Living Small in Laneway Houses

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Image: Adam Blasberg
Schatz and Purdy's 500-square-foot home blends in
with its Dunbar surroundings.

From their own deck, the Mendozas can now glimpse, beyond their backyard’s new bamboo hedge, the flat-roofed, one-bedroom house that resulted, and they happily talk about the financial considerations that led to its construction. “In terms of an investment . . . if you build that for $220,000,” says Manuel, pointing, “and you rent it for $1,700 a month, it’s a no-brainer. Whatever your mortgage, you’ll be ahead.” Even with a $150,000 increase in their property’s assessed value, and a subsequent increase in property tax, plus maintenance costs and higher insurance and utility costs for the two houses, the Mendozas believe they’ll benefit from the cash flow as long as the laneway house is rented. Their young tenants, a professional couple who’d grown tired of apartment life, are just visible on their sunlit, west-facing balcony nearby. For the same rent they’d pay for aerial highrise life downtown, they have their own little house and garden. 


The Mendozas report that their east Vancouver neighbours have all been curious, stopping to ask about the lane house’s design process, the permit protocols at city hall and the building’s earning potential. Everyone has, not surprisingly, wanted a peek inside. It is, in fact, the very first laneway house completed and occupied in Vancouver. And no one has complained. Most of the Mendozas’ neighbours, like themselves, have immigrant Asian or European roots and understand that living close is an inevitable part of urban life. 



Laneway house critics

There are, of course, critics of Vancouver’s laneway housing. None are more vocal than the Dunbar Residents’ Association, and its spokesperson, 65-year-old retired architect Peter Selner. The DRA feels that neighbourhoods should have had a say in whether lane houses were permitted in their district, and that no such consultation took place. They’re also leery of the privacy intrusions laneway structures inevitably make upon those living nearby. They’re especially worried that the three side-by-side, over-height lane homes built in the 4600-block of Point Grey’s West 11th Avenue might be duplicated in their adjacent neighbourhood. But as the months have passed, criticism has subsided as laneway regulations have been tightened. In fact, the city has imposed a strict one-and-a-half-storey height-limit on buildings. 


While the Mendozas built on their own property for rental purposes and the Schatz/Purdy couple built for themselves in their family’s backyard, a third laneway option exists for private developers like Vancouver’s John Kyriazis, age 55. His latest project is a nearly completed 3,000-square-foot rental house and its adjacent two-bedroom rental lane house on a 33-foot corner lot on Triumph Street in east Vancouver. This simultaneous construction of two new houses on a single lot occurs in over half of all laneway projects to date. “It’s cheaper to do two at the same time,” says Kyriazis. “It costs $15,000 to bring new sewers and gas to the lot’s property line, whether it’s one or two houses. Landscaping’s cheaper. Construction’s cheaper.” Hammers bang and cupboards are being installed around him as he discusses the $550,000 construction project with Vancouver realtor James Wong. 


The two run through the financial calculations. If Kyriazis chooses to live in the lane house, the two rental units in the main building should produce around $52,000 a year in revenue. With his monthly mortgage payments, plus insurance, taxes and other expenses, Kyriazis figures he’ll still be up over $10,000 a year in rental revenue. He calls this his “retirement income.” The trick of the math is this: when you build a laneway house on a single-family lot, the land for the lane house is, ostensibly, free. Both men admit they’ve faced the annoying fact that many banks have yet to catch on to the equity considerations and the economic benefits that lane homes bring to investors. Vancity, they agree, is a leader in promoting the social and financial advantages of putting two houses where once there was only one. 


Vancity has what it calls its Laneway Homebuyers’ Bundle, which is meant to encourage the development of lane homes. As the credit union sees it, these small backyard buildings will increase the amount of affordable housing in Vancouver without ghettoizing the elderly, or low-income workers or those who don’t like highrise living. They’ll also help keep families together, with aging parents and children choosing to live side by side. As Colin Lawrence, mortgage development manager and point man for Vancity’s laneway program, explains, “Many of these laneway houses start as rental properties. Typically, that’s $1,200 to $1,700 a month for one bedroom; $1,400 to $2,400 for two bedrooms. Depending on equity (usually the primary house), the down payment and type of mortgage plan, the monthly payment on a $200,000 laneway loan is around $720 to $900. So the figures work. But . . . the purpose of these houses can evolve. They can be converted into space for, say, an elderly parent. Or space for university-age kids. Then, maybe, rental income drops.” 



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