BC's small-scale housing rules mean most single-family lots can now hold more than one home. A secondary suite in the house plus a laneway house or garden suite behind it is allowed on most lots, and in Vancouver many lots can go further. The question is no longer whether you're allowed, but whether it pays. In 2026, a 700 sq ft laneway house in Metro Vancouver typically costs $350,000 to $450,000 all-in and rents for $2,200 to $3,200 a month. That's roughly a 6% to 8% gross return on cost before running costs, financing and tax. This page shows the real numbers for your lot.
What you can build
- A secondary suite inside the house, usually the basement. It's the cheapest option, because the shell, roof and foundation already exist.
- A laneway house or garden suite is a separate small home in the backyard, with lane access where there's a lane. Vancouver has allowed laneway homes city-wide since 2009. Burnaby, Coquitlam, North Vancouver, Surrey and others have their own versions and rules.
- Both together. Under BC's small-scale multi-unit housing rules, municipalities must allow at least three or four units on most single-family lots. A house, a suite and a laneway home fit within that. On larger lots or near frequent transit, a multiplex may be worth more; compare with the multiplex calculator.
A laneway house stays on the same title as the main house. You can't sell it separately unless the whole property is converted to strata, which most municipalities restrict for these units.
What it costs in 2026
| Project | Typical all-in cost | Typical rent |
|---|---|---|
| Laneway house, 700 sq ft, mid-range finishes | $350,000–$450,000 | $2,200–$3,200 |
| New basement suite | roughly 60–70% less than a laneway house | $1,800–$2,300 |
| Legalizing an existing suite | $35,000–$85,000 | $1,800–$2,200 |
A laneway budget breaks down roughly like this:
- Design: $15,000 to $40,000.
- Permits and city fees: $10,000 to $20,000, and more where development cost charges apply.
- Construction: most of the total. Quotes run roughly $350 to $550 a sq ft for mid-range builds, and Step Code energy requirements push costs up.
- Services: BC Hydro, water and sewer connections vary enormously with your lot. Confirm them early.
- Contingency: 10% to 15%.
From first design meeting to occupancy is typically 10 to 16 months. Vancouver's permit process for straightforward laneway applications takes a few months of that.
How the numbers work
On the default inputs: a 700 sq ft laneway house at $450 a sq ft, with $45,000 of soft costs and 10% contingency, costs about $396,000.
- At $2,700 a month, after 3% vacancy, $3,000 of running costs and the extra property tax on the value it adds, it nets about $27,600 a year. That's roughly 7% on cost, and it pays back in about 14 years.
- Borrowed in full at 4.39% over 30 years, the payments are about $1,970 a month, which leaves about $330 a month before tax and close to nothing after it.
Three things decide whether it's a good project:
- Rent relative to cost. Efficient layouts rent almost as well as larger ones. A well-planned 600 sq ft unit can earn close to what a poorly planned 800 sq ft one does, at much less cost.
- How you pay for it. At today's rates, borrowing the whole cost leaves little monthly margin. Cash or a partial loan makes the monthly numbers comfortable.
- What it adds to the value. Buyers pay for income and space, not for your construction cost. Builders commonly cite 60% to 80% of cost showing up in the assessment. The calculator defaults to 70%, which is conservative.
Paying for it
- CMHC-insured suite refinance. Since January 15, 2025, you can refinance up to 90% of the home's value after the suite is built, with a 30-year amortization, on homes worth up to $2 million and with up to four units. The lender and CMHC must approve it before construction starts. Line it up before you sign with a builder.
- A home equity line of credit. Flexible for staged construction payments, usually at prime plus a margin, and interest-only. See the HELOC calculator.
- What no longer exists. The federal $80,000 Canada Secondary Suite Loan was cancelled in Budget 2025 before it opened. BC's forgivable Secondary Suite Incentive Program closed to new applicants in March 2025.
Tax and rules to know
- Rental income is taxable. You can deduct interest on money borrowed to build it, a share of property tax and insurance, repairs, and depreciation (CCA). Depreciation is recaptured as income when you sell, so claiming it is a choice, not an automatic win.
- The principal residence exemption. Building a separate rental unit is a structural change. When you sell, part of the gain can become taxable instead of exempt, especially if you've claimed depreciation. Get advice before building if you plan to sell within a few years.
- GST. Building a new residential unit to rent can require you to self-assess GST on its value, with a partial rental rebate. Whether it applies depends on how the unit is built and used. Ask an accountant before construction, not after.
- Assessment and property tax. The new unit raises your assessment and your tax. The home owner grant still applies to the property if you live in the main house and are otherwise eligible.
- Tenancies. A long-term tenant has full Residential Tenancy Act protection. Short-term rental is allowed in one suite or accessory unit on a property that's your principal residence, if the municipality permits it and you register with the provincial registry. See the investor guide.
Laneway, suite, or multiplex?
- Choose a suite if you want the best return on cost, have a suitable basement, and are happy with a smaller rent.
- Choose a laneway house if you want the highest-quality rental, space for family, or privacy from the tenant, and can carry the cost.
- Consider a multiplex, or selling to a builder, if your lot is large or near frequent transit. The land may be worth more as a development site than as a house with a laneway. See the transit-oriented zoning calculator.
Mistakes we see
Budgeting from a builder's per-square-foot headline without design, permits, services and contingency.
Starting construction before financing is approved. The insured suite refinance can't be added afterwards.
Counting on the $80,000 federal suite loan. It was cancelled.
Ignoring the tax side: depreciation recapture, the principal residence exemption and GST self-assessment.
Designing big instead of efficient. Rent doesn't rise in step with square footage.
Not checking the lot first: lane access, services, trees, and whether a multiplex would be worth more.
Questions people ask us
How much does a laneway house cost in Vancouver in 2026?
Typically $350,000 to $450,000 all-in for about 700 sq ft with mid-range finishes, including design, permits, construction and contingency. Construction quotes run roughly $350 to $550 a sq ft, and lot conditions and services can move the total a lot.
How much rent does a laneway house earn?
In 2026, typically $2,200 to $3,200 a month in Metro Vancouver, depending on size, finishes and neighbourhood. Studios and one-bedrooms sit at the lower end and two-bedrooms at the upper end.
Is building a laneway house worth it?
On typical 2026 numbers it earns roughly 6% to 8% of its cost in rent before running costs, and pays back in about 12 to 16 years. It works best with some cash in the project, efficient design, and a long hold.
Is a basement suite cheaper than a laneway house?
Usually much cheaper, roughly 60% to 70% less, because the house's shell already exists. It rents for less too, but the return on cost is typically higher.
Is the federal secondary suite loan available?
No. The $80,000 Canada Secondary Suite Loan was cancelled in Budget 2025 before it opened. CMHC's insured refinance for suites, up to 90% of the home's as-improved value over 30 years, is available, but it must be arranged before construction starts.
Does a laneway house affect my principal residence exemption?
It can. A separate rental unit is a structural change, and part of your gain may become taxable when you sell, especially if you claim depreciation. Get tax advice before you build.
Can I sell a laneway house separately?
Generally no. It stays on the same title as the main house, and most municipalities restrict stratifying these units.
778-918-5990
Thinking of adding a unit?
Dan can check what your lot allows, whether a laneway home or a sale to a builder is worth more, and connect you with lenders who arrange the insured suite refinance before construction. Your numbers come along with the message.
