When many people in Toronto purchase property, some of them immediately begin thinking about what can be done to increase the value. One way to do this would be to add a laneway home in the back of your existing place. This is a small home that typically faces an alley and is perfect for owners who are interested in additional income as well as renters who are interested in a smaller place to live. If you would like to know more about how much it would cost to build one, here is a breakdown of what you can expect to invest.

Obtaining A Permit

Since there are only certain parts of Toronto where people are allowed to erect laneway homes, it is important that you check to see if your area is eligible. If it is, the next thing you will have to think about is obtaining a permit. Building an additional home on your property without getting permission would be a huge disaster and it would eventually cause more problems than it is worth. The exact cost of a permit will differ depending on the size of the home you are building, but the base rate is $17.16 per square meter.

You will also be responsible for a $52.08 fee for a residential unit and $23.15 for certification of plans and the permit associated with that. To give you an idea of what an estimated cost would be, the total fees for building a 500 sq. ft. laneway home would be a bit under $700.


If you have to demolish any part of the main home or a garage in order to add this additional home, you will have to pay demolition fees. The cost of demolishing both would be approximately $1,753=0. In the event that there is no reason to do any demolition work, you will be able to save, as this is not needed in all situations.

Architecture and Engineering Fees

Those who have a background in architecture and/or engineering should rejoice since it means that they can save substantially when it comes to this part of the construction process. Generally, you can expect to pay at least $10,000 to have someone construct solid plans for you. You cannot skip this step since you want to make sure that the place you are having built is feasible and it will be structurally sound. The exact cost will depend on several factors, like the firm you decide to hire, but you should move forward knowing that the amount here is a starting point.


Not only is there a base amount that one can expect to pay when they are having a laneway home constructed, but there are many other fees that are associated with it. Generally, it costs about $200 for every square foot. Using a 500 sq. ft. home as an example again, this means that you are looking at around $100,000. Keep in mind that there is a premium if you want to have a roof installed. This cost differs depending on the contractor and the type of roof. Other things you will need to worry about paying for include:

– Survey Fees

Before building has begun, you may need to have the land surveyed. Some construction companies will require this before they are willing to get started. These cost around $2.000.

– Heating System

Since much of the world is focused on living in an environmentally friendly environment, you might want to think about that when purchasing a heating system. This part of the process will add another $1,000-$4,000 to your total cost. Opting for something that is not so green will be cheaper, but it will increase your carbon footprint and possibly the amount you end up paying overall.

– Electrical System

This has to be a totally different system from the one that is used in your main home. If the structure already has some wiring, there is a chance that you can get away with paying as low as $1,000. On the flip side, if an entirely new system needs to be built from the bottom up, you can expect to pay as much as $20,000.

– Water And Sewer

This is something else that is absolutely required and it has to be separate from the system used in the main home. This is rather costly and you should budget at least $7,500. A larger, more complicated system can run as high as $30,000.

Making It Livable

Once the property has been constructed, it will be your responsibility to make sure that it is livable. This means that you will need to install appliances and worry about landscaping. The latter may not seem like an essential, but curb appeal goes a long way when you are trying to rent a property to someone else. In addition, it is required that you make the place look like a nice home.

– Landscaping Fees

If this is your forte, or you know someone who does this as a hobby, you can shave some money off your total if you don’t have to hire a professional to take care of this for you. Letting an experienced company handle this means that you should be willing to invest $500 or more.

– Adding Appliances and Plumbing

You will need to add a refrigerator, stove, toilet, sink, and bathtub/shower. The quality of these items will determine the total cost, but overall, you should be prepared to spend at least $2000. Adding a washer and dryer will cost you about $500 more, but you should consider it since this means you will be able to charge more or rent.

As you can probably tell, building a laneway home may seem like a small task, but it can cost a considerable amount of money. From paying for permits to making sure that the landscaping is in order, there will be so many things that you will be required to pay for during this process; make sure that you are financially prepared for the road ahead.