Additional residential units
Learn about additional residential units (ARUs) and how to add them to your property.
On this page
- What are additional residential units?
- ARUs add more homes
- Zoning regulations
- Required permits and licences
- How to add an additional residential unit
- Apply for an ARU Grant
- Contact us
What are additional residential units?
Additional Residential Units (ARUs) are separate, self-contained living spaces within a home or on the same property.
Ontario now allows up to 3 units on every residential lot.
Each ARU has its own entrance, kitchen, bathroom, and living area. ARUs can be inside a single detached, semi-detached, or townhouse building, or in a backyard Coach House.
ARUs provide extra housing on a property. They can be used by family members or rented out.
ARUs add more homes
ARUs add more housing while using existing roads, utilities and services. Waterloo is one of the fastest-growing cities in Canada, and more homes are needed.
Right now, many residents can’t afford a home in the city. ARUs help by:
- adding more housing choices
- creating more affordable rental options
They also also give homeowners the option to add rental units to their property.
Zoning regulations
To address the housing crisis, the City of Waterloo has updated its Zoning By-law. These changes allow:
- up to 4 units on a low-rise residential property
- buildings up to 4 storeys in all low-rise residential areas
Required permits and licenses
A building permit is required to begin construction of an additional residential unit. Apply for a home renovation or additions permit on the building permits page.
If you are planning on renting out an additional unit, you must apply for a rental license. Learn about the requirements and how to apply on the rental licences page.
How to add an additional residential unit
Read our downloadable ARU toolkit to help guide you through the process of adding an additional rental unit.
The guide helps you:
- add ARUs: convert spaces, build coach houses, or expand homes in Waterloo
- get permits: follow zoning rules, apply for permits, and meet building codes
- plan costs: budget for fees, access incentives, and generate rental income
City staff are also exploring incentives to help offset the costs of building additional rental units.
Learn more about the ARU toolkit’s development and share your feedback on Engage Waterloo.
Additional resources
Check out the Ontario Second Unit Guide – a detailed online resource on building an ARU, including regulations and requirements.
CMHC's Housing Design Catalogue includes a range of designs for different housing types and site conditions, including ARUs and fourplexes.
Apply for an ARU Grant
Get funding to build an Additional Residential Unit (ARU) on your property. We are offering grants to help homeowners create more affordable rental housing. Funding is limited – we are accepting applications while funds are available.
Two types of ARU projects are eligible for funding:
- Detached ARU – up to 50% of project costs, to a maximum of $30,000. These include separate buildings such as a coach or laneway house, usually in the rear yard.
- Interior ARU – up to 50% of project costs, to a maximum of $20,000. These are self-contained units within an existing or new home, such as a basement apartment or separated suite.
Who can apply
Property owners can apply if:
- the property is in an area where ARUs are permitted under Zoning Bylaw 2018-050
- the project meets all program requirements
- construction has not yet started
- the unit will be rented to an eligible tenant at an affordable rate for at least 5 years
Review the full program guidelines in Appendix A of the June 2025 staff report (PDF).
Email ARU@Waterloo.ca if you have questions or need help with your grant application.
You can also apply to the Region of Waterloo’s Secondary Suites Program, which offers up to $25,000 for units rented at an affordable rate for 15 years.
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ARU Grant Program requirements |
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Review the full guidelines in Appendix A of the June 2025 staff report (PDF). Funding for this program comes from the Housing Accelerator Fund and is limited. We issue grants while funds are available. Building and construction
Grant payment and documentation
Tenant and rental rules
2025 maximum affordable rent and incomeUse these numbers to confirm whether your unit and tenant meet the affordability rules.
We recommend that all approved applicants get independent legal advice, at their own cost, to review and explain the terms and conditions of the grant. These costs are not considered eligible project expenses. |
Contact us
If you have any questions, email us at ARU@waterloo.ca.