How Much Does It Cost to Build a Laneway House in Vancouver?

How Much Does It Cost to Build a Laneway House

A Vancouver city survey shows that the majority of laneway houses in Vancouver cost between $100,000 and $300,000 to build. Laneway houses have become popular as an income-generating rental or an additional dwelling for the homeowner’s family. Let’s take a closer look at what it takes to build a laneway home in Vancouver.

Are Laneway Houses Legal in Vancouver?

Yes, laneway homes have been legal in Vancouver since 2009. They are, however, governed by city by-laws, zoning rules, and permit requirements. We give you an overview of these rules in a section below.

Cost of Building a Laneway House – Vancouver Price Range

The City of Vancouver conducted a survey in 2018 and found that:

  • 36 percent of laneway houses in the area cost $200,000 to $300,000 to build
  • Another 27 percent cost $100,000 to just under $200,000
  • There were a few laneway units (4 percent) that cost less than $100,000, and even fewer (1 percent) that cost over $500,000.

We can see from these figures that a typical price range for building a laneway house in Vancouver is $200,000 to $300,000, but various factors could affect those prices. Size, location, and design are some of these factors.

Notably, the survey highlighted one way to lower costs for building a laneway home. It suggested that it may be more cost-efficient if a laneway unit is built together with the main house, as opposed to it being added on to a lot with a main house already standing. About 47 percent of laneway homes constructed at the same time as the main house cost less than $200,000. Meanwhile, among laneway units that were added on, only 20 percent were under the $200,000 mark.

What is The Average Size of a Laneway House in Vancouver?

The typical size of a laneway home in Vancouver is 500 to 900 square feet. City rules mandate that a laneway unit must not exceed 16 percent of the property lot size, so on a standard 33 x 122-foot lot, you may find a one-bedroom laneway house with a 600-square foot footprint.

What are The Rules for Laneway Houses in Vancouver?

Here’s an overview of the zoning rules and permit requirements for building a laneway home in Vancouver:

Laneway House Zoning

In Vancouver, laneway homes are allowed only in these zones:

  • All RS zones
  • RT-4, RT-4A, and RT-4N
  • RT-5, RT-5N, RT-6, amd RT-11/11N
  • RM-7, RM-7N, and RM-7AN
  • RM-8 and RM-8N
  • RM-9, RM-9A, RM-9N, and RM-9AN
  • RM-9BN.

Laneway House Site Eligibility

  • A laneway unit can only be built next to a single detached house, not a duplex.
  • The building site must have access to or is served by an open lane.
  • The building site must be at least 32 feet wide.

Laneway House Permit Application Basic Requirements in Vancouver

  • Site analysis, including site restrictions, utilities, and trees on site
  • Building and energy requirements (energy report)
  • Architectural and structural drawings
  • Non-stratification covenant
  • Approved water/sewer connection
  • BC Housing registration of New Home
  • New home warranty insurance.

You’ll want to work with a professional home builder to apply for a laneway house permit in Vancouver. The application process is meticulous, involving layered rules and various offices. In fact, according to the City’s survey, many homeowners who built laneway houses had difficulty interpreting complex regulations.

Our comprehensive build services at Building Space Custom Homes can handle all the pre-build requirements for you, ensuring your laneway house is 100 percent compliant.

Can Laneway Houses Be Sold in Vancouver?

No – as of this writing (June 2023), a laneway house in Vancouver cannot be sold separately from the main house. Vancouver City rules clearly state that a laneway house must always be in conjunction with a single detached house and cannot be strata-titled (meaning it cannot have its own separate title). Nearby areas such as New Westminster and the District of North Vancouver also don’t allow selling laneway houses as separate units.

Can I Put Up My Vancouver Laneway Home on AirBnB?

The short answer is no. In Vancouver City, homeowners cannot list their secondary units as a short-term rental, not even on platforms such as AirBnB or VRBO. Secondary units include laneway houses and add-on suites that are not the principal residence of the homeowner. A short-term rental is one that can be rented for less than 30 days.

One exception to this is if you can prove that your laneway house is your principal residence, in which case you would be eligible for a short-term rental license.

Are Laneway Houses a Good Investment?

Laneway homes are often touted as a sound investment, especially for property owners looking to earn passive income by renting out the unit. Consider that the average rent for a laneway house ranges from $1,500 to $2,500, which could allow a homeowner to recover their initial investment in a few years.

However, you should conduct a more detailed assessment if you’re considering a building laneway rental. Account for increased property taxes, property insurance, utility bills, repairs and maintenance, and your mortgage payments. Note also that rent increases are controlled in the Province of British Columbia. In 2023, the BC rent increase limit is 2 percent.

On the other hand, if you intend to sell your property, a laneway house generally increases the property resale value, boosting your return-on-investment (ROI). The downside is that your laneway unit will increase your property taxes. Generally, the laneway portion of your property will be considered separate from your primary residence, thus that portion is not exempt from capital gains tax.

Contact a Cost-efficient Laneway House Builder in Vancouver

If you wish to make the most of your laneway home, start applying smart strategies right from the planning and designing stages. A professional builder can advise you early on regarding cost-efficient building designs, materials, and methods, and can also ensure your permit application goes as smoothly as possible. Once construction begins, a reliable builder should also help you avoid mistakes that could cost you more time and money.

This is why a large majority (87 percent) of the surveyed laneway home owners opted to hire a professional design-build firm, and many of them reported good experiences with their builders.

In Greater Vancouver, residents trust us at Building Space Custom Homes, Ltd. for their laneway home building projects. With decades of experience in this industry, we provide efficient design-build services from planning, designing, and permitting, all the way to construction and cleanup.

Let’s talk about your laneway home plans and goals. Schedule your Building Space consultation. Call us at (604) 726-5839 today.

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