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10 Reasons why a Laneway Apartment will draw more rent than a basement apartment

Ten Reasons why a Laneway Apartment will draw more Rent

The new Laneway Initiative that the City of Toronto will be moving forward with will create a number of opportunities for Landlords and Homeowners as well.

One of the benefits that this Initiative will create is the relocation of rental opportunities from the basements of Toronto homes to the clean environment of a second storey apartment. This will encourage the movement of people renting from a place never meant to house people, to an area where the quality of life will be so much better. As such, an increase in rents will be realised.

As a design and construction company we’ve seen what many basement apartments look like in this City. The significant majority of them are damp, cramped spaces that should only be used for storage. Sure, there are a small number that have been built to certain standards but those are few and far in between.

Further, based upon our experience, if you are thinking about becoming  a landlord and you are thinking about doing so in your basement the number of issues we’ve seen over the years with existing basement apartments would make your head spin.

Basement Apartments are the source of many landlord/tenant issues more so when you, the Landlord in a lot of cases. If there’s pot smoking in your apartment 90% of the time, it’s wafting up the vents and does not stay contained in the basement. Come July 1st of this year this is something you will need to think about. 

Here are ten reasons why basement apartments make less sense than building a basement apartment.

  1. Basement Apartments are Rarely Legal
  2. Health issues in Basement Apartments
  3. Basement Apartments usually draw the Lowest Income Tenant Demographic
  4. Being able to hear everythinggoing on upstairs (including talking)
  5. Hardest Properties to Manage
  6. Ceiling Height
  7. Lack of Light
  8. Lack of Ventilation
  9. The Potential for Bugs
  10. Sprinklers

 

  1. Basement Apartments are Rarely Legal

The City of Toronto has been significantly monitoring and cracking down on illegal basement apartments. It’s not as easy building a legal apartment in your basement anymore nor is it as inexpensive.  

City of Toronto Zoning https://www.toronto.ca/zoning/bylaw_amendments/ZBL_NewProvision_Chapter150_10.htm

Toronto Star Article Regarding Basement Apartments

https://www.thestar.com/life/homes/2012/03/16/basement_apartments_must_comply_with_zoning_fire_building_and_electric_codes.html

Ministry of Housing Link Re; Basement Apartments

http://www.mah.gov.on.ca/Page9575.aspx

New Laneway Apartments will be built to comply with all Building, Planning and Zoning requirements. They will be inspected by City of Toronto inspectors and Managers for compliance with the new By-Laws

2. Health issues in Basement Apartments

 Today’s savvy renter is well aware of the risks associated with renting in a basement. They know that some health risks to people who live in basements have been noted, for example moldradon, and risk of injury/death due to fire. It has been suggested that a basement suite is the last type of dwelling a tenant should look for because of the risk of mold. However, due to demand for affordable housing, basement suites are often the only available housing for some low-income families and individuals.

Airborne spores can cause mold to grow in damp and unventilated areas, such as basements.Presence of mold can lead to “respiratory symptoms, respiratory infections, allergic rhinitis and asthma”, as well as personal belongings being contaminated by mold.

Claims against Landlords for mold exposure by Tenant’s are going up.

Radon is an odorless gas that has been shown to increase risk of lung cancer. Basement’s must be tested for Radon on a yearly basis.

Basement suite tenants are more likely to be injured or die due to a fire in the house. However, many landlords do not follow fire code regulations, and often such regulations are not enforced by governments.

New Laneway Apartments will be built atop an existing garage or constructed from the ground up. New building code and new improvements in construction techniques allow for the tight dry construction of a laneway home. Further, significant decreases in the occurrence of mold will be attained due to the improvements in decreased humidity levels and increased ventilation.

  1. Tenant Demographic

If you can explain to me why a tenant in his or her right mind would rent a basement apartment when they can rent an apartment in a building for the very same price or lower, I would love to hear it. Because they like the dark? or the sound of running feet overhead? Generally it’s because of the price or they can’t get approved in a building because of their nasty credit, poor work history or some other problem.

New Laneway Apartments will draw a rental demographic projected to have an annual income of approximately between $ 70,000 – & 95,000 per annum.

  1. Being able to hear everything going on upstairs (including talking).

I’m sure it depends on the house, and how many people live above you and how active they are, but unfortunately, the family is rather noisy.

