Due to the housing shortage in urban areas, laneway houses or coach houses have gained popularity in recent years.
Laneway houses are compact, secondary dwellings typically built in an existing property for additional room or rental income. As for Canada, especially Toronto, these small houses have become popular because of their potential value, extra space, etc.
While laneway houses offer several advantages, you must consider some drawbacks before building one. In this article, we will explore the advantages and disadvantages of laneway houses to help you make an informed decision.
Vancouver was the pioneering city in Canada to permit laneway house construction, though the laneway house must not exceed 16% of your overall property’s area. Calgary also has laneway houses, but it does not regulate short-term rentals.
What Is a Laneway House?
Laneway houses or granny flats are small buildings, typically in the backyard of a property or in the garage. Laneway houses have all the components of a typical home: a kitchen, bathroom, living area, and such, making them a very considerable choice for renting or additional space.
Laneway houses come in different sizes. They vary in shape and area depending on how many rooms they have (typically 1 or 2).
The Advantages of Laneway Houses
Laneway houses bring so many benefits. You should consider building/getting a laneway house if any of the advantages below enhances your living situation.
Increased Housing Options
It is evident that we have encountered overpopulation in urban areas. A housing shortage is the natural outcome of living in busy cities like Toronto.
Laneway houses enable additional home space in densely populated towns to ease housing shortages by adding more units to the existing buildings.
Rental Income
Having a laneway house in your backyard can be a new source of income. Homeowners can rent out these compact homes. The number of people looking for laneway houses is increasing daily due to their accessibility and low prices. You can use your extra space as a financial aid.
In municipalities such as Vancouver or Toronto, laneway house rent varies from $1500 to $2500 monthly. This certainly is a considerable amount to help the homeowners with their mortgage and other expenses.
Increased Property Value
Having a laneway house in your property can increase its real estate value. Potential buyers are thrilled to use your compact house as an extra room, sustained living conditions, etc. The additional living area makes your home more attractive and practical.
Sustainable Living
Compared to traditional homes, laneway houses are greener. The energy and resources to build and maintain a laneway house are far less than a conventional house. Laneway houses are promoting a new method of living to reduce our carbon footprint and energy consumption.
Flexibility In Taste
Laneway houses offer a variety of choices in terms of design and use. You can customize your laneway house to match your aesthetic taste or make it specifically to meet your requirements. Whether you want an office, a guest room, a rental unit, or even a meditation space, laneway houses allow you to prioritize your needs for their design.
Multigenerational Living
We have all seen movies of families living in one big mansion or house. However, not all of us can afford that if we ask to be close to our family; besides, traditional homes can withhold independence from larger families. Laneway houses are an excellent approach for families to live together but with enough privacy. They can be used as a living space for your grandparents, grandchildren, relatives, or guests.
Proximity To Your Tenants
This factor particularly affects homeowners who rent their laneway houses. In most cases, it is usually tricky to get in touch with your tenant to address the living situation issues or go over some contract materials. However, if your tenant lives that close to you, distance is no longer an issue for communication.
Nevertheless, as a homeowner or a tenant, you should always respect and keep others’ privacy to arrange a comfortable living environment.
The Disadvantages of Laneway Houses
As promising and stunningly practical laneway houses appear, they also present some flaws. You should consider all the aspects and drawbacks before purchasing/building a laneway house.
High Expenses
Though it is financially reasonable to rent a laneway house than a traditional home, it is not always easy to build one. Building a laneway house can be expensive in cities with high land construction costs.
Homeowners must consider their initial investment and conclude if the outcome overweight’s the overall expenses. In most cases, renting or the resale value of your laneway house makes up the money you spend and gives you profit. Nevertheless, high costs are a genuine concern in building a laneway house.
Permit Laws And Zoning Regulations
Even though laneway houses are trendy, they are not within the laws of some cities. Besides, if a municipality allows laneway house construction, it has strict zoning regulations and building codes to maintain a sustainable environment.
If you intend to build a laneway house on your property, you should examine the permitting process and comprehend the local laws concerning your situation.
Privacy Concerns
As discussed in the advantages of laneway houses, these compact homes allow larger families to live independently. However, privacy is still an issue if you are a tenant or a homeowner.
Even though a laneway house is a separate building from the main property, there can still be noise disturbances, poor personal space, or security issues due to proximity.
Maintenance Resources
Homeowners are obligated to attend to the laneway houses as traditional homes. They are responsible for repairs, utilities, and upkeep, which can be a costly and time-consuming burden.
Moreover, if the laneway house is for personal use, homeowners must consider the overall expenses of required resources for their property.
Overpopulation And Traffic
Renting the laneway house on your property increases the number of people living in your neighborhood without a change in the parking situation. This overpopulation will likely cause traffic disturbances in your street and a limited number of parking spots for everyone. Besides, increased population density might unsettle some neighbors.
Risk of Resale Value
We mentioned that laneway houses might increase your property’s real estate value. However, not everyone considers these compact homes an asset. Homeowners must comprehend that a laneway house in their backyard may appear as a liability to some buyers. They should also consult a designer before building a laneway house to optimize their home’s curb view and minimize the possibility of reduced resale value.
Higher Taxes
By building a laneway house and expanding your property, its value increases. It is only natural that the higher home value results in higher taxes.
Suppose you have a laneway house on your property. In that case, we recommend you read the tax regulations concerning your situation (whether it is a personal space or a rental unit) because each condition has a specific set of rules for tax payment.
Water Utility Bills
Despite the fact that electricity bills are separate for the homeowner and the tenant because of individual meters, the water utility is not. Homeowners are obligated to pay their whole property’s water bill.
It is common for the owners and the tenants to compromise an agreement. However, legally speaking, you can only hope your renters don’t enjoy long baths.
Final Remarks
Laneway houses have many advantages to offer. They promote housing options, rental income, and sustainability for a greener life. Nevertheless, homeowners must take the drawbacks of laneway houses into consideration before attempting to build one. Construction permits, zoning regulations, high expenses, and privacy issues are some concerns for building a laneway house.
Homeowners must be entirely aware of their local laws concerning laneway house construction. They should also weigh the pros and cons of building a compact home in their backyard to avoid potential investment issues.
Ultimately, laneway houses are a promising and valuable asset in your property if planned and executed correctly.