Should you install a laneway home vs. Basement suite? When installing a secondary suite, you may need to choose between both secondary suite options. Real estate prices are climbing higher in Ontario, and affordable housing is scarce. Now is the right time to add a laneway home or basement suite to meet the higher demands on affordable housing and unlock opportunities for rental income. To help you make the best choice based on your unique scenario, we’ve written this detailed article on all critical priorities for building a laneway suite or basement apartment.
What is a Laneway house?
Laneway homes are self-contained housekeeping units, often referred to as tiny houses, coach houses, or carriage houses. They are often standalone but can be semi-detached. You will find them located in the backyard of a primary dwelling. Often, these laneway structures served the primary residence as a vehicle garage. So, laneway suite designs are compact dwelling units that are retrofitted. A laneway home is accessed via a laneway. Some may even have two laneways, as with a corner lot.
Some municipalities even allow for a basement within your laneway home, which can be advantageous but costly to execute. Laneway house floor plans must include essential living spaces but can also be designed to include a ground-level parking spot. Unlike other detached dwelling units, laneway houses are typically built on smaller lots and generally have lower construction costs. The existing building envelope on the site largely determines a laneway house’s size, shape, and design. It should be noted that while laneway housing can be an attractive option for homeowners looking to add more living space to their property, there may be additional zoning regulations or fees associated with constructing a laneway house, so it is important to consult local government regulations before beginning a build.
As laneway houses become more commonplace, builders are challenged to create comfortable and functional interior spaces in smaller footprints. To make the most of the limited square footage, designers must think holistically about how all the spaces will be used and optimize layouts accordingly.
What are Basement Suites?
Basement suites are often referred to as accessory apartments and basement apartments. They are self-contained living spaces located on the lower level of a single-family home. Dedicated or shared entrances can access the secondary suite in the basement space. The OBC does not demand that basement suites have a dedicated entrance. Still, it is often more appealing to the space’s occupants and offers more convenience when moving furniture in and out of the basement.
As a self-contained space, your basement suite design features a living area, a full kitchen, and a private bathroom with one or more bedrooms. In rare cases, a newly built single detached or semi-detached home will contain a basement-dwelling unit. It is more common for a basement apartment to be added after the home is constructed. Also, the OBC offers reduced requirements for basement apartments within existing homes for more than five (5) years.
Also, adhering to local zoning bylaws is essential when creating your basement suite. Depending on where you live, additional permits or inspections may be required to renovate.
Comparisons and Similarities: Laneway Home vs. Basement Suite
Similarities
Basement suites and laneway homes offer the opportunity to generate rental income and create an independent living space. Whether renovating or creating new laneway homes or basement suites, both require building permits, which means adherence to municipal bylaws.
Differences
However, the most obvious difference is their location. Laneway Homes takes advantage of the space in the backyard. In contrast, basement suites use the basement of the primary dwelling. Hence, basement suites have a level of reduced privacy and independence. In comparison, laneway suites offer a higher level of confidentiality to tenants. It is a requirement in many cities that allow laneway suites to be connected directly to city service. This can include water, hydro, gas, and sanitary, whereas a basement unit ties into the existing service of the building.
Basement suites and laneway homes also impact your primary living spaces differently. Basement suites do not alter the exterior aesthetics of the main house. In contrast, laneway homes will change your backyard’s appearance. However, a basement will require natural light typically supplied by a window in the basement. Alternatively, a laneway home can offer options with the exterior wall of the existing or newly built structure. Despite this flexibility that a laneway homeowner has at their disposal, similar to a basement apartment, the spatial separation plays a significant role in where these openings appear. So, you need to be very thoughtful about every design element.
Cost and Returns: Basement suites versus laneway homes
Laneway suites require building standalone structures that don’t already exist. However, many factors are involved in estimating the cost of laneway homes; on average, a laneway home needs between $300,000 and $500,000 for construction in Ontario. In contrast, you need $60,000 to $90,000 to finish a basement suite. Some factors include existing or retrofit, materials finishes, design complexity, and unit size. As expected, laneway suites generate higher rental income compared to basement suites. This is because laneway homes provide more independence and cost more to build, carrying higher perceived appraisal value. As of February 2023, a two-bedroom laneway home costs around $3,000 to $3,200 monthly. In contrast, the average monthly rent for a two-bedroom basement suite is $ 1,800 to $2,000.
Pros and Cons of Laneway Homes
Pros
Flexible home for aging in place
Laneway homes are an excellent option for individuals wanting to age. It offers a means of downsizing the laneway home and creating a rental income from the primary house to support retirement. Or, a laneway home can serve as space for a relative or non-relative caregiver to live near.
Studies suggest that multigenerational households in Canada increased to 50% between 2001 and 2021. So, more seniors are living with their grandchildren. Hence, laneway houses allow you to create an entirely separate space for older family members. It’s a cost-effective solution, allowing family members to live nearby, where it would have been unaffordable.
Cons
Losing outdoor space
Installing a Laneway suite means you will lose some of your outdoor space. That said, the right professionals can help with laneway house floor plans that optimize space efficiently.
More expensive
Laneway house construction will take longer than many other types of additional housing. You’ll also have to spend a lot of money to create the average laneway house.
