Density Gap and the Yellow Belt
There is a strong need for creative solutions to manage the affordability crisis as home prices continue to rise, due to very little supply of housing in southern Ontario, specifically in Toronto. Zoning requirements in the city of Toronto are creating a huge density gap. We see small, densely populated areas with an increasing population and large, low densely populated areas with a stagnant or decreasing population.
Three quarters of Toronto’s land area is under strict zoning regulations, only allowing land to be used for single family housing or low-rise buildings. Often, we see this land used only for single family houses due to the push back from community councils that are by design elected to favor the community. This restrictive zooming it called the Yellowbelt. The Yellowbelt was given its name because of the color of the map on the municipal official plans.
These zoning requirements are fueling a large part of the affordability crisis in Toronto. For one, being unable to add new denser housing (i.e. low-rise, midrise and high-rise apartments) in such a large land mass adds a huge constraint on the already limited supply. On top of the 75% of Toronto that’s within the Yellow Belt, another 20% is reserved for employment buildings, leaving very little room for more dense residential construction. Construction costs are also impacted heavily since it is only possible to build in the small areas outside the Yellowbelt, causing a huge pressure to develop mid to high-rise buildings. This type of construction is much more expensive than low-rise buildings.
This is all causing a problem of density distribution, or “the missing middle”. With large areas filled with single family houses and small areas filled with mid to high-rise buildings, we are effectively missing the middle density housing types. How do we responsibly densify these low-rise neighborhoods within the Yellowbelt? This is where the need for innovation comes in to solve this affordability crisis. Laneway housing is one step forward.
Laneway suites are almost like a basement suite, relocated to the rear of the property, disconnected from the actual property but sharing services. This is intentionally set out in the bylaws to serve as a rental unit, adding additional value for the homeowner.
- -gently densifies low-rise neighborhoods,
- -animates underutilized space,
- -diversifies available housing stock,
- -creates affordable housing close to amenities, increases value,
- -generates income,
- -and there is no additional burden on infrastructure.
This is not only a step closer to affordable housing, but this also makes for more affordable living for the homeowner.
Who can benefit?
Laneway suites are a valuable investment for:
- 1. Professional builders looking to add laneway suites to increase the value of the property and flip for profit,
- 2. Professional landlords looking to create additional housing stock to hold, sell, or rent,
- 3. Homeowners who are looking to increase the value of their property, make passive income through rent or make use of their extra space.
Since laneway housing increases the value of the property, it is an excellent investment option. Setting up a laneway suite on an already existing lot for renting might also be a better option for rental income than the basement suite, as it is separate from the house, creating a more ideal home environment for both the homeowner and the tenant. It also serves the purpose of making use of underutilized space, which is perfect for multigenerational homes or those looking for a separate workspace.
A Progressive Policy
Laneway suites are completely exempt from development charges, which can be quite expensive for those who build any units on a property. Since laneway suites are both suitable for the individual and the neighborhood, there are a lot of government incentives given out on the municipal and federal level including forgivable loans for up to $50,000 in Toronto. CRA also has tax rebates available. In addition, a space for vehicle parking is not a requirement when in similar multi-unit properties, it is. The laneway suite also does not count towards lot density and so this allows for a lot more flexibility.
Process to Set Up Your Laneway Suite
To get started you need to ensure your property is eligible for laneway suites. There are many specific requirements for the different type of laneway suites that can be built on your property. There are many free resources online that can help you assess your eligibility; Lanescape also does a free property report to assess if your property meets the bylaws for laneway suites. If you are interested, you just need to send them the address of your property or any property you are interested in, and they will send you the complete report. If you need any type of financing, Foremost Financial also finances Laneway Mortgages.
See our interview with Tony Cunha from Lanescape as part of our Builder’s IQ series.
To inquire about working with us to provide financing to make your next laneway suite project a reality please, contact a member of our Lending Team
Executive Vice President ext. 288
Vice President ext. 101
Associate Vice President – Mortgage Lending ext. 555
Associate Vice President – Mortgage Lending ext. 240
Analyst ext. 225
Broker *, Agent **