Laneway Housing – Everything You Need To Know

We’ve all seen them at some point or another. It is those detached but completely self-sufficient units that are usually built at the rear of your existing property. They also open up onto the laneway. These units being found all over are called Laneway Houses and are one of the ways to ease the pressure of affordable housing.   These small homes have been seen popping up all over Toronto, and tend to go from about 550 sq ft to just under 950 sq ft. The laneway house is generally calculated in sizing as about 15% of the total lot size + about 40 sq ft of storage. 

There are various types of laneway housing available. The most common are standard stick-frame construction (framed with wood 2x4s), container housing, or barndominium type homes.

Generally, if you are considering building a laneway house, you should be at least 16’ in distance from the house to the laneway. Of course, there may be other requirements and it would mean getting into contact with your expert contractor.


Even though the cost may seem a bit prohibitive, the value in rental returns will far outweigh the expense of construction. Yes, maybe the laneway house is a detached unit with a bit of addition built onto it or the conversion of a garage. The consistently hot market and housing shortage in Toronto means that finding someone to pay top dollar will be easy. 

You can easily see the laneway house as another way to boost the amount of properties in your portfolio.

Why Have A Laneway House?


One of the more common reasons people build a laneway house is to help in generating some additional revenue maybe in short or longer term rental. Additionally, maybe some individuals want to rent out the larger home property, so they move into the laneway house and open the larger home for lease or rent.

Curb Appeal

Having a laneway house on your property has also led to increased curb appeal and also property value. Toronto has a high demand for housing and this also lends to the property owner benefitting, by having this laneway house.


This also is advantageous since there are no shared walls and the tenant can have their own private entry without bothering the landlord. This may be good for adult kids who may not yet be able to afford an apartment but want their privacy. 


Also adult kids who may not be able to have their privacy but due to the difficulty of finding and affording an apartment in Toronto may use the laneway house.  

Laneway Housing Requirements

In order to get going on your laneway house you will need a building permit. This is whether you are going from ground up or renovating the building. Even though you can design the laneway house on your own it is always recommended that you hire an expert contractor. This will ensure that you meet the requirements of the Ontario Government.

At each stage municipal building inspectors will review the work progress at various stages. Things such as insulation, service connections, heating, plumbing and other building code requirements are checked for compliance. 

Along with this, many persons may wish to build beyond the minimum requirements of the Toronto Building Code. This is ideal especially when converting an existing building like your garage into a livable space.

The energy efficiency, health and comfort of the tenants at the end of the day is the most important thing in the laneway house.


The beauty of building a laneway house is that there are various forms of financing and Canadian mortgage options available and this can assist in the expense hurdle. Of course it makes sense to check through all of the variables to your design as the cost of construction will be linked to the size of the laneway house. Be sure to consider how complex the structure may be. In many instances, pricing may be as low as $300,000, as a starting point.

Having a financial broker may also be beneficial to get going as well. They will assist in finding some of the best financing options around.