Market Byte: New Rules Pave Way For (Many) More Laneway And Garden Suites

The Short

Ontario took a significant step toward overcoming its housing crisis late last month when the provincial government tabled new rules that fast-track the process of adding basement apartments and garden or laneway suites to single residential lots.

The Long

Given the number of cranes dotting the skylines of Toronto, Ottawa, Hamilton and other Ontario cities, the housing crisis can seem overblown. How can there be a shortage of housing with all this condo construction going on?

That’s what makes the situation so troubling. As torrid as the pace of construction has been over the past decade, with new housing completions averaging around 67,000 a year since 2012, the pace must more than double for the government to hit its target of 1.5 million new homes by 2032. Ontario is expected to grow by more than two million people between now and then, with approximately 70 percent of this growth taking place in the Greater Golden Horseshoe Region.

No wonder rental prices keep climbing, with the average monthly price for GTA condo units hitting an all-time high of $2,627 in 2022. Not to mention that, on average, rental units are sitting on the market for an all-time low of just 14 days.

That’s where the new “missing middle” rules included in the More Homes, Built Faster Act come in. While up to three residential units were already allowed on most land zoned for one home, the proposed legislation exempts second and third units (such as basement apartments and garden and laneway suites) from municipal by-law amendments, municipal permissions, and parkland dedication charges.

These additional units are also exempt from the fees collected from developers that help pay for the cost of municipal services or impacted infrastructure such as roads and transit. If it passes, the new legislation will be in effect by the summer of 2023.

Garden and Laneway Suites Explained

These self-contained residential units are located on the same lot as a larger detached or semi-detached house, townhouse, or other low-rise home. Laneway suites are typically built in backyards next to public laneways, while garden suites can be set pretty much anywhere on a residential lot.

My Two Cents

These rules diversify the urban housing mix by bringing Ontario closer to European-style zoning, which spreads density more evenly than is typically the case in North America. Here, low-rise neighbourhoods and dense apartment/condo developments tend to be more distinct. At the same time, second and third units can not only boost the value of a homeowners’ property — but also generate rental income, and provide mortgage relief.

In a city starved of housing inventory, this is a step in the right direction.