Date: August 4, 2025
Additional Residential Units on Agricultural Properties
Executive Summary:
This Discussion Paper examines expanding permissions for Additional Residential Units (ARUs) on certain agricultural properties within the Niagara Escarpment Plan (NEP) area. It aims to inform the Commissionโs recommendations for the 10-year NEP review in response to evolving provincial housing and agricultural policy frameworks.
Recent changes to the Planning Act and the 2024 Provincial Planning Statement (PPS) allow ARUs in Prime Agricultural Areas (PAAs), but these do not currently apply within the NEP, which remains the governing policy under the Niagara Escarpment Planning and Development Act (NEPDA). Currently, the NEP permits one attached secondary unit in some land use designations but does not specifically address ARUs in PAAs.
The paper explores the potential benefits of aligning NEP policies with the PPSโsuch as supporting farm families, housing workers, and improving farm viabilityโwhile also highlighting concerns like land use conflicts, loss of farmland, and servicing issues.
It concludes that while expanded ARU permissions may have merit, any changes must align with NEP objectives for environmental protection and sustainable agriculture. Further assessment is recommended as part of the 10-year NEP review.
1.0 Preamble
This discussion paper is one in a series of documents developed to inform the NEC about policies of the 2017 NEP where staff have identified gaps or challenges or where significant changes to the provincial land use planning framework have taken place in recent years. The intent is to provide awareness for the Commission about the issues and potential options which the Commission may then use in the development of a list of recommended topics to be considered by the Minister for inclusion in the 10-year NEP Review.
2.0 Definitions
The following is a select list of key terms defined in the NEP that are relevant to this Discussion Paper.
Agricultural System: The system mapped and issued by the province and is comprised of a group of inter-connected elements that collectively create a viable, thriving agricultural sector. It has two components: 1. An agricultural land base comprised of prime-agricultural areas, including specialty crop areas and rural lands that together create a continuous productive land base for agriculture; 2. An agri-food network which includes infrastructure, services, and assets important to the viability of the agri-food sector.
Compatible: Where the building, structure, activity or use blends, conforms or is harmonious with the Escarpment environment.
Dwelling unit: One or more habitable rooms with a private entrance and designed for the use of one household in which sanitary and kitchen facilities are provided for the exclusive use of such household.
Escarpment environment: The physical and natural heritage features, cultural heritage resources, and scenic resources associated with the Escarpment landscape.
Prime agricultural area: An area where prime agricultural lands predominate. This includes areas of prime agricultural lands and associated Canada Land Inventory Class 4 through 7 lands, and additional areas where there is a local concentration of farms that exhibit characteristics of ongoing agriculture. Prime agricultural areas may be identified by the Ontario Ministry of Agriculture, Food and Agribusiness using guidelines developed by the Province as amended from time to time. A prime agricultural area may also be identified through an alternative agricultural land evaluation system approved by the Province (Provincial Policy Statement, 2014).
Prime agricultural land: Specialty crop areas and/or Canada Land Inventory Class 1, 2, and 3 lands, as amended from time to time, in this order of priority for protection (Provincial Policy Statement, 2014).
3.0 Introduction
In response to a growing housing shortage in Ontario, several changes to the Planning Act and the PPS have taken place in recent years. The intent of these changes was to streamline development processes, reduce barriers for building homes and increase permissions related to certain types of residential development, such as ARUs in settlement areas. This Discussion Paper is focused on the topic of ARUs in PAAs to consider the appropriateness and relevance of this type of development within the NEP area and inform recommendations for the 10-year review of the NEP.
While not defined under the PPS the Planning Act defines a residential unit as follows:
(a) consists of a self-contained set of rooms located in a building or structure,
(b) is used or intended for use as residential premises, and
(c) contains kitchen and bathroom facilities that are intended for the use of the unit only.
An ARU is an independent residential unit that can be attached to, detached from, or located within the primary dwelling on the same lot as a primary residence. These units are often referred to by various names, including granny flats, in-law suites, garage apartments, laneway houses or secondary suites. For the purposes of this Discussion Paper, ARUs are considered synonymous with the term secondary dwelling units used in the NEP.
The NEC regularly receives inquiries regarding permitted uses and applicable policies for secondary dwelling units, both attached and detached, throughout the NEP area. Lot creation policies within the NEP limits the severance of lands in the rural land use designations and PAAs, which may drive interests in ARU development to allow for multi-generational homes or living arrangements to support agricultural uses and agricultural-related uses.