There’s a young daughter interested in gymnastics along with a very hyper golden retriever. This makes for loud bumps, often, and sometimes when company is over it sounds like a stampede. There were times it got to the point where I wanted to leave and find something to do. I just can’t concentrate with things like that going on, and I really didn’t think it would be this bad.

I am so, so grateful that they’re always gone for the day during weekends so I can have some peace and quiet.

A new Laneway Apartment will not have a third storey so there’s nothing to hear above a renter.  

  1. Hardest Properties To Manage

It’s the tenant/tenant issues that will drive you crazy and the quality of tenant you get. A few months ago I rented a basement apartment to a very nice seeming young lady except she did not be open and honest with me…there have been many issues with her not complying with our rental agreement. Then there’s another one I rented just up the street here, nice young couple except they are did not keep the apartment clean at all….

Based on the projected rental demographic of having an annual income of approximately between $ 70,000 – & 95,000 per annum, it would indicate a young urban profession rental inventory to choose from.  

 6. The ceiling height.

I’m 5’9” – if I stretch, I can touch the ceiling. This isn’t something that bothers me as I knew what I was getting into beforehand, and all basement apartments will vary on this. My best advice is to walk around and make sure you don’t feel claustrophobic. It should go without saying, but don’t rent something sight-unseen.

Average Laneway Apartment ceiling heights are projected to be 10’-0” AFF, (average heights may be higher or lower depending upon the Zoning definition prescribed for your property).  

 7. The lack of light.

I always kept my window shade down in my room at my parents’ house, never really caring for light that much. Now, I definitely miss it. There’s nothing like having the sun shine through on a beautiful morning. My cats enjoy basking in the sun, and it sucks that they don’t get much of it. The apartment isn’t gloomy at all, but it does make a difference. There are only four windows and a door that light can come through.

To tie the two points above together, it really comes down to a lack of windows, and lack of full-sized ones at that. This is an obvious one, but it’s so important. I would love to have a nice view of anything at this point, or a door/window to open to feel closer to nature outside.

Average Laneway Apartments can have large windows facing the laneway itself and facing the main home. Final sizing will be dependent upon the City of Toronto providing further guidance. Additionally,  sky lighting may be added or secondary lighting to each side of the building may add to the total amount of sun lighting in the unit, (again, subject to the City of Toronto providing final guidance.  

  1. The lack of ventilation.

Basement apartments are at risk of smelling, but there’s a dehumidifier that takes the worry out of that. Sometimes it can still get rather stuffy and it would be nice to have some cross-ventilation with the little windows. Unfortunately, opening them doesn’t help much – you barely ever feel a breeze.

I also would have loved to have a storm door so that we could open the actual door – both for light and for breeze.

As mentioned above, with larger windows and at a greater height elevation, there will be significant improvements in cross-breezes and ventilation.  

  1. The potential for bugs.

Basements tend to attract spiders and other gross-ass insects. There have been several spiders in the bathroom, and I found quite a few hanging from weird places in the kitchen. I also ran into (more like away from) two centipedes. That gets a big fat nope from me.

New Laneway Apartments will be built atop an existing garage or constructed from the ground up. The potential for bugs will be reduced as a result of decreased humidity levels and increased ventilation.  home.

  1. Sprinklers.

This is going to sound odd, but it’s something I never considered. In the summer, this is a major inconvenience. The landlord has the sprinklers turned on between 8 and 9pm. This is usually when I go out shopping or walking.

So I have to sit and wait for them to pass and then run out (there’s a backyard entrance, so I have to cross BOTH lawns). If you’re not bothered by getting soaked, that’s great, but it can be a nuisance when you can’t see too well because it’s dark out.

As a new Laneway Apartment will be built atop an existing garage or constructed from the ground up issues with Landlords running sprinkler systems will not be an issue.

 

 

Laneway Houses – The benefits of small home living

Toronto Laneway Homes – Not as small as a tiny home but gives you all the benefits of one, (plus a great location!).

When you think of a small space, you might think of the 500-square-foot tiny homes or small condominiums that have become a trendy option for those looking to really downsize. But there are benefits to living in a smaller home without having to live in a shoebox. Consider the new 900 square-foot home that is being proposed as the maximum footprint allowable for Toronto’s new Laneway Initiative proposal. It’s smaller than the average house, but not so small that you can’t comfortably live in it and enjoy the fantastic location.

There are a number of benefits of living in a laneway home that may not be apparent yet to many here in the City of Toronto. However, once the City decides to move ahead with this new initiative many will quickly see the benefits. We’ve compiled a list of some of the benefits of living the “smaller” life along with a few design and real estate experts to uncover the benefits of trading in for a smaller space.

