You may have come across a residential area where a small house is situated in the backyard or even driveway of a larger one. These are called laneway homes. They’re smaller houses or living spaces built on existing residential lots that open onto a laneway or an alleyway. They are particularly popular in major cities like Vancouver and Toronto and are continually becoming more common.
Why Would I Want One?
Laneway homes provide a few useful opportunities. As it is essentially a secondary residence, it can be used as a space for family members to live in, or as a rental opportunity as the demand for affordable housing increases in Canada. Additionally, they provide more units in neighbourhoods and can make use of underused laneways and turn them into brighter, safer and more vibrant places.
Enjoying our content? Subscribe to our free weekly newsletter to get real estate market insights, news, and reports straight to your inbox.
How Does the Process Work?
Your initial step will be getting your zoning application from your local government. These will be different depending on the province and the city you are choosing to build in. After that, you will need to apply for a building permit and have a structural engineer draft the drawings for the permit. At this point you will need to get your water, electrical and sewage services checked to see if they meet the requirements and if not, have them upgraded. After that, it’s shovels in the ground with underground trenching, building the foundation and finally the home itself! The build usually takes around 4-5 months but can take even longer depending on what kind of amenities your home is going to have.
How Much Would it Cost to Build One?
Building a laneway home costs an average of $150,000 to $400,000, but a lot of this depends on the specifications of your home and what amenities the home is required to have, as well as if you require any kind of professional help. Also factored into the cost should be things like the materials you need to use or the specifications you need to meet. Energy efficiency will need to be met, as well as plumbing, heating and electrical specifications and this will all factor into the cost as well, particularly if they are not of the required standard.
What Are the Pros and Cons of a Laneway Home?
Pros
- Convenience. Your landlord/tenant is just a few steps away! This means if problems arise, a solution may be a few steps away.
- Added security. With such close proximity to each other, you have a second set of eyes watching your home for security.
- Additional income. There is potential to rent out your laneway home for some additional income. Failing that, you can always provide a residence for your family to keep them close by.
- Tax deductions. Assuming you do treat your laneway home as a rental property, certain tax deductions are applicable, such as a portion of your property tax or repairs and maintenance to your laneway home.
- Increased value. Having a laneway home could potentially increase the value of your overall property.
Cons
- It’s a long process. Building a laneway home is a long and potentially arduous process. A zoning application will be required, as well as a building permit, and your property will need to be checked to ensure it meets the requirements for electrical, water and sewage services. Different provinces have varying requirements.
- Lack of privacy. While potentially having your tenant or landlord just steps away from you may seem convenient, being so close to each other can be frustrating privacy-wise. Things like noise, garbage or how active your tenants are should be considered before renting to someone.
- Higher property taxes. As a result of building a laneway home, your property taxes are likely to increase with the value of your property.
- Higher home insurance. Your home insurance will likely become more expensive as you must now cover an additional dwelling and its utilities.
If you have any further questions about laneway homes, you can find out a little more from our interview with Tiny Estates, or you can give us a call.