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Ontario wants this housing crisis solved. “Gentle Densification” is the buzzword that Ontario uses to talk about provincial Bill 23: The More Homes Built Fast Act. The Act is meant to further the province’s long-term goal of building 1.5 million new homes in Ontario by 2031. 

At the core of Bill 23 is increasing densification but not just by building taller units, AKA high-rises. The Act targets single family homes as well. In fact one option, a laneway house, might just fix two persistent problems: paying off your mortgage faster and solving the housing crisis.

Focusing on Gentle Densification To Solve The Housing Crisis

Unless you’re an urban planner, you may not be familiar with this term. The whole idea is that you increase the density of people more gently. Rather than adding high rises everywhere, you’re adding things like secondary suites, triplexes and fourplexes and laneway houses.

Homeowners: No Zoning By-Law Needed To Add Units To Your Property

The Act lets homeowners add two more residential units “as of right” for single family homes, as well as semi-detached and townhouses, all without needing a zoning by-law amendment. This helps cut the red tape.

Homeowners have lots of flexibility. The three extra units can be in the existing home or could be as an in-law suite, basement suite, garden, or laneway house. Standard restrictions still apply when it comes to the height, setback, and coverage.

Build A Laneway House To Rent To Family, To Newcomers, To Anyone

A Laneway house is an interesting idea. Laneway houses are prevalent in BC  but are a relatively new concept in Ontario.

In case you’re not familiar with laneway houses, a laneway house is a detached secondary suite that’s built on an existing lot. It’s called a laneway house because it usually has its entrance on a back lane or backyard. 

Laneway houses are typically used when more than one generation of the family lives on the property. This could be your adult kids and their spouse, or your elderly parents.

If you don’t need intergenerational housing, you could also rent out the property as a landlord. With the influx of newcomers to Canada, including permanent residents and people here on temporary residents here on visa, there will be plenty of people looking to rent your laneway house.

The key thing to remember is this:

  • A laneway house isn’t a house you can sell. To do that, you’d need to sever the lot and get approval for that
  • Laneway houses are just rentals.

Your Laneway House To Get Mortgage Free Sooner

Building a laneway home can be a good mortgage helper. If you have a sizable lot, it can be a good way to put the extra land to good use and earn some extra money to be mortgage free sooner.

If you have a lot of untapped home equity, you could easily refinance it to pay for the construction of a laneway house.

Due to rising inflation, building materials have become a lot more expensive these days. While in theory building laneway homes may make sense, the higher cost of construction, coupled with higher interest rates, may keep a lot of homeowners from doing so.

The Dangers of Removing the Zoning Approvals

Density is always a hot button issue when it comes to local politics. Residents are often concerned that there are too many people moving into an area for the local infrastructure to handle.

These concerns may be warranted when it comes to too many condo buildings in a single neighbourhood but are lesser so when it comes to “gentle densification.” There’s a limit to how many units a homeowner can add. If every homeowner added a laneway house, the local infrastructure might be strained, but if only a few homeowners do it, it should be perfectly fine.

Sean Cooper avatar on Loans Canada
Sean Cooper

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach, and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense.

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