per cent of the total cost.
Sometimes, Lightwell buys the property from the homeowner, who invests a portion of the proceeds into the project, with the company guaranteeing the bank debt.
Other builders quoted $650 to $900 per square foot all-in, with construction costs in Vancouver about 10 per cent to 15 per cent higher due to the city’s more-stringent building bylaw.
Financing can be a challenge, said Theorem’s Jhuty. His company works with lenders like Vancouver City Savings Credit Union (Vancity) and Prospera Credit Union.
“With a homeowner asking for X-million amounts of dollars, they get a little bit hesitant,” he said.
Jhuty said any homeowner who wants to pursue a multiplex project should do their homework by interviewing multiple builders, looking at their past experience, visiting their sites, obtaining preliminary cost estimates, reviewing draft contracts and speaking to references.
Multiplexes still face obstacles
Experts say barriers to widespread adoption include high construction costs, a skilled-labour shortage, new tariffs on building materials, homeowner illiquidity and municipal variation.
“Even though the province wants to see this, we’re seeing that the rules of every city are very different,” said Lanefab’s Davidson.
Another challenge is that in Vancouver, much of the land is too expensive. It’s not priced based on density, but on single-family exclusivity, he said.
“The challenge is just that a lot of the single-family land in Vancouver is just so expensive that you would need a lot more density for it to make sense economically as multi-family housing as opposed to, say, an exclusive mansion,” Davidson said.
While the new zoning allows proponents to bypass neighbour notification, public hearings and other former requirements, Davidson said the province should go further and make the multiplex approval process no different than the approval process for a single-family house.
Manuel Miguelez Kuthy, co-owner of Vancouver-based reVISION Design + Build, said he expects multiplex demand to grow, but that consumer awareness remains a challenge.
“There’s a lot of skepticism at the beginning, mostly because it’s been placed on homeowners to do [multiplexes] themselves,” he said.
Already, the B.C. and federal governments have released free standardized home designs to accelerate SSMUH creation. Net-zero multiplexes are also in vogue.
“At the end of the day, the requirements and the needs of our city and our region … are going to be there for quite some time until we all, in different ways, contribute to it,” Kuthy said.
“It’s a different type of product that … gives homeowners an opportunity to be part of the game and also contribute to the betterment of our city and society.”
