What is the difference between a Coach House and a laneway house in Vancouver?
Vancouver's rising population density and high real estate costs have pushed homeowners to explore alternative housing options like coach houses and laneway houses. Both of these housing types offer the opportunity to increase living space or generate rental income on an existing property, but there are key differences between them—especially in terms of location, design, and legal implications. In this blog, we’ll break down what distinguishes a coach house from a laneway house in Vancouver, so you can decide which option suits your needs best.
What is a Coach House?
A coach house is essentially a secondary house located on a property that already has a primary residence. Historically, coach houses were used to store horse-drawn carriages, often in a detached structure behind or beside the main house. While these historic origins have faded, modern coach houses serve as standalone dwellings that can be converted from garages, outbuildings, or custom-built structures.
Coach houses come in a range of sizes and styles and are typically found in suburban or rural areas where there is more land. They are often used as guest houses, rental properties, or even homes for aging family members. However, the main factor that distinguishes coach houses from laneway houses in Vancouver is the location and city regulations. While they can be found in metro areas, coach houses are more commonly seen in towns with fewer zoning restrictions.
What is a Laneway House?
A laneway house, on the other hand, is a more specific type of dwelling that has become increasingly popular in Vancouver as a solution to high-density housing challenges. These homes are built in the backyards of properties and typically face a laneway or alley behind the primary house. Laneway houses are often created in place of garages and provide independent living quarters that have their own entrance and parking.
In recent years, Vancouver has embraced the construction of laneway houses to increase the housing supply. The city has issued over 3,000 permits for laneway houses as part of an initiative to provide affordable rental units without requiring large new developments. This makes them ideal for urban areas where space is limited, but demand for housing continues to grow.
Location and Zoning: The Biggest Difference
The primary difference between a coach house and a laneway house is where they can be built. Laneway houses are largely restricted to urban areas like Vancouver, where city regulations allow for the use of laneways as residential areas. These homes make efficient use of otherwise underutilized space by turning backyards and alleys into living spaces.
Conversely, coach houses are often found in less densely populated areas, where the zoning rules may be more relaxed. In these areas, homeowners typically have larger lots, allowing them to build second homes that are not restricted to facing a laneway. While laneway houses are part of Vancouver’s strategy for dealing with urban population growth, coach houses serve as a more flexible housing option in rural or suburban settings.
If you have drawings of your laneway home already, visit the City of Vancouver’s website to check if they follow regulations at the link below:
Legal and Tax Implications
Understanding the tax and legal implications is crucial if you’re planning to build or rent either a coach house or laneway house.
When you build a laneway house, it is considered a separate housing unit by the Canada Revenue Agency (CRA). If the laneway house is rented out, it is no longer part of the principal residence exemption, which shelters gains from capital gains tax when you sell your primary residence. Essentially, renting out a laneway house could create a tax liability when selling the property, as the laneway portion would not be tax-free.
In contrast, a basement suite or a portion of the main house that is rented out can still be eligible for the principal residence exemption. This is where the tax distinction becomes important, and it is essential to seek professional advice to understand how rental income or capital gains on a coach or laneway house will be taxed. In some cases, coach houses may follow similar tax treatment if they are considered separate dwellings, particularly in urban areas with more stringent regulations.
Privacy and Design Considerations
One often-overlooked aspect of choosing between a coach house and a laneway house is the level of privacy each offers. A laneway house typically has its own driveway, entrance, and parking area, making it more independent from the main house. Tenants of a laneway house may experience minimal interaction with the homeowner since the home faces a different street or alley.
On the other hand, coach houses may share common spaces with the main house, such as driveways or outdoor areas, leading to more frequent interactions between the residents. This difference in privacy can influence the style of living and the potential appeal for renters or family members.
Cost Considerations
Building costs can vary significantly depending on whether you’re constructing a coach house or a laneway house. In Vancouver, the average cost of building a laneway house is estimated to be around $300,000, but the final price depends on factors such as accessibility for construction, landscaping, and electrical hookups.
Coach houses, depending on the size and location, might have a broader cost range. They are often more customizable, especially in areas with fewer zoning restrictions, meaning the homeowner has more flexibility in design and function.
Conclusion: Which Is Right for You?
Both coach houses and laneway houses present unique opportunities for homeowners to expand their living space, generate rental income, or accommodate family members. If you live in an urban area like Vancouver and want to make use of a small backyard or existing garage space, a laneway house may be the right choice. However, if you have more land or live in a rural or suburban setting, a coach house might offer greater flexibility in design and function.
Before making any decisions, it’s crucial to consider the legal regulations, tax implications, and design preferences that come with each type of housing. Consult a professional to ensure that you fully understand how building a coach house or laneway house could impact your property value, taxes, and rental opportunities.
