Frances Bula header image 2

Building an infill/laneway, Part 4: Do you have the stamina, interest, location to make this doable?

February 17th, 2021 · No Comments

My neighbour spent $40,000 going down the road to building an infill house on his lot, with a plan almost identical to ours. He actually started a little before I did, also hoping for a place for their son, his wife and toddler.

But he gave up after a couple of years into the same process I went through. He and his wife sold at the top of the market to what turned out to be an investor buyer, and their young relatives, who had camped at the house with them for a while, moved somewhere else in the city.

We kept going because we felt we had no options. And, as well, I had prepared myself and everyone else at the beginning: “Be patient,” I was warned. “Anything can happen. There will be twists and turns.”

That’s the kind of thing anyone is going to have to weigh as they contemplate whether to house a whole other family on their existing lot, along with many other factors.

Some people connected to city planning have contacted me during this series to say that I’m not presenting a realistic picture.

There is a regularized existing laneway-house policy in the city that’s been in place since 2009, they say, and is much less complicated than what I went through. Mine was in a special zone, they say, one that allows infills that can be stratified, which required a lot more negotiation and fussing.

Yes, that’s true. And I’ve heard of many, many laneways built in less time and for less money in the city.

But it’s also true that you never know when city policy is going to change and throw a wrench into your plans.

When we started, my builder, one of the most experienced in the city, was confident about what we could get because there was a 30-plus-year-old program detailing the requirements to build an infill under a heritage-revitalization agreement. A noted landscape architect had just completed a similar infill on the next block the previous year.

It all seemed straightforward – until someone in city planning decided that process was no good any more. And we couldn’t be “grandfathered in” because we had only spent a year negotiating with the planning department over the allowable size and plan – but hadn’t put in our official development-permit application by the time the freeze came down.

As well, some of the ups and downs we went through can happen to any laneway builder: having to replace all the utilities; being hit with a sudden requirement for a new sump pump; wrangles over trees, garage placement, sidewalk materials and more.

So anyone thinking about building a laneway house needs to assess their own capacity for patience.

And that’s just the beginning of the issues to ponder for those of us fortunate enough to have nabbed a piece of Canadian land while it was still possible.

Other factors to ponder range from aesthetics and privacy, to financing construction, to tricky ownership arrangements.

So think about the following: Do you even like the idea of having other people that close?

I had always been intrigued by the idea of families living in a kind of compound since I’d seen something like that in Cuernavaca, Mexico, 40 years earlier when visiting the family of a friend. So that was an easy yes for me, especially since our older house is sited further forward on the lot, giving us extra backyard space.

Is there a benefit, in general? Yes, I thought, for environmental and general city-building reasons. We added housing and doubled the number of people living on our little slice of Vancouver.

And then there was the advantage of being able to (sort of) sell off some of our land equity to our kids, allowing us to downsize without moving. One of the significant pluses.

Does it work in your city and on your existing lot?

What your city will allow in terms of size is crucial. Cities are constantly updating their rules for this form of housing. The fact that we were allowed about 300 more square feet in our zone than in other parts of the city – resulting in 1,040 square feet, plus an enclosed garage – made a huge difference.

A house at 750 square feet wouldn’t have been worth it. It wouldn’t have fit a family of five, or us, in the eventual swap we’re planning to do. And renting it out would do little more than cover the mortgage that we’d have to take on for construction costs.

Sure, at the end of however many years, I guess we’d be able to sell our whole mini-resort for more money. That’s what the planners I talked to at various points seemed to suggest as a justification for any extra requirements they imposed. But selling is a long way off – with a big debt to have to take on in the interim.

Laneway homes are cost-effective for builders who raze an entire lot and do the triple-combo allowed in Vancouver – main house, basement suite, laneway – all in one go, so that general site-preparation costs are spread out over three units instead of one.

But for people like us – people who aren’t professional developers and not wanting to add a rental unit to our portfolio – building a laneway house only makes sense if you’re trying to solve a family housing problem: finding a place for kids or for aging parents.

But the biggest question is whether you can handle the almost inevitable financial complications.

As noted before, our costs went from the original $350,000 to $510,000 almost five years later, just before construction started.

Then there were a whole lot of other extra bills aside from the builders’ contract. The $10,000 for the new sump pump. Another $1,000 for the electrical hook-up, $500 for someone to locate the exact location of a section of the existing gas line that wasn’t showing up on any official plans, another $5,000 for the new fences, another $1,100 because the grade of the house was unexpectedly higher than the rest of the yard and that required more retention work, about $6,000 in interest on the credit line that I used to cover the construction, $2,000 for a private assessment and legal work to change ownership details, and numerous other smaller amounts. That entailed scrambling to extend our line of credit (resulting in more fees) and having to provide a lot of reassurances to the bank about our income in the middle of a pandemic.

Finally, there’s the financial complication of ownership.

At the moment, a combination of city and provincial laws makes it either illegal (in Ontario) or challenging (in B.C.) to partition off your laneway house and sell it outright.

In Vancouver, you’re technically allowed to stratify your laneway (and basement suite) if you are “preserving” a pre-1940s house.

In practice, very few homeowners do it because provincial strata laws, which Vancouver has shown zero interest in trying to get adjusted, require that the main house be upgraded to current building-code standards.

I’ve been told by professional builders doing these kinds of projects that it would mean spending $500,000 to $1-million on renovations to our main house to meet those standards. In the process, the existing house would pretty much be eliminated, they say.

We didn’t want to take on that kind of debt (again, supposedly to be recouped at some later date when you cash out) or destroy our existing house.

So that has forced us into having to take on a complex ownership structure with our kids. They are getting a partial share on the land title, in proportion to however much money they are able to pay.

At the moment, it’s not a lot more than a break-even on the construction costs. We’ve asked that they increase their share over the years, so that we are slowly selling off some of our equity to them.

But it makes for a stressful financial situation.

As I’ve announced to the family multiple times, no one is allowed to run off to “find themselves,” develop a gambling habit, get divorced, or die.

That would create a huge mess, since it’s very difficult to sell off one piece of a joint-ownership property and likely neither of our households would be able to afford to buy out the other.

So we’re winging it a bit, hoping for the best and no complications. Check back with us in 10!

Categories: Uncategorized