How Much Does It Cost to Build a Laneway Home in Toronto (2025)?

More Toronto homeowners are choosing laneway suites instead of basement apartments or expensive home additions. Here’s why:

1. More Privacy

Laneway homes are fully detached, so renters or family members have their own entrance, outdoor space, and no shared walls. It’s ideal for multigenerational living or private rentals.

2. Better Light & Comfort

Unlike basement units, laneway homes offer natural light, ventilation, and above-ground living — making them more attractive to renters.

3. No Need to Split or Sell Land

You still own your full property. You’re just making better use of the space you already have — especially if your backyard connects to a laneway.

4. Rental Income

Most 1-2 bedroom laneway homes in Toronto can bring in $2,500 to $3,500 per month in rent, helping you offset mortgage payments or even generate profit.

5. Adds Value to Your Property

A well-built laneway suite can increase your home’s resale value by hundreds of thousands of dollars. Buyers see it as a flexible space they can use for family, work, or income.

If your property qualifies under the City of Toronto’s laneway housing rules, a laneway home can be a smart and flexible investment. Whether you want to create space for aging parents, generate rental income, or increase your property value, it’s worth exploring.

And in a city where space is limited and housing prices keep climbing, using your backyard to its full potential just makes sense.