Rural areas face unique challenges from a lack of affordable and attainable housing, which can result in impacts to agriculture, agri-business, and agricultural lands. Lack of affordable or available housing in urban or settlement areas have impacted the cost and availability of rural rental units (ROMA 2022), which are already limited due to restrictive policies related to ARU outside of settlement areas.
Agriculture related housing needs are diverse and effective solutions require comprehensive strategies to address housing shortages while ensuring the long-term protection of agricultural systems and lands (Greenbelt Foundation, 2025). Approaches to creating housing in rural land use designations of the NEP, and specifically in PAAs, needs to carefully balance protection of the rural economy and the Escarpment environment. The PPS and provincial plans, including the NEP, require the protection of PAAs and provide that residential development in PAAs should be limited to that which is required to support agriculture.
Background
Under the More Homes Built Faster Act, 2022, changes to the Planning Act accelerated Ontarioโs framework for ARUs. Since Ontario Regulation 299/19 took effect in 2019, up to three residential units per lot are now permitted โas-of-rightโ in most serviced residential areas outside of the NEP area โeither all within the main building or split between the main and an ancillary structure (e.g., garage). This applies across the province in settlement areas with full municipal water and sewage services, excluding legal non-conforming uses like homes on hazard lands. The More Homes Built Faster Act also removes barriers such as development charges, parkland requirements, minimum unit sizes, and excess parking requirements to encourage ARU creation. For all other areas (outside areas that are fully serviced โ e.g., rural areas, land on partial or private servicing), the framework is discretionary.
The new PPS came into effect in October 2024 and provides specific policies related to residential development in PAAs. While the PPS continues to discourage lot creation in PAAs to prevent incompatible non-farm uses, provisions and limitations for ARUs in PAAs are included in Section 4.3. The new PPS policies seek to address the housing needs of the agricultural community while preserving the viability of agricultural land. While the new PPS may enable this type of residential development in PAAs, the overall agricultural policies within are stronger by requiring municipalities to use a systems approach to protecting the long-term viability of agriculture and agricultural lands.
Although these Planning Act and PPS changes generally apply across Ontario, they do not apply in the NEP area. Under Section 14 of the NEPDA, the NEP takes precedence in case of conflict with other legislation or plan. Therefore, the policies of the NEP with respect to secondary dwelling units continue to apply.
The NEP lists secondary dwelling units as a permitted use in Escarpment Rural Areas (ERA) and Escarpment Recreation Areas (REC), subject to the relevant Development Criteria. These units must be within a single dwelling and are not allowed in detached accessory facilities. They are prohibited in Escarpment Natural (ENA), Escarpment Protection (EPA), and Mineral Resource Extraction Areas (MREA). Secondary dwelling units must be subordinate in size to the principal single dwelling.
The NEP does not specifically speak to permitted uses in Urban Areas but rather states that proposed uses may be permitted, subject to conformity with Part 2, Development Criteria, the Development Objectives and, where applicable, zoning by-laws that are not in conflict with the NEP. Therefore, while ARUs may be permitted as a use in municipal planning documents in Urban Areas, they are limited by the development criteria in Part 2.2.11 of the NEP, which only allows for one attached secondary dwelling unit. Similarly Minor Urban Centres (MUC) are an overlay designation and permitted uses are to align with the underlying land use designation, usually ERA or EPA. Discussion and recommendations related to ARUs in Urban Areas and MUCs is provided in the May 2025 Discussion Paper titled โAdditional/Secondary Dwelling Unitsโ.
Part 2.8.5 of NEP includes policies for โdwelling units Accessory to Agricultural Usesโ and these are intended to provide temporary on farm accommodations for farm labour. The ARU policies in the PPS have broader intent than that purpose. This topic is is reviewed separately in the Discussion Paper titled โFarm Worker Housingโ.
The current NEP policies do not specifically allow or prohibit secondary dwelling units within PAAs. Where the NEP is silent, on policies contained within the PPS, the policies of the PPS continue to apply, where relevant. The development of a secondary dwelling unit in a PAA within the NEP area would be subject to the policies of the NEP but also would need to meet the PPS policies as outlined below.
For comparison, the Greenbelt Plan permits second dwellings within a single dwelling or existing accessory structures on the same lot, outside of the Natural Heritage System. The Oak Ridges Moraine Conservation Plan (ORMCP) allows a secondary dwelling unit in a primary dwelling unit provided it is located outside of Natural Core and Natural Linkage designations.
