Laneway Suites Moving Forward

Rental housing is in short supply in Toronto, and the recent federal government changes in mortgage financing rules will likely make it even more difficult to find rental accommodation, since it is now harder than ever to afford a home or condo. Over the past 20 years, the City of Toronto has undertaken many initiatives to support and encourage the creation of ‘second units’ (mostly basement apartments) in Toronto homes, and laneway suites are a form of second unit that is receiving increased attention.

Laneway suites are not new, for example, Vancouver has had laneway suite policies in place since 2009, and about 2,400 suites have been constructed since then, about 300 per year.

A ‘laneway suite’, also called a ‘laneway house’ is a self-contained secondary living unit/apartment next to a public lane. Thousands of houses in Toronto have laneway parking at the rear, an ideal spot to construct a laneway suite. Back in 2006, the City recommended against construction of laneway houses except in very special situations, and very few have been built since then. Several private studies of the feasibility of laneway houses have been conducted, culminating in a 2017 study called “Laneway Suites: a New Housing Typology for Toronto”. Following that most recent study, the City has now recommended changes to the Official Plan and Zoning By-Law to allow laneway suites in the ‘Toronto and East York District’, an area spanning from Parkside Drive in the west to Victoria Park in the east, and from the lake north to (roughly) St Clair/O’Connor drive. There are about 35,000 homes with laneway parking in this area.

The City has developed a set of guidelines to govern the location and form of laneway suites, including:

  • Lot width must be at least 3 m
  • Maximum height 6 m – can be up to 2 storeys plus a basement
  • Maximum length 10 m, maximum width 8 m (lot permitting)
  • The laneway suite must be at least 5 m from the back of the main house for a one storey suite, and at least 7.5 m back for a 2 storey suite
  • At least 50% of the rear yard must be soft landscaping
  • No requirement for parking

The City anticipates that there will be 100-300 laneway suites constructed per year once the guidelines have been implemented.

The application fees for laneway suites will be steep – on the order of $65,000, not including the cost of building permits. The City will likely waive development costs normally applicable to the construction of new detached residential buildings as long as the laneway suite is not severed from the main property for at least 10 years. Severance will be theoretically possible but will be strongly discouraged and likely very rare.

Even with the high application fees,laneway suites can potentially yield very high rents, particularly in the downtown core, and can significantly increase property value for homeowners with the right type of laneway.