Rules & incentives
Ontario's rules made plain.
What Bill 23 changed, what's generally permitted, the minimum size for a legal unit, and the grants and financing that can meaningfully lower your build cost.
What Bill 23 changed, what's generally permitted, the minimum size for a legal unit, and the grants and financing that can meaningfully lower your build cost.
Ontario's Bill 23, the More Homes Built Faster Act (2022), allows up to three residential units on most urban residential lots, without a minor variance, as long as the units meet the building code and local rules. In practice this means a primary home plus, for example, a basement suite and a garden suite. Several municipalities have gone further and now permit up to four units. Ontario Regulation 462/24 (November 2024) further clarified the additional residential units framework on most urban lots. For additional units on urban lots it overrides angular-plane and floor-space-index limits, allows at least 45% lot coverage, and caps the required separation between buildings at 4 m.
Provincial permission is the starting point, not the whole story. Lot size, setbacks, height, lot coverage, conservation authority jurisdiction, heritage designations and servicing capacity are all decided locally. This is exactly why every DivineADU project begins with a property-specific feasibility review.
Every municipality differs, but most ADU permit packages include:
DivineADU prepares and coordinates every item on this list.
Last reviewed: October 2026. Requirements change; confirm with your municipality.
Ontario's tiny home guidance sets a combined minimum living area of roughly 17.5 m² (about 188 sq ft): a 13.5 m² combined living/sleeping area, a 3.0 m² bathroom, and a 1.0 m² laundry. In practice, comfortable rentable suites are considerably larger, but the floor sets the legal minimum.
approximate combined minimum for a legal unit (17.5 m²)
A growing number of Ontario municipalities offer grants, fee waivers and charge exemptions for additional units. Availability and amounts change. Confirm with the municipality before budgeting.
Last reviewed: October 2026. Programs change; confirm with your municipality.
| Municipality | Incentive | Link |
|---|---|---|
| Cambridge | One-time grant up to $10,000 | Official page |
| London | London's 2026 ARU construction grants (up to $45,000 affordable / $20,000 standard) and permit-fee waiver are fully allocated and closed (permits issued Apr 29 to Sep 7, 2026). A repayable ARU loan remains available. | Official page |
| Barrie | 50% off ARU building permit fees for applications submitted Jan 1 to Dec 31, 2026; full rebate if final inspection is within 12 months of permit issuance (no later than Dec 31, 2027). | Official page |
| Mississauga | 2nd & 3rd ARU exempt from most municipal charges; permit fees refunded | Official page |
| Burlington | ARU fee waivers ran until Dec 31, 2025, and the forgivable loan program closed Oct 1, 2025. Confirm current fees with the City. | Official page |
| Waterloo | No City development charges on the first two additional residential units (education charges still apply) | Official page |
| Toronto | Development charge deferral for ancillary second units | Official page |
| Ajax | ADU grant intake closed; mapping tool and CMHC catalogue designs available | Official page |
Effective January 15, 2025, CMHC's insured refinance program lets owner-occupiers refinance up to 90% loan-to-value on properties valued up to $2,000,000 to fund the construction of up to four self-contained suites. The secondary suite must be used as a long-term rental (90-day minimum). The proposed federal Canada Secondary Suite Loan Program never launched; Budget 2025 confirmed it will not be implemented. The owner or a close relative must live on the property, there is no equity take-out, and CMHC approval is needed before or early in construction.
CMHC refinance detailsGenerally, no. An ADU adds value to your property but is part of the same parcel of land, so it can't be sold on its own. The main exception is creating the unit through a Plan of Condominium, which can allow separate ownership. This is uncommon and involves additional legal and approval steps. Kitchener, for example, notes the plan-of-condominium route as a possibility for additional units. If separate ownership is a goal, raise it early so we can assess feasibility for your municipality.
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