Guide
The Toronto multiplex guide
Rules, unit counts, conversion vs. new build, costs, timelines and financing. What to understand before you build a multiplex in Toronto.
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What is a multiplex?
A multiplex is a house-scale residential building with two to six self-contained units on one lot. Each unit has its own kitchen, bathroom and entrance. Duplexes, triplexes, fourplexes and sixplexes are all multiplexes.
For homeowners, a multiplex can mean rental income, room for extended family, or a way to unlock the value of a large lot. For the city, it adds homes to neighbourhoods that already have transit, schools and services.
Why Toronto, and why now?
Several policy changes have lined up at the same time:
- More units permitted. Fourplexes are allowed in residential neighbourhoods citywide, and sixplexes in selected wards.
- Lower municipal fees. Development charges have been waived for many small multiplex projects.
- Tax relief on new rentals. Qualifying new purpose-built rental projects may recover GST and Ontario’s portion of the HST.
- Rental financing. Buildings with five or more rental units may qualify for CMHC MLI Select.
Each of these has eligibility rules. Treat them as reasons to investigate, not guarantees.
How many units can you build?
| Location | Up to | Notes |
|---|---|---|
| Residential neighbourhoods citywide | 4 units | Conversion or new build |
| Toronto and East York wards + Ward 23 | 6 units | Sixplex permissions |
| Most lots, in addition | + garden or laneway suite | Lot conditions apply |
See the sixplex ward map for an overview of where six units are permitted.
Rules to check before you design
- Zoning: permitted building type, height, depth, setbacks and lot coverage
- Building code: fire separation, sound control, exits, headroom
- Heritage: listed or designated properties and heritage districts
- Trees and ravines: protected trees and ravine-protected areas
- Servicing: water, sewer, electrical capacity
- Fire access: especially for garden and laneway suites
Conversion, addition or new build?
- Conversion keeps the existing structure and divides it into units. Usually faster and cheaper per unit, if the house is in good shape.
- Addition / extension adds a storey or footprint. Useful when the structure is sound but too small.
- New build replaces the house. Best for poor structures or maximum unit counts.
Our services pages explain each approach in more detail.
Costs and timeline
| Stage | Typical time | Cost |
|---|---|---|
| Feasibility | [x] weeks | [$ placeholder] |
| Design & engineering | [x] months | [$ placeholder] |
| Permits | [x] months | [$ placeholder] |
| Construction | [x] months | [$ placeholder] |
| Contingency | — | [x]% |
Financing
- Up to four units: typically financed as a residential property; ask your lender about rental income treatment.
- Five or more units: commercial rental financing, including CMHC MLI Select, may be available.
- Construction financing: draws are released as work is completed and inspected.
Read more in Financing a Toronto multiplex: CMHC MLI Select explained.
- 25-year amortization
- 30-year amortization
Calculated with Canadian fixed-rate convention (interest compounded semi-annually, paid monthly). Illustrative math only, not a rate quote.
Source: Calculation: standard Canadian mortgage payment formula
View data table
| Interest rate | 25-year amortization | 30-year amortization |
|---|---|---|
| 3% | $4,732 | $4,206 |
| 3.5% | $4,993 | $4,476 |
| 4% | $5,260 | $4,755 |
| 4.5% | $5,535 | $5,042 |
| 5% | $5,816 | $5,337 |
| 5.5% | $6,104 | $5,639 |
| 6% | $6,398 | $5,948 |
| 6.5% | $6,698 | $6,264 |
| 7% | $7,004 | $6,586 |
A worked example
Rental buildings are valued on their income. That makes the cap rate one of the most important numbers in any multiplex pro forma:
Value = NOI ÷ cap rate. A small change in cap rate moves the valuation a lot. That is why lenders and appraisers look closely at it.
Source: Calculation: value = NOI ÷ cap rate
View data table
| Cap rate | Value |
|---|---|
| 3.5% | $2,857,143 |
| 4% | $2,500,000 |
| 4.5% | $2,222,222 |
| 5% | $2,000,000 |
| 5.5% | $1,818,182 |
| 6% | $1,666,667 |
| 6.5% | $1,538,462 |
Try your own numbers in the return calculator.
| Item | Amount |
|---|---|
| Purchase price | [placeholder] |
| Construction budget | [placeholder] |
| Total project cost | [placeholder] |
| Monthly rent (all units) | [placeholder] |
| Annual operating costs | [placeholder] |
| Net operating income (NOI) | [placeholder] |
| Value at completion (NOI ÷ cap rate) | [placeholder] |
| Cash out at refinance | [placeholder] |
| Equity left in the project | [placeholder] |
How we can help
Start with a free consultation. We will look at your address, explain what is likely possible, and tell you whether a full feasibility study is worth it.
Sources
- City of Toronto: Multiplex housing TODO: verify
- City of Toronto: Expanding Housing Options in Neighbourhoods TODO: verify
- City of Toronto: Development charges FAQ TODO: verify
- CMHC: MLI Select TODO: verify
- Canada Revenue Agency: GST/HST new residential rental property rebate TODO: verify
- Government of Ontario: Building more homes TODO: verify
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Find out what your property can become
Tell us your address. We will check zoning, outline your options and give you an honest view on whether a multiplex makes sense. Free, with no obligation.