Specific PPS Policies Related to ARUs in Prime Agricultural Areas:
Section 4.3.2 of the PPS lists permitted uses in PAAs. Section 4.3.2.5 provides โWhere a residential dwelling is permitted on a lot in a prime agricultural area, up to two additional residential units shall be permitted in accordance with provincial guidance, provided that, where two additional residential units are proposed, at least one of these additional residential units is located within or attached to the principal dwelling, and any additional residential units:
a) comply with the minimum distance separation formulae;
b) are compatible with, and would not hinder, surrounding agricultural operations;
c) have appropriate sewage and water services;
d) address any public health and safety concerns;
e) are of limited scale and are located within, attached, or near the principal dwelling or farm building cluster; and
f) minimize land taken out of agricultural production.
Lots with additional residential units may only be severed in accordance with policy 4.3.3.1.c)[1].
Section 4.3.2.6 states โFor greater certainty, the two additional residential units that are permitted on a lot in a prime agricultural area in accordance with policy 4.3.2.5 are in addition to farm worker housing permitted as an agricultural use.โ
5.0 Discussion
PAAs in the NEP and the Provincial Agricultural System:
Page 3 of the NEP provides the following โIn the context of the NEP, PAAs are most frequently found in Escarpment Rural Areas, but portions of the Escarpment Natural and Escarpment Protection Areas may also have PAAs. In the context of implementing the NEP, it is important to understand that PAAs in the NEP Area should be identified in accordance with the broader Agricultural System once established, recognizing both the agricultural land base and the agri-food network components.โ
The province’s preferred approach to designating PAAs in official plans is to have “prime agricultural areas” as a category of land use identified on a land use schedule or map, with corresponding policies in the official plan. Identification and mapping of PAAs is inconsistent throughout the NEP area and for some areas, such as Grey County, PAAs are not mapped within the NEP area. This is an important consideration when contemplating the applicability, relevancy and appropriateness of the current PPS policies related to ARUs in PAAs in the NEP area. Within the NEP, PAAs are not a land use designation. While the NEP indicates the intent to protect PAAs, the policy framework within is not entirely consistent with the approach to mapping and protecting these areas outside the NEP.
As previously noted, the NEP is silent on ARUs in PAAs but has limited permissions for secondary dwelling units where they are allowed as outlined in Part 2.2.11. To enable additional opportunities for secondary dwelling units, or to align with the Planning Act and PPS, amendments to the NEP would be required.
Possible Benefits of ARUs in PAAs:
While the number and type of secondary dwelling units are limited within the NEP to certain land use designations and must be attached, amending the NEP to include expanded ARU policies in PAAs may have potential benefits.
ARUs may support multi-generational housing on agricultural properties.
Could be used as housing for farm labour/agricultural workers or those employed by agribusinesses.
Rental income may provide added revenue and support the long-term viability of agricultural operations.
May reduce the desire or need for severances to allow for the development of single dwellings/retirement lots to enable intergenerational farm transfers.
Potential Impacts of ARUs in PAAs
The purpose of the NEP is to provide โfor the maintenance of the Niagara Escarpment and land in its vicinity substantially as a continuous natural environment, and to ensure only such development occurs as is compatible with that natural environmentโ. To consider the appropriateness of expanded permissions related to ARUs in in PAAs, the objectives of the NEP as well as the objectives of the specific land use designations must be considered. Development criteria in Part 2 of the NEP would apply to the development of ARUs. Impacts of ARUs to the Escarpment that would need to be considered and mitigated via development criteria are as follows:
Servicing ARUs, especially multiple or detached units, requires more water and larger wastewater services and there could be impacts to water quality and quantity and related concerns from NEC staff, municipalities, and the public.
Impacts to key hydrologic features such as reductions in catchment areas or changes to natural drainage and surface water flows.
Impacts to key natural heritage features (KNHF) and loss or reduction of natural vegetation or other natural features.
Visual impacts and alterations to the natural scenery and open landscape character of the Escarpment.
Changes to landforms from cutting or filling to flatten areas for development envelopes.
The creation of large areas of impervious surfaces from development footprints and associated parking, driveways, and other amenities.
Implications for minimum separation distances for agricultural operations.