Construction chaos
Building another home on your property will mean dealing with construction issues for some time. It will get loud and dirty with surprises that sometimes cause delays.
Pros and Cons of Basement Suites
Pros
Easy on your budget
Basement apartments are fantastic if you have a smaller budget but want to enjoy the extra income. They don’t need additional space, so you can install them if you have limited outdoor space.
Added living space
If you just need an added living space, basement suites are practical. You won’t spend much money. And you can still accommodate guests, family members, and even tenants with great flexibility. It’s also easy to turn basement suites into a workplace, gym, or even extra storage, if you’d like.
Less impact on outdoor spaces
Basement suites have a lower impact on your outdoor space than laneway suites. So you don’t have to sacrifice your garden and backyard space.
Cons
Sacrifices indoor space
That said, basement suites save outdoor space, but this means you’re sacrificing indoor space. This can potentially be an issue for growing families later.
Not a lot of privacy
Some homeowners are cautious about installing a basement suite. This is because no matter how much you soundproof them, there will still be a lot of noise transfer. And you’ll run into your tenant frequently, which further minimizes privacy.
Lower rent potential
Compared to laneway homes, basement suites would bring half the rental potential of a similar-sized laneway home. That said, you’re still gaining many returns on that extra space.
Factors to consider when deciding between a laneway home and a basement suite
Despite all the similarities, differences, benefits, and drawbacks of laneway homes and basement suites, every construction is tailored to your needs. Let’s look at some considerations you need to think of when deciding between a laneway home and a basement suite.
Assessing ideal tenant profile
Generally, secondary suites like basement and laneway homes attract similar tenant types. But here are the unique tenant profiles for both scenarios.
Ideal tenant profiles for basement suites
- Budget-conscious individuals: People looking for a more budget-friendly housing option than standalone structures. These people often have financial constraints.
- Urban professionals: Urban professionals may choose basement suites when they are convenient to central or urban locations.
- Students: Students may love a basement suite if it’s the most affordable option near their educational institution.
- Families with budget constraints: Families looking for a cost-effective solution without the expense of a standalone structure.
Ideal tenant profiles for laneway suites
- Independent professionals or couples: Laneway homes attract tenants seeking more independence or exclusivity. They are ideal for these professionals or couples.
- Families seeking exclusive living: Families desiring a single-family kind of home but without that kind of budget. They may find laneway suites more suitable as a blend of comfort and privacy.
- Empty nesters: Empty nesters looking to downsize while maintaining independence would love laneway homes
- Higher budget renters: Tenants with a higher budget than an apartment or condo would love laneway homes.
Design Requirements
For laneway homes, you need to consider many things. Some essential factors include setbacks from the property lines, separation from the principal residence, and soft landscaping. Also, pay attention to building height based on the size and layout of your existing dwelling.
There are also restrictions on the shape of the second storey of the laneway house, especially if it would be too close to the primary dwelling. However, laneway suites do not require parking spaces for cars. Depending on your municipality, they may need two bike parking spaces within the buildable footprint the setbacks allow.
Budget
You’ll need at least two bedrooms for a decent, attractive, standalone rental unit. Our earlier estimates suggest between $300,000 to $500,000. But one Toronto homeowner spent over $330,000 to build a two-storey laneway house with a one-bedroom suite over a garage. In contrast, a Vancouver homeowner spent over $510,000 to make a $1,040-q.ft two-storey laneway home (plus an enclosed garage)
Depending on your budget, you can also qualify for a financial incentive. For instance, The City of Toronto recently launched its Affordable Laneway Suites Pilot Program. The program offers up to $50,000 in loans and is forgivable in 15 years from when the first tenant occupies the laneway suite.
Even so, a basement suite is more affordable on a tight budget.
Need for privacy
Laneway suites offer more privacy than basement suites as they are separate from your home. But you’ll need to consider how much that extra outdoor backyard space means to you. And whether it’s worth the sacrifice. Basement suites, in contrast, are more connected to your home, hence more challenging to maintain privacy.
Availability of space
Most regulations, like Toronto, do not allow laneway home constructions above two stories or 6 metres tall. Laneway suites can be built on various lot sizes, including smaller ones. Basement suites, in contrast, require a certain amount of space in your existing home. If sacrificing storage and privacy isn’t your thing, then a laneway site may be better. However, if you want to tone down your budget, and keep things a bit simpler, basement suites are the option. Nevertheless, laneway suites and basement apartment decor ideas need space-saving furnishings such as wall-mounted beds and Murphy beds.
Purpose of the space
You need to be upfront about who will use the extra space. If you are renting and have a bigger budget, laneway homes are attractive to many tenants. In contrast, basement suites are better for a lower budget. In the same vein, if you are creating for an older family member, or have plans to transition to your laneway home as you age, then a laneway home can be the better option.
Conclusion
Like many projects, your key priorities are your budget, circumstances, and goals. Suppose you are building a secondary suite for income. In that case, you need to consider how your budget compares against the returns you would expect.
Also, look at the long-term picture. Fortunately, your BCIN designer and building permit expert are ready to guide your vision tailored to your existing property. At Property Pathways, we’re prepared to help you compare and contrast laneway homes against basement suits to determine the best for your unique situation. Contact us today.
