As we celebrate the new year, it’s only natural to look back at the past year in real estate. Here in Toronto, one of the most exciting takeaways from the year is the development of the Toronto laneway house.
If you’re not exactly sure what a laneway house is, you’re certainly going to want to read this. This is especially the case if you happen to live on a laneway or if you’re in the midst of a property search.
We’re uncovering what exactly a laneway house is, who is eligible and how it could help to pay your mortgage.
What is a Laneway House
So, what exactly is a laneway house, you ask?
A laneway house is a structure that is built on the land of a pre-existing home. Here in Toronto, most laneway houses are constructed in the backyard of a resident’s home. In order to build a laneway house, your home must be connected to a laneway.
Many homeowners with such a laneway are choosing to invest their money into building a laneway house. Once finished, the homeowners can find a tenant to rent their laneway house or opt for a short-term rental.
Who Can Build a Laneway House?
If your house backs onto a laneway in Toronto, there’s a strong potential that you could be granted the opportunity of building a laneway house.
Here in Toronto, there is a city map that outlines all of the approved laneways in Toronto. If you’re home is located on one of the designated laneways, you can move onto the next step in determining your eligibility.
Of course, not all laneways are going to be approved for a laneway house. In fact, there’s very strict criteria that a property must meet in order to be determined eligible. For example, one of the criteria is that your property line must be located within a certain distance from a fire hydrant.
If you’re interested in learning whether your property could be approved for a laneway home, be sure to contact the city. From here, you will need to have a city representative visit your home to determine your eligibility. Next, you will have to attain an official building permit before commencing the construction of your laneway home.
Why Invest in Building a Laneway House?
To start, why don’t we talk numbers?
Let’s say that building a one bedroom laneway house costs $350,000. This cost includes labour as well as all building materials and furnishings. Remember, this is on land that you already own so there’s no need to purchase the land in which it resides.
Now let’s compare this to purchasing a one bedroom condo in Toronto. In today’s market, a one bedroom condo is likely going to cost around $600,000. It’s also important to note that on top of paying your mortgage, you’ll also have to pay maintenance fees with a condo.
Whether it’s a one bedroom condo or a one bedroom laneway house, a tenant is likely going to pay a similar price to rent either unit. These days, a one bedroom unit in Toronto rents for around $2300 per month on average.
With a laneway house, you can invest significantly less money than you would buying a condo. Yet, you’re still capable of achieving a similar priced tenant.
Is This the Future of Toronto Real Estate?
Okay, okay, the “future of Toronto real estate” as a whole might be a little dramatic.
But, it’s safe to say that laneway housing is an incredibly exciting development for the Toronto real estate market. Remember, there’s not exactly a ton of vacant land kicking around Toronto these days. This means that finding vacant land to build residential homes in Toronto doesn’t happen often. When vacant land is available, it’s often reserved for a commercial structure or for a large-scale condominiums.
With a laneway house, there’s no need to find vacant land to build such a structure. Instead, the homeowner can simply build the structure on their own pre-existing land. Down the line, the homeowner may have the option to sever the lot for a price.
Are you looking to buy a house on a laneway? If so, be sure to work with a real estate agent that is well versed in the art of the Toronto laneway house.
Our Nobul Verified Agents will help you find the perfect laneway house for you.