Key Considerations Related to ARUs in PAAs:
While not entirely unique to PAAs, the following considerations are important and relevant to the topic of ARUs:
Outside of ENA, EPA and MREA, the NEP already allows one attached secondary dwelling unit/ARU on an existing lot of record, provided the development criteria can be met.
The PPS does not allow for the creation of new residential lots in PAAs. ARUs would be enabled in association with a new principal residence only when it is deemed an agricultural use. Otherwise, they would be limited to existing residential uses. The contribution of ARUs to general housing supply may be limited.
There are existing non-agricultural residential uses in PAAs in the NEP area, these properties could be eligible for ARUs via changes to the NEP unless specifically prohibited.
Intensification of residential land use, even as an agricultural use, can impact or conflict with agricultural operations/normal farm practices, including issues related to traffic and farm equipment, and take lands out of production. ARUs should be clustered with existing farm buildings.
The NEP does not have setback, height, or lot coverage requirements like municipal zoning bylaws, and it maybe challenging to determine or limit the size and/or location of ARUs, especially detached structures, in the absence of these controls.
It is not possible to ensure that ARUs are affordable or attainable for agricultural workers and there is no reasonable approach to limiting the occupation of ARUs to families or those working in the agriculture sector. Determining compliance with any such limits would not likely be feasible.
Per the PPS, residential development is to be directed towards settlement areas where appropriate servicing is more likely to be available. Where ARUs may be developed outside of settlement areas, additions or enhancements to private water and septic systems are likely to be required.
If aligned with PPS policies, ARUs in PAAs could be in addition to housing for farm workers, possibly leading to greater intensification and negative impacts to agricultural lands and the Escarpment environment.
Therefore, if policies are expanded to allow more or detached ARUs, consideration of the existing development criteria to identify any relevant and necessary amendments may also be required to ensure there is no damage or irreversible harm to the Escarpment environment, agricultural lands, or the agricultural sector.
6.0 Other Considerations and Relevant Information
The topic of ARUs in PAAs relates to other current issues and policy considerations. These are outlined as follows:
Additional/Secondary Dwelling Units: The Commission requested staff prepare a Discussion Paper regarding Additional Residential Unit/Secondary Dwelling Units to support the development of recommendations to the Minister as part of the 10-year Review of the NEP. NEC staff presented the Discussion Paper titled โDetached/Secondary Dwelling Unitsโ in May 2025 which recommended consideration of the current NEP policies, with specific options, such as aligning the policies related to ARUs in Urban, Minor Urban and Escarpment Recreational Areas with the PPS 2024 and contemplating attached secondary dwelling units, that are subordinate to the principal dwelling in Escarpment Protection Areas.
Farm Worker Housing: The NEP provides specific policies related to dwelling units that are accessory to agriculture for the purpose of providing farm worker housing. Dwelling units for this purpose must be temporary and either portable or mobile unless located within an existing building or structure. A key difference between ARUs and farm worker housing, in both PPS and NEP, is that eligibility for development of farm worker housing requires a demonstration of need. In most cases, where permitted, an agricultural property could have both farm worker housing and a secondary dwelling unit.
Residential Development on Prime Agricultural Areas: Considerations related to residential development on prime agricultural lands are contemplated in the NEP 10-year NEP Review Discussion Paper titled โRural Estate Housing on Prime Agricultural Landsโ. The outcome of the NEP review and how NEC interprets PPS policies related to PAAs may be relevant to this topic. If residential development unrelated to agriculture is restricted in prime agricultural areas, opportunities to further develop these properties by way of ARUs would be also limited.
Housing Supply and Economic Opportunities: Residential development within the NEP outside of Urban Areas and Minor Urban Areas is generally single dwellings on a single lot. Lot creation policies within the NEP are restrictive in the rural land use designations, to preserve the Escarpment environment and meet the purpose and objectives of the NEP. The Bill 23 More Homes Built Faster Act (2022) is aimed at urban or settlement areas and therefore has limited relevancy to most of the NEP area and the recently revised PPS does not promote or direct intensification of residential uses in the rural areas of Ontario.
7.0 Recommendations
NEC staff recommend this topic be further assessed during the 10-year NEP Review to determine if amendments should be made to the NEP to align the current policies with the PPS. However, it is suggested this be approached as a comprehensive review of the relevant policies related to secondary dwelling units and PAAs, as well as the housing needs for the agricultural sector. Should amendments to the NEP seek to enable opportunities for ARUs in PAA, it should be first demonstrated that doing so will encourage agriculture, protect PAAs and not lead to conflicts with agricultural uses, or impacts to agricultural lands. An assessment of the feasibility of limiting ARUs to agricultural uses may also be required.
