As Toronto continues to grapple with a housing shortage, the city is encouraging homeowners
and investors to consider laneway houses—compact, self-contained dwellings built at the rear
of properties that back onto public laneways. Legalized citywide in 2020, these units offer a
unique way to add density without altering the character of established neighbourhoods.
For investors, laneway houses are more than a planning innovation—they’re a strategic
opportunity.
These homes typically range from 600 to 1,000 square feet and can generate $2,500–$3,500/month in rental income depending on location and design. With over 2,400 laneways available for development, the potential is vast.
Where Can You Build One?
Laneway suites are permitted across most residential zones in Toronto, provided the property:
Shares a lot line with a public laneway
Meets minimum lot size and setback requirements
Complies with fire access and building code regulations
Neighbourhoods like Dufferin Grove, Roncesvalles, The Annex, Leslieville, and parts of East
York are particularly ripe for laneway development due to their laneway access and lot
configurations.
What’s Involved in Building One?
The process includes:
Design & Planning: Work with architects familiar with Toronto’s laneway suite bylaws.
Permitting: Submit plans to the City for approval; over 200 permits have already been
issued.
Construction: Costs range from $300,000 to $500,000, depending on finishes and size.
Financing: CMHC now allows financing for laneway homes under new rules, and
Toronto offers incentives like a $50,000 loan program.
Once built, laneway homes can be rented out as long-term housing or used for multi-
generational living. They’re also eligible for tax deductions on mortgage interest and may
increase overall property value.
Why Now?
With Toronto’s population growth and rental demand surging, laneway homes offer a high-
yield, future-forward investment. They’re a smart way to unlock value from existing land while
contributing to the city’s housing solution.
Brick & Bloom can help you assess your property’s eligibility and connect you with trusted
laneway suite professionals. Let’s turn your backyard into your next big investment.