City of Vancouver to explore enabling the subdivision of laneway houses | Daily Hive

City of Vancouver to explore enabling the subdivision of laneway houses from the main house on a single-family lot

Example of a laneway house in Vancouver. (Google Maps)

Could laneway houses and backyard houses in Vancouver be owned and sold separately from the primary house through the subdivision of the single-family lot?

Earlier this week, Vancouver City Council approved a member motion directing City of Vancouver staff to explore enabling such opportunities.

Currently, there are approximately 6,000 laneway houses, with this number for such secondary detached houses growing by 300 to 400 units per year.

The motion by ABC city councillors Sarah Kirby-Yung and Mike Klassen request City staff to explore and compare the stratification and subdivision of such lots with multiple detached houses. Subdivision would divide it into two separate fee-simple ownership properties.

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It is asserted that this would provide more options for home ownership — including first-time homebuyers, seniors downsizing and aging in place, and intergenerational living — as opposed to the current common uses of unsecured long-term rentals and short-term rentals like Airbnb.

Moreover, it was suggested that this could simplify construction financing opportunities for laneway houses by eliminating the need for complex agreements involving non-resident parties and mortgages tied to the main house on the lot.

“It’s a financially daunting challenge to take on building a laneway home, and right now there is no ability to stratify or subdivide it as we have enabled with the multiplex,” said Kirby-Yung during the deliberations, noting that Seattle and California practiced reforms to enable separate ownership several years ago and the results so far have been promising, showing an increase in small, flexible housing supply.

Example of a laneway house in Vancouver. (Google Maps)

In Vancouver, the cost of building a laneway house can range between $400,000 and $800,000 or even more, depending on the site conditions, size, scope, materials, utilities connections, and overall design. There are also major construction cost premiums for a laneway house added to a lot with an existing house, as opposed to a laneway house built alongside a new main house as a part of the entire redevelopment of the lot.

It was also suggested that the pathway of changing policies to enable the subdivision of a single-family lot with a secondary detached structure could be more challenging, whereas stratification could be more easier and quicker to achieve — even as an initial interim measure.

Currently, laneway houses cannot be stratified and sold separately from a single-detached house, with the City’s laneway housing policies primarily serving the purpose of providing more rental opportunities in single-family neighbourhoods. As well, many existing laneway houses — a typology allowed by the City since 2009 — double as the garage, which is typically set aside for the residents of the main house, not for the residents of the laneway house.

Laneway house structures are typically limited to 1.5 storeys and a maximum floor area of 900 sq. ft., based on a floor area ratio density limit.

But options to strata title and sell such structures separately are available for multiplexes and through the existing character retention incentives.

“It’s not going to be easy work, but I think it’s work that is going to be definitely worth chasing down,” said Klassen.

“And if it means that we get a very quick change to allow for strata, and then the work continues to figure out the subdivision, I’m fine with that. But at least we’d be advancing that. One of the big reasons that was underneath all this is the fact that money is really tight right now and getting financing for any housing development of any kind is external and difficult.”

Example of a laneway house in Vancouver. (Google Maps)

Luke Harrison, an owner and partner of Smallworks, which specializes in building laneway houses, brought up the scenario to City Council of multi-generational families forced into complex co-ownership agreements, where both parties must be co-borrowers on a mortgage or where senior parents on fixed incomes must finance new homes.

“Many families, particularly young buyers, said they can’t access financing without clear title. And even if they can, they aren’t building true independent financial independence. They’re paying down the mortgage without building their own equity because the ownership isn’t legally separate,” said Harrison.

“By contrast, subdivisions enable fee-simple ownership, which opens up conventional mortgage financing and the opportunity to build long-term financial security.”

Akua Schatz, a partner at Smallworks and chair of the non-profit advocacy organization Small Housing BC, shared the example of how she and her husband, then a young family in 2009, built their first laneway house on a lot owned by her in-laws.

There are challenges to this, she says, as her aging in-laws would ideally like to free up some cash they contributed to the shared mortgage for their leisure activities.

“The reality is that we took a leap of faith and continue to do so amidst a lot of legal and financial challenges that are pretty complicated to navigate,” she said.

“So not only are we now both on a mortgage, even though my in-laws paid for their portion outright, that creates challenges for them when they want to access, access any money for themselves. When they approach to try and look into that, because they legally are on title with this additional mortgage, they were no longer eligible.”

Bryn Davison, co-owner of Lanefab Design/Build, suggested the City should go even further in its policy considerations by enabling the construction of a new multiplex in front of an existing laneway house, effectively creating a triplex, and the stratification of an existing primary house on a single-family lot into three strata units, which is already practiced for larger character houses.

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