8 Benefits of living in a small house

1.Choosing a small home can result in big savings
Making the jump to smaller laneway property could save you a lot of cash. “My wife and I downsized from a 2,000-square-foot townhouse with a garage to a small 950-square-foot apartment,” says Gerald Aguilar of Jupiter, FL, who wanted to save money to help launch his business. He estimates that the move saves him about $400 a month, thanks to cheaper rent and “minuscule” utilities.

2.Utility costs for a smaller laneway home will be lower

The cost of insurance, taxes, heating, cooling, electricity, etc. will always be less in a home [that’s] 1,000 square feet or less. While other factors affect insurance and taxes, utilities are the guaranteed place to save. On average, the electric bill for a 1,000-square-foot home is approximately $250 per month less than the electric bill for a 3,000-square-foot home. And if you’re going the condo route, you can save big on maintenance fees. And if you’re coming from where you have a condominium and are thinking about going the laneway route most of your condo fees are calculated on square footage and in a laneway home you won’t have those costs.

3. Want to living in a great location where it can be more affordable?

In this City there will be a strong surge of new laneway rental properties under 900 sq.ft. that will come on stream in a number of desired downtown locations around mid-to-late 2018 if all goes according to plan. These new rental / ownership homes will typically, allow you to get into those ‘hot’ neighborhoods without getting into really high price points. But for what a small home lacks in space, there is easy access to amenities if you’re centrally located. When you have a gym two blocks away, you don’t need space for a treadmill; or a massive pantry when you can stop at the corner market every day on your way home from work.

4. Maintaining a smaller home is just easier

Anyone residing in a home over 3,000 square feet can attest to the fact that there always seems to be something going wrong. Whether it’s a leak in the guest room or a broken pipe in the upstairs bathroom, the fact is, larger homes require more upkeep. Although few people can truly say they enjoy weekend home maintenance, a smaller house potentially means fewer things will go wrong in the first place. Even the big-ticket items like replacing a roof, redoing floors, and exterior paint jobs will take a smaller bite out of your paycheck.

5. Cleaning and de-cluttering takes half the time

Not only are there fewer rooms to tackle, but also the home’s smaller size helps you cut down on clutter. It really helps one declutter and just keep the real necessary things in life. You will also enjoy that there is not much to clean and [it] takes half the time to clean the new space.

6. Remodeling and redecorating costs less

It is a plus to be able to splurge on a few pieces you love versus buying to accommodate a large house.With a large home, you tend to purchase a lot of off-the-shelf furniture just to fill up the space. With a small home, you have built-in limits [on] buying too much. If you remodel, costs are lower as well. Just think of all the gorgeous wallpapers, granite counter tops, and other luxe home upgrades you can indulge in.

7. Hosting large groups and parties is still possible

While the size of a smaller home can limit the guest list, a small laneway home’s deck can accommodate larger get-togethers if necessary. It could run the length of the house, and when people are over, bring out all the chairs, plus additional folding chairs

8. Downsizing can make the whole home feel cozier

There are times when bigger is better — but also when bigger just seems overwhelming. You could decide that a large home or larger apartment could be too large and cavernous with large rooms feeling impersonal and empty. After moving to a new laneway space you could make it much more intimate and more lived-in versus staged.

Assessing the potential for both Laneway Suites and Detached Secondary Suites

Assessing the potential for both Laneway Suites and Detached Secondary Suites

Unfortunately Toronto is currently in the midst of declining rental unit stock across the City with this issue creating spillover issues in the municipalities as a result.

Interestingly, the concept of moving forward with both Laneway Suites and a Detached Secondary Suite (DSS) has been gaining strength.

Primary Issue at Hand   

1) the Greater Toronto Area struggles to accommodate over 100,000 new residents every year,

2) house prices continue to soar, (particularly condominium suites), and

3) significant pressures have been brought to bear on the current inadequate supply of rental units.

Why approving both Laneway Suites and DSS (Detached Secondary Suites), makes sense.

The success of Toronto’s 1999 Secondary Suites bylaw, with secondary apartments now making up 1/5 of our rental stock, is one way to accomplished this is by putting the benefits in the pockets of homeowners through expanded provisions to allow detached secondary suites in the form of a laneway or garden suites.

Meanwhile the City of Toronto is currently considering options for laneway suite performance standards based on feedback from three public consultations spearheaded by Mary-Margaret McMahon and Councillor Ana Bailao.

