Laneway Homes Toronto

How Much Does It Cost To Build a Laneway House in Toronto?

The average house price in Toronto recently reached the million dollar mark in 2021 and if you’re looking to increase your value even more you may want to think about adding a laneway home on your existing property. A laneway house typically faces onto an alley and is an ideal way to earn income by renting it out or to use as an in-law suite or for visiting guests and family etc. Of course, you can always live in the laneway house yourself and then rent your main home.

However, you can’t simply start erecting your own small laneway house on your land as you need to go through the proper channels.

Permits and Fees

The first thing you need to do is find out if laneway houses are allowed in your area of the GTA since they’re not permitted in all locations. If these types of buildings are legal in your neighbourhood you’ll then need to obtain a proper building permit. The cost of this permit will generally depend on the size of home you’re planning to build but the current base rate is approximately $20.00 per square metre.

In addition, you’ll need to pay additional fees for a residential unit and for certification of plans. On average, the permit cost and fees on a 500 square-foot laneway house in Toronto would be close to $1000.

Laneway Home Builders in Toronto

Architecture and Engineering Costs

Unless you’re an experienced architecture and/or engineer you’ll need to hire the services of pros and this could cost as much as $10-15,000 to come up with feasible plans for the home. You can’t really bypass this either since you need to be sure the house will be structurally sound. If you work with a Design-Build contractor then they will manage all of this for you.


Construction Costs

There will be a base construction fee for the house as well as several other costs involved. A 500 square-foot laneway house will run you around $200,000-250,000. The costs vary according to design and style and will also vary from contractor to contractor. The roof is typically an additional cost.


Survey Costs

The land could need to be properly surveyed before you can begin building as some contractors will require you do so before they start. The average price of a survey is approximately $2500 in Toronto.



Unless the laneway house is going to be used in the summer only, you’ll need to have a heating system installed and this could cost about $5,000 to $10,000+. There are different heating options and while one may be less expensive to install it could cost more in the long run to operate it due to the monthly bills.

Custom Laneway Home Designs Toronto


A laneway house needs an electrical system which is independent from your main residence. If a new system is installed the cost could be as high as $20,000.


Water and Sewer

Another necessity in a laneway house is water and sewer and again, this needs to be independent from the main home. A simple system is approximately $7,500 while a  more-complicated and larger one may be as high as $30,000.



When your Toronto laneway home has been built you’ll then need to outfit it with appliances and furnishings if you want to make it a livable habitat. This means you’ll need a refrigerator/freezer, oven, sink, toilet, shower/bathtub etc. You may also decide on a dishwasher and washer/dryer, which would enable you to collect a higher rental fee.



If you have the time, room, energy and money, you may also want to perform a little landscaping work around the building. This is especially true if you’re trying to attract potential renters. Of course, you may wish to do this on your own or you may decide to hire professional landscapers for an additional cost.

While a laneway house may seem like a small and simple home it’s no small task to build one though though. It’s basically a smaller version of a regular Toronto home and requires most of the same amenities, fees and costs etc. Whatever you can think of as a cost for a regular-sized home will more or less need to be included for a laneway house.


About Novacon Construction

Novacon Construction is a custom home builder and home addition contractor in Toronto. We specialize in large scale home renovation projects as well as laneway home construction. Contact us today to learn more about laneway homes and to schedule a free consultation.

Novacon Construction