Toronto’s New Laneway Suite Pilot: How Does It Work?

By: Steven Liambas
February 29, 2020

In June 2018, the City of Toronto started the laneway suite pilot project which allowed the homeowners of eligible lots to build laneway residential units on the same property as the main house, to be rented out or used as a secondary home. This landmark move has been a significant step forward for Toronto as it will help bring new gentle-density housing options to desirable neighbourhoods that are otherwise out of reach for most young couples and families.

What is a Laneway Suite?

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A laneway suite is a secondary home that is detached from the main house on the property, located at the back of the lot facing the laneway. A laneway suite is smaller than the main house on the property and must be under the same ownership, leading many homeowners to build them for rental income.

What you Need to Know First

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Having access to a public laneway does not mean your property is automatically eligible for a laneway suite. Here’s what you need to know before you start designing your laneway home.

Eligibility: The property has to meet certain conditions to be eligible and most importantly its location and access to emergency services. In addition, the dimensions and layout of the lot and the existing house together with other considerations will determine if building a laneway suite is possible.

Dimensions and Character:

The laneway suite can be built to maximum dimensions of 10 m (33 ft) long and 8 m (26 ft) wide and up to 6m (no more than two storeys). The dimensions are also limited by the size of the lot and the amount of space taken up by the main house. (illustration here)

Getting your Plan Approved: First, you need to determine if your property complies with the zoning bylaws. If your property and the design meet the zoning requirements, you can apply directly for a building permit to be approved As-of-Right.  

If you don’t meet all the zoning requirements, then a Minor Variance would be required, and the project would be discussed at the Committee of Adjustment. If the application does comply with the zoning bylaw, the next step would be applying for a permit, which is reviewed within ten business days. A project will be subject to a Zoning Certificate before the permit application could be submitted.

Utilities Hook-Up: Usually all the services have to be sourced from the main building, and this introduces a challenge for some of the houses. However, we tend to prefer this model over the City of Vancouver’s laneway program where the laneway suite connects to the street, but the upfront costs are very high.

How can a Laneway Suite Produce the Best ROI?

1.    Increase Property Value and Earn Passive Income

Adding a laneway suite on your property does require an initial investment, but it provides income and can substantially increase the value of your property as properties with secondary units that can be rented out are very sought after. Laneway suites offer a fantastic way to generate passive income by renting out your laneway unit while at the same time still maintaining your privacy. And while building a laneway suite requires a financial investment, when compared to buying a condo unit in a similar location it is far more economical and provides a product that is more desirable in the market.

2.    The Affordable Housing Rebate Program

The City of Toronto has a great initiative that provides financial incentives to landlords who provide affordable housing in the city: The Affordable Laneway Suites Pilot Program will provide funding in the form of a loan of up to $50,000 for eligible property owners developing a laneway suite. The loan will be forgiven 15 years after construction completion. The rent being charged cannot exceed the City of Toronto Average Market Rent, by bedroom type at any time during the 15-year affordability period.

3.    Smart Construction: Use a Modular Home

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Minimize the high costs of building in Toronto by finding smart workarounds. Opting for a modular unit is a great way to get a better quality home, cut the cost substantially and reduce the hassle of trades and long construction time as your home is assembled on-site in just a few days once the foundation and utility connections are in place. Also, this approach helps us build more houses with less material wasted and practice more environmentally-conscious construction methods.

The Laneway Suite Pilot Program is an exciting new opportunity for the City of Toronto and Toronto homeowners. This new policy helps Toronto accommodate more urban dwellers in a way that doesn’t disturb the unique fabric of each neighbourhood. It also means that homeowners have more options for adding character to their property and increasing its value.

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