And at this time, Toronto’s 250 kms of laneways present an idle piece of affordable housing potential that has been sparking the imagination of architects and city-builders for decades, representing between 6,000 and 10,000 properties that could incorporate a laneway house (Stinton and Elslander, 2003). Yet broadening the scope of our conversation just a bit beyond laneway-abutting properties could make up to 200,000 properties eligible to add rental housing with detached secondary suites (DSS). DSS function the same way as laneway suites, but while not abutting laneways, require access from the street frontage, and in doing so, address many of the concerns that must be surmounted to permit laneway housing, while expanding the benefits of DSS geographically across the city. Laneway housing was last discussed at Toronto City Council in 2006, and was defeated with the assumption that laneway suites would involve severing lots and create complications with servicing. It has been widely recognized in the ordinances passed in over a dozen Canadian municipalities since then, that DSS should not require severances and instead should remain as rental units of the principal residence, with water, sewage and hydro services connecting to the main house, not unlike basement apartments or secondary suites within the main house, except with more light and privacy. Now, with third party companies including for-profit developers like Lanescape and Evergreen working collaboratively on developing performance standards to inform a laneway ordinance for Toronto, it is the ideal time to consider the potential of expanding the conversation beyond laneway houses to include backyard houses or garden suites in the decision-making process. Considering the diffculty of changing a bylaw in the City of Toronto, and the education required to inform Toronto’s 44 councillors about DSS, most active proponents of laneway suites consider it politically premature to push for a garden suite bylaw as well at this time. With that in mind, the purpose of this paper is to demonstrate the immense potential of looking beyond laneway abutting properties and to recommend that adopting a garden suite ordinance for the City of Toronto be considered as a part of the laneway suite conversation. This paper illustrates the relative simplicity of addressing servicing and access issues in garden suite compared to laneway suites, and proposes design guidelines specific to garden suites that would ensure that they were developed in such a way as to not have detrimental impacts on privacy, livability, or neighborhood form.

The concept of the Detached Secondary Suites in tandem with the implementation of Laneway Suites

Unlike here in Toronto, across Canada most other major cities’ bylaws have addressed both garage (laneway) and garden (backyard) suites.

The estimated potential for DSS in Toronto using two neighborhood case studies, one downtown and one suburban, was looked at. Research has analyzed the guidelines of eight Canadian cities, and two American cities, and makes recommendations for Toronto, proposing a set of design guidelines to encourage gentle density through not only laneway housing, but garden suite construction across the City of Toronto. The guidelines recommend setbacks and the appropriate placement of windows, entrances, and balconies to minimize overlook and shadowing on neighboring properties; addresses concerns around servicing, garbage collection, and emergency service access; and suggests a tiered permitting approach that would allow simple guideline compliant 1 or 1 ½ story DSS to be built as-of-right city-wide, yet allow planners to retain design control over taller or more potentially intrusive projects. A study suggests that, depending on how the performance standards were defined, between 100,000 and 200,000 rental units could be introduced through a permissive DSS bylaw. Although most active proponents of laneway housing in Toronto consider it politically premature to act on the potential for backyard or garden suites city-wide currently, this research makes it clear that a city-wide DSS bylaw offers the potential to increase the rental unit supply 30 times more than considering laneway housing alone, with fewer complications in terms of municipal services and emergency vehicle access.

How to get into Toronto’s rental / real estate market with a laneway house

How to get into Toronto’s rental / real estate market with a laneway house

Toronto’s really hot rental and condo markets don’t allow for a lot of flexibility when it comes to affordability. Laneway housing may just bring affordability, density and convenience to the rental market and eventually may offer additional opportunities to renters in the near future.

Right now there are a number of different names floating around for them…laneway house / laneway apartment / laneway suite / laneway homes. However, as each of the names suggests, what we are really talking about is a small home that looks onto a laneway. In Toronto, we are looking at the first building permits being issued in 2018, a full 10 years after The City of Vancouver saw the light and issued their first building permits as part of a pilot program. In 2013 Vancouver further expanded their program by allowing strata laneway ownership whereby certain laneway homes were allowed to be owned by someone other than the person on title for the main home. At this time the City of Toronto is not considering allowing the separate ownership of a laneway home, it must remain tethered in title to the main home. 

And so for now, it is believed that because of this restriction Laneway Houses may not be the cure all for Toronto’s rental / condo market, similar to Vancouver’s experience.  

