London builder bets on ‘flex haus’ to ease home affordability crisis

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LONDON, ONT. — A new type of starter home is beginning to pop up in London — one that comes with the promise of helping priced-out first-time homebuyers finally break into the housing market.

Popularized in more expensive cities such as Toronto and Vancouver, these homes come with an up-to-code additional secondary unit already baked into their design, allowing owners to rent them out or have family live in them to help cover the mortgage payments.

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For some industry observers, these types of properties could be an important piece to solving the local housing affordability crisis that has seen home prices skyrocket in recent years beyond the reach of many Londoners.

Already, secondary units, also being promoted heavily by the provincial government, have been growing in popularity locally as people look for alternative sources of income amid challenging economic conditions.

Last year, for instance, London city hall issued 260 building permits for such units, a 24 per cent increase over 2022.

As of May, 176 such permits had already been approved by London this year, with 55 of those issued that month alone — three fewer than all recorded in 2019.

“There is certainly a significant increase in trend on the new build side, where these are being included already,” said Jared Zaifman, chief executive of the London Home Builders’ Association. “But at the same time, we’re seeing people that currently own their own homes looking to find more utilization of their property.

“So, we’re seeing kind of a nice mix on both fronts, between the new builds and the renovations.”

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On the new builds front, one company in particular has taken the lead on building these properties in London: Ironstone Building Co.

Dave Stimac, the company’s president, said the first such project for them came after the province, in a move to boost housing supply, changed regulations that made it easier for secondary dwellings to be added to a property.

“We had a stock of homes that were basically at inventory state, in various degrees of completion . . . so we went through the painstaking process of converting our first inventory home into a ‘Flex Haus,’” Stimac said, using the term they came up with to describe these properties.

Soon, the realization set in that it was easier to include the units straight into the design of new homes.

“London’s always been a great market for people to buy homes in terms of affordability and pricing, but that has changed quickly over the last five to seven years,” Stimac said. “And that has also provided us with the necessity of creating different solutions without just having a single-family home with a white picket fence.”

Ironstone, however, took the idea one step further, partnering with RBC so that the potential income generated by renting the additional units is also factored into a buyer’s application, making it easier for them to qualify for a mortgage and make the home “attainable.”

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“It essentially reduces the burden on a buyer because it shows other financial considerations that can help that person purchase the unit,” Stimac said.

Besides the financial support, Ironstone also helps buyers obtain a rental license and provides them with information on how to be a good landlord and how to pick good tenants.

So far, the company has built 15 “Flex Haus” homes, which come with either one- or two-bedroom units, and 12 of which have already been sold.

But Stimac said he’s so confident in the concept, his plan is to make such homes a bigger portion of their portfolio going forward, with plans of building about another 15 as part of new developments.

“For home affordability, or attainability, we need to think this way,” Stimac said. “I won’t suggest it’s mainstream quite yet, but people are starting to get it, so we’re throwing more resources towards this.

“We’re trying to make it a larger portion of our inventory of homes.”

Other developers are taking notice too, Zaifman said, adding he expects more of these homes will be built in the city in the coming years.

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“We’re now seeing other builders start to go in this direction, again, partly from an affordability perspective, but also because we’re certainly seeing a lot more multi-generational homes,” he said.

“So, some of our builders are looking at changing, even some of their existing plans, to see how they can accommodate and make this work.”

jjuha@postmedia.com

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