Lot Severances: Unlocking Value and Housing Supply Through Smart Infill Development

For developers across Hamilton, Halton, Niagara, and beyond, lot severances are emerging as one of the most practical and profitable strategies to unlock hidden value in existing neighborhoods. By dividing larger parcels into smaller, buildable lots, developers can create new housing opportunities and maximize their return on investment—without needing vast tracts of undeveloped land.

Two unit severance in the core of Hamilton. The developer created two units in the place of a small single storey house with a large lot.

What is a Lot Severance?

At its core, a lot severance is the process of splitting a single property into two or more parcels that can each accommodate their own dwelling. This is done by applying to the local municipality, ensuring that the new lots meet planning regulations such as frontage, depth, setbacks, and height restrictions.

From a developer’s perspective, a severance transforms one asset into multiple income-producing opportunities. A parcel that once held a single home can now support two, three, or more dwellings—each of which can be sold or rented individually. That multiplication effect is where the real value lies.

The Development Process: From Due Diligence to Proforma

Successful severances start with careful due diligence. After acquiring a lot, a developer must confirm it conforms with municipal planning policies. Key considerations include:

• Lot width and depth: Do the new parcels meet minimum frontage and area requirements?

• Setbacks and coverage: Is there room to build within the regulated building envelope?

• Height and density restrictions: Will the proposed homes fit into the zoning permissions?

Once conformity is established, the next step is financial. Developers will typically prepare a proforma—an economic model estimating construction costs, sale prices, carrying costs, and municipal fees. This projection determines whether the severance is worth pursuing. In many cases, the uplift in land value created by adding new lots more than justifies the upfront planning and servicing work.

Large existing residential lot in the process of being redeveloped. These large lots offer the opportunity to provide multiple units.

Adding Value and Increasing Density

The primary purpose of a severance is to create more housing within the same footprint of land. Instead of one large lot with a single detached dwelling, a developer might produce two smaller parcels, each supporting a new home, duplex, or townhouse.

This incremental densification benefits more than just the developer. Municipalities gain new housing supply and existing residents benefit as well, since higher density makes more efficient use of infrastructure—spreading the costs of water, sewer, and roads across more households.

Corridors with large, underutilized parcels are particularly well suited for severances. In Hamilton, for example, the south end of Upper Sherman Avenue has become a hotspot for infill as deep lots are split to accommodate new housing. Similar opportunities exist in Burlington, Oakville, Milton, Grimsby, St. Catharines, Port Colborne, Fort Erie, and across Niagara Falls, where suburban patterns of development left behind generous lots that can now be reimagined.

Why Severances Represent the Future of Housing

Ontario faces a critical housing shortage, and traditional greenfield development is increasingly limited by geography, infrastructure, and policy. Lot severances represent a flexible, scalable way to add housing where it is needed most—within established neighborhoods that already have transit, schools, and amenities.

By gradually increasing density at the street and block level, severances allow communities to evolve and grow. Severed lots often provide a more affordable supply of single detached homes. This “gentle densification” provides a steady pipeline of new units and helps municipalities move toward long-term housing targets.

Lot severances create two or more units in the place of one unit. Here a single storey dwelling has been replaced with two, two storey dwellings.

The Civil Engineering Challenges

While the planning and financial rationale for severances is compelling, the engineering side can be complex. Developers must carefully evaluate whether the existing municipal infrastructure can support additional homes. Key technical questions include:

• Sanitary capacity: Does the downstream sewer have enough flow capacity for the added units? In older neighborhoods, pipes may already be near their limit.

• Water supply: Can the existing water main provide adequate pressure and volume for new dwellings, including fire protection requirements?

• Stormwater management: Is there an existing storm sewer available? Are on-site stormwater controls required? These systems can consume valuable lot area and drive up costs.

Drainage is one of the most significant hurdles. Municipal rules are clear: no stormwater runoff can flow across private property lines, and the design must cause no negative impacts. All roof and surface drainage must be directed to the municipal right-of-way. Achieving this can require grading modifications, landscape walls, or even underground storage systems to meet the municipal standards and to ensure positive drainage toward the street.

Landscape walls are particularly common in infill projects where grades do not naturally slope toward the road. These structures not only add cost but can also complicate the layout of driveways and yards. Stormwater storage, swales, or infiltration features may be needed, and while effective, they may reduce the net buildable area of the lot.

Each site is unique, and developers must weigh the civil engineering requirements carefully in their proforma to ensure the project remains profitable.

Excavation for a new service connection for an infill lot. Lot severances require new services for one or all of the new units. Proper design is needed to minimize the cost of connections and ensure all municipal standards are met.

Conclusion

Lot severances are a strategic development tool that allows investors and builders to unlock hidden land value, deliver much-needed housing, and contribute to healthier municipal finances. While the planning approvals and engineering design can be challenging, the payoff is significant: multiple new homes where only one stood before.

For regions like Hamilton, Halton, and Niagara, severances represent a practical way forward. By leveraging existing infrastructure, respecting municipal guidelines, and addressing the civil engineering constraints, developers can help shape vibrant, sustainable communities while realizing strong returns. In an era where every unit of housing counts, lot severances are not just an opportunity—they are part of the solution.