The City of Vancouver has laneway homes in its sights, weighing adding ownership options to this form of housing that experts say could boost supply despite presenting some challenges of its own.
Allowing separate ownership of laneway homes could give families more flexibility and financial freedom, and at least one local credit union offers a dedicated mortgage product aimed at laneway and similar co-living arrangements.
Still, there are concerns surrounding infrastructure, parking, conflict resolution and speculation, and experts told BIV that while successful, this building type should continue to be studied, as the city is now doing.
Vancouver city council has directed staff to explore and report back on options to allow the subdivision or stratification of residential lots containing secondary detached housing units, such as laneway homes or accessory dwelling units (ADUs).
The motion was carried unanimously at a July 9 meeting, and directed city staff to focus on situations where units comply with R1-1 zoning guidelines and “the form and siting are functionally equivalent to those permitted in multiplex subdivisions.”
Currently, separate ownership may be possible for multiplex developments, but the same flexibility does not apply to laneway homes or ADUs.
“Broader access to subdivision or stratification for all detached secondary dwellings, regardless of whether they are part of a multiplex or single-family lot, would support Vancouver’s goals of aging in place, intergenerational housing, and attainable homeownership,” said the committee’s resolution.
The resolution noted that other jurisdictions, including Seattle, have allowed ADUs to be stratified or subdivided, “resulting in a surge of new housing production and flexible ownership models.”
It also noted that nearly 42 per cent of single-family homes in Vancouver are owned mortgage-free by individuals 65 and older, and that this equity could be unlocked to fund “missing middle” housing supply in the city’s residential neighbourhoods.
Expedited permitting recommended
“Obviously the easiest thing for someone to do is — and it would still be meaningful in regards to getting equity off their property or meaningful in the sense of adding housing to the community — is for people to be able to sell these laneway homes and not use them strictly for rental,” said Jake Fry, founding owner and partner, Smallworks Ltd.
Fry said his company has built about 500 laneway homes, and over 90 per cent have been for families.
He used the example of a young couple that has lived together, test-driven a golden retriever and is ready to start their own family. If a parent lets them build a backyard home, the two generations’ finances could become closely intertwined.
“You could be an accountant living in a laneway house and you’re mid-career but you still need your dad to sign on for your car loan,” he said.
“Strata titling all of a sudden liberates that, and it also becomes a great mechanism for younger people, irrespective of whether this is a family project or not,” he said.
As the city explores this policy, Fry recommends automated or expedited permitting that does not trigger other property updates that could make code-compliant laneway projects unviable.
He also said it’s an opportunity to implement standardized designs, as well as prefabrication of bathrooms, panels and other components. Because companies like his build in existing neighbourhoods, prefab helps them reduce disruption and the need for bigger machinery.
Coun. Mike Klassen said laneway houses have been an “incredibly successful” typology in Vancouver.
“I was working with mayor Sam Sullivan’s office when the original policy was put forward in 2008. It was eventually put into approved policy by the new council in 2009, and it’s my understanding that we have either built or have under construction over 6,000 laneway homes in the city right now,” Klassen said.
He continued: “You don’t hear people complaining about laneway homes. They’ve just become a part of our neighbourhoods.”
Klassen suggested the potential policy shift could be a game-changer, including for senior citizens who wish to age in place.
“I think what’s held us back from maybe building more of that type of housing is just the straight-up cost,” he said.
“Going to the bank for that kind of money is a little harder, but if you already have some property and equity built into that, you can turn that around into [something] probably easier to finance, and get something constructed with those tools.”
Other experts weigh in
Michael Geller, a veteran planner and retired developer, said he thinks the proposed laneway policy change could increase the stock of more affordable, smaller homes on properties within established neighbourhoods, he said, aligning with multiplex, small-scale multi-unit housing (SSMUH) and transit-oriented densification policies of government.
Yet the proposed laneway policy is not without its challenges. Geller said accommodating sufficient parking is a “major issue” as it is with multiplexes and densification in general. For example, laneway homes often replace separate garage structures.
Another perennial challenge is reducing servicing costs and municipal fees associated with upgrading sewer and water-supply infrastructure, he said.
Andy Yan, director of the City Program at Simon Fraser University, said strong demand could be met for ground-level domiciles in neighbourhoods that already have schools, roads and other services.
“Does this create the next new speculation product in Vancouver real estate? But yet, at the same time, some have said that this is another option for homeownership,” he said.
“The challenge here is that it doesn’t necessarily produce the affordable housing that we’re talking about,” he said.
Other challenges will include how to mitigate potential conflicts between strata owners, Yan added.
Dan Winer, executive lead with advocacy organization Small Housing BC, said subdivision may make the most sense. If you’re stratifying and the older, main structure needs a roof upgrade, the laneway occupier would otherwise be out of pocket.
“When we’re talking about just a single-family home and just a laneway home, subdividing and the allowance of sale is ultimately beneficial. It allows for less bureaucracy and less yellow and red tape at the varying levels of government,” he said.
Legal agreements advised
Some financial institutions are playing a role by offering mortgage products aimed at facilitating co-ownership.
The “Mixer Mortgage” currently offered by Vancouver City Savings Credit Union (Vancity) allows families, friends or partners to co-own a property while maintaining individual mortgage terms, including separate amortizations, rates, balances and payments.
“In cases where there’s a main home and a laneway home, each party can take responsibility for their own portion of the mortgage, reflecting how they live on the property,” said a statement by Ryan McKinley, senior mortgage development manager at Vancity.
McKinley recommended co-owners obtain legal advice and draft an agreement outlining ownership shares, responsibilities for repairs and maintenance, and what happens if one party wants to exit the arrangement.
“Since all parties are financially linked, it’s also important to review insurance coverage to ensure everyone is protected from unforeseen events that could affect the group,” he said.
