The idea of laneway houses, also known as garden suites, can cause quite an uproar among people who have never encountered such an idea. One house, one yard is and has been the norm for as long as anyone can remember. At most, you’d find some larger homes with basement apartments or an attached in-law suite. However, with the housing shortage Toronto is currently facing, adding additional units to a single house can offer many benefits. In this post, we’ll talk more about secondary suites and whether or not building one is a good idea for existing homeowners.

What Is a Secondary Suite?

A secondary suite is like a “mini home” that cozily resides within the main house, usually a basement apartment or nanny suite. Separate “guest houses” were once the domain of the wealthy, so they could entertain without sharing their space. 

However, as demand for housing increases in Toronto, separate suites are becoming more popular. So next time you think that “shed” or detached garage looks particularly fancy, look again! That quaint and cozy little building might actually be someone’s home!

The terms “laneway houses” and “garden suites” are often used interchangeably, but there are minor differences between them.

  • A laneway house backs onto a publicly accessible laneway. At one point, these were the only type of separate dwellings permitted in Toronto.
  • A garden suite can be built on nearly every residential property in Toronto as long as the lot is large enough. In 2022, the city expanded permissions for garden suites to increase the desperately needed housing supply.

The two have more similarities than differences, so for simplicity’s sake, we’ll refer to both as “laneway houses” throughout this article.

Toronto is growing, and opportunities abound for both residential owners and investors! Where should you start your search? The posts below can point you in the right direction:

Why Build a Laneway House? 

As you can imagine, building a laneway house can be more costly than renovating a basement into a secondary suite. Why go to all that trouble and expense? As a landlord, think about it from a tenant’s perspective. Who would want to live in a cold, damp basement with little natural light when you can have a ground-level suite with large windows and absolute privacy? With all these benefits, your income potential can be much higher than other types of secondary suites.  

And there is another benefit to consider. Think of the resale value of your home when adding a laneway house. For now, they are a relatively new concept in Toronto, and few existing properties have them. If you ever decide to sell your home, you’ll very likely see its value soar in comparison with others in your neighbourhood.

The Risks and the Legal Nitty Gritty

Considering all the benefits of laneway houses, you might be eager to grab a hammer and start building. However, like any great investment, there are some risks you should be aware of. Then there are legalities. Red tape is something all homeowners must face when considering any upgrade or addition. 

Plus, construction projects can be unpredictable, with unexpected costs and delays that can pop up at every turn. Building a laneway house requires a significant upfront investment before you can start reaping the rewards of rental income or equity growth.

Before you go all-in, it’s crucial to do your research and determine if it’s financially feasible for you at this time. If you decide to proceed, get ready to navigate the world of permits, insurance, and other necessary documents. Does it sound overwhelming? The steps may seem endless, but your local real estate agent can help you navigate the process.

Do you want to know more about investing in Toronto? Here is a post you will love: What Is BRRRR Real Estate Investing?

Beyond the Financial Benefits

They say money makes the world go around, but everyone knows there’s more to life than bank accounts. And when it comes to laneway houses, it isn’t just about the money. There are many benefits to the community and the environment, including:

Eco-friendliness: By their very nature, laneway houses are warm, comfortable, and close to all major conveniences. They also have a small carbon footprint, making them particularly desirable to younger renters. The environmental benefit is a win-win for everyone, homeowners, tenants and the planet!

  • A helping hand for the next generation: Housing costs are soaring, and many homeowners are rightly concerned that their children and grandchildren will never be able to afford a house of their own. A laneway house can be the foot in the door a young person needs to break into a challenging market and start building equity. 
  • A boost for the community: Laneway houses promote a sense of community and enhance the overall neighbourhood. You can have a friend or family member living close by without sacrificing privacy.
  • Design and customization: Working with an architect to build a unique, personalized space is one of the most exciting aspects of building a laneway house. It’s like having a mini dream home right in your backyard!
  • Creative uses beyond rental income: Do you have an artistic flair or have always wanted to learn to sing without family members barging in on your practice time? A laneway house is the perfect spot for creative spaces, home offices, rehearsal studios, guest quarters, or even Airbnb rentals. You can maximize the value of your property without even having a tenant.

The potential for laneway houses is just one more thing that makes Toronto perfect for families. But there are many reasons, and you’ll find more in the posts below:

Build Now or Build Later?

Real estate has long been considered one of the safest investments, and the reason is simple. No matter what happens politically, economically, and in spite of any technological breakthroughs, one thing will always be sure. People will need housing. And with more immigrants coming to Canada over the next few years, the already high demand will soar.

Building a laneway house can be an excellent way to grow your net worth and generate passive income without searching for a second-income property. However, that doesn’t mean everyone should do it. It’s a great investment, but it can also be a hassle. 

And here’s something exciting you should know; you may not even have to build a laneway house to profit from the concept. Ask yourself, “Does my home have the potential?” If so, many companies in Toronto offer consultation assessments to make prospective buyers aware of the opportunities a property provides. What does this mean for you as a homeowner? You could command a higher price for the mere potential of adding a laneway house while avoiding the trouble of building it yourself.

Toronto real estate is exploding with potential and opportunities just like this. With the help of a local real estate expert, you will know exactly where to look. 

Are you ready to explore the unlimited possibilities within the Toronto real estate market? We are happy to help you every step of the way! Reach out to us at, or call (416) 485-7575 for more information or to get started.