Under the PPS, policies related to ARU in PAAs are intended to be more restrictive than other rural areas. However, within the NEP, the policies for secondary dwelling units are more restrictive than the PPS and Planning Act policies for ARUs. It may appear misaligned if certain uses, such as ARUs, were allowed in PAAs but not in the rural areas of the NEP, outside of PAAs. This may also be inconsistent with the approach to ARUs in the remainder of the province outside of the Greenbelt.
To date, NEC staff have not recommended expanded and more permissive policies for ARUs in ERA and EPA, other than a suggestion that an attached secondary dwelling unit could perhaps be considered in EPA. The primary rationale for limiting these uses is to discourage intensification, protect the environment and direct residential development to settlement areas. The overall approach should also remain reasonably consistent throughout the Greenbelt, where each of the provincial plans have stated objectives of protecting PAAs. Within the NEP area, policy guidance that speaks to ARUs within PAAs will be challenging given that PAAs are not land use designations and permitted uses are directed by those designations.
The introduction of any new policies or amendments to provide for housing to support the rural economy and agricultural sector should not result negative impacts to the Escarpment environment and must meet the NEP objectives of protecting ecologic and historic areas as well as scenic resources and the open landscape character. Should more permissive policies be considered it is recommended that specific development criteria, like those in Section 4.3.2.5 of the PPS, be contemplated to ensure there are no negative impacts. It may be necessary to introduce new or amended NEP policies/development criteria to ensure this type of development takes place outside of key natural heritage features and hydrological features while also protecting scenic resources and cultural heritage values. The number, size or location criteria could also be considered both attached and detached ARUs (if permitted), to reduce impacts and decrease the amount of land taken out of agricultural production. Consideration should also be given to policies that limit or moderate the size and number of accessory facilities (driveways, parking, etc.) as well as servicing associated with ARUs. Servicing needs and the need for associated policies would also be an important consideration.
8.0 Conclusion
The changing land use planning framework in Ontario reflects a growing recognition of the need for flexible housing solutions. However, within the NEP area, the objective of protecting the Escarpmentโs unique environmental and agricultural character remains the priority.
This Discussion Paper has examined permissions for ARUs in PAAs within the NEP. While ARUs may offer benefits such as supporting multi-generational farming, providing housing for agricultural workers, and enhancing farm viability, they also present risksโparticularly in terms of land use compatibility, servicing constraints, and the potential loss of agricultural land.
The NEPโs current policies are more restrictive than those of the PPS, and the risks related to policy alignment must be considered. The introduction of more permissive ARU policies should only proceed if it can be clearly demonstrated that such changes will support agricultural viability, avoid land use conflicts, and uphold the NEPโs core objectives of environmental and landscape preservation.
As part of the 10-year NEP Review, this topic warrants further study through a comprehensive lens that considers housing needs, agricultural land protection, and the broader policy context. Any proposed amendments should be guided by planning principles that prioritize the long-term sustainability of both the agricultural sector and the Escarpment environment.
9.0 References
Greenbelt Foundation. 2025. Housing Needs and Actions for the Agricultural Sector in Rural Communities Housing Needs and Actions for the Agricultural Sector in Rural Greenbelt Communities
OMAFRA. (2016). Guidelines on Permitted Uses in Ontarioโs Prime Agricultural Areas. https://www.ontario.ca/files/2024-04/omafra-publication-851-guidelines-on-permitted-uses-inontarios-prime-agricultural-areas-en-04–2-2024.pdf
Ontario Ministry of Agriculture, Food and Agribusiness. Prime Agricultural Areas. Prime agricultural areas | ontario.ca
Ontario Ministry of Municipal Affairs and Housing. (2024). Provincial Planning Statement. https://www.ontario.ca/page/provincial-planning-statement-2024
Rural Ontario Municipal Association. (2022). ROMA Task Force on Attainable Housing and Purpose- Built Rentals. ROMA – Foot In the Door
Prepared by:
Original signed by: ___________________ Suzanne Robinson Senior Strategic Advisor |
Approved by:
Original signed by: ___________________ Shawn Carey Director |
Section 4.3.3.1 c) includes provisions related to s residence surplus to an agricultural operation. โ