However, this does not mean that there aren’t opportunities out there. 

It just means that you’re either renting a laneway house or you will be making some sort of deal with a friend or family member whose single-family lot is big enough to support your small-plot dream.

In the coming months we will begin to understand how the City is going to approach Laneway Housing. It is felt that the City will be approaching Laneway Housing as a true “rental home” along with other types of secondary suites. This would fall in line with the Council’s thinking that only a renter would find and occupy a Laneway Home.

However, if you think a little proactively, one may be able to structure an agreement with an existing laneway home owner, (or a current homeowner with a laneway site to develop). The right deal structured the right way could be beneficial for both parties.  

Time to think a little differently

As was mentioned earlier, getting into the market through laneway housing isn’t going to be as straightforward as today’s condo market. That’s because while Toronto’s real estate buyers are savvy when it comes to what a detached / semi-detached home is not too many will know what a laneway home really is and what the rules are when it comes to them.

The individuals who are asking real estate professionals now are the ones who have done their homework and see the potential for an opportunity.

In speaking with a number of real estate professionals in Toronto we’ve found that the vast majority of clients aren’t actively looking for homes with laneway houses already in place. That’s because a lot of people are being taken out of this market where one is already build…a laneway house adds significant value to a property’s value. They’d rather purchase a house without a laneway house that has the potential to support one later.

The very few that look for home with a laneway house already built are empty-nesters looking to downsize.

If you want to rent a laneway house, you find one the same way you’d find any other listing: through a rentals broker. The prices are indeed higher than those you’d find in an apartment of comparable square footage, but you’ll usually get parking and some backyard. As with all rental pricing, location matters.
 
Still, for renters, Laneway Houses offer an alternative to renting in one of Toronto’s non-descript condo developments. For homeowners, a laneway house offers a way of improving their ROI and turning that unused free standing garage into a true investment.

Before you look to purchase a property on a Laneway

If you buy or build a house with a laneway house attached, you can rent out the laneway house to slow the financial bleed of home-ownership. However, you must take into account that small footprint does not equal small construction cost: running electricity, plumbing, and gas to a spot on your property ain’t cheap, even if it’s only a 900 square-foot Laneway House. You’ll be adding value to your house, but not quickly; at least, not vis-a-vis your mortgage, property-tax, and maintenance costs. Hooking up to the main homes services, (electrical, gas, and sewer systems), will cost around $30,000. That’s just for the hookups, and is not even counting the cost of the construction.

If you want to actually make money off of your purchase, the only to make the math work would be to occupy the laneway house yourself and rent out the main property.

And the affordability / mortgage noose is still tightening.

Of course, you need access to a property that sits on a laneway, or that stretches the entire depth of a block.

Most frequently, it’s a parent or grandparent who owns the property. “Usually mom and dad are happy to help out, and their willing to give up their garage or their backyard for their kids to have their first home.” Sometimes, though, the client is older, building and occupying the Laneway Home while renting out the main structure. 

This type of agreement means an older person can liberate the money tied into their old house, using it to face the increasingly-expensive process of growing old.

If you don’t have family in Toronto, or at least not family with whom you want to share a backyard, perhaps you have (very) close friends with whom to join forces. You could create a sort of tiny cohousing collective, with the backyard held in common. Make sure that you really get along, though. Maybe even do a few group counseling sessions first. Not kidding.

How big can a laneway house be?

While we are still awaiting the final word from Toronto City Council, it is anticipated that a Laneway Home will be limited to 900 sq. ft.

The question then becomes, do you want the entire 900 sq. ft. for yourself or maybe just the main level for a car

Based on the proximity to public transit, not owning a car is not a big deal for most people.

 It’s really just the biginning…

Toronto’s Laneway House program is only in it’s infancy however it is expected to grow quickly. Depending on a few things it is expected that over 100 would be built within the first year.

However, if we look to other City’s for examples of how their Laneway programs rolled out the bottleneck will be with the actual permit approvals. Backlogs of permit approvals have had a negative effect on builders.

So, despite its position on the outright ownership of a Laneway House, there may be options to those looking for more than a rental property.

Robert Offenbacher is the President of Flatrock Inc, a multi-discipline, licensed design and construction firm located here in Toronto. Robert has been involved in Toronto’s design  and construction industries for almost 25 years. Have a question or comment about Laneway homes or a potential Laneway rental property? Please give him a call at 416 770 7475

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