One of the first steps in planning your laneway suite is to establish your financial goals. At this early stage, it’s important to understand what a complete development budget will entail in order to set realistic expectations and put you in a position for a successful investment.
Soft costs refer to expenses associated with design, approvals and other items required beyond the material and labour involved in construction. Common soft costs include consulting fees, permit fees, legal fees, and municipal levies.
To secure permits for your laneway suite you will require an accredited designer (Architect or BCIN professional). Most projects also require structural and mechanical engineers. When selecting your design consultant, check if their scope of work and fees include engineering fees. It is also important to consider other consultants that may be required on a case by case basis. These commonly include a surveyor, grading consultant, or arborist. When considering building a basement, one should also factor in costs associated with shoring design, vibration studies and geotechnical evaluations that may be required as part of the permitting process.
Permit application fees are paid to the Municipality and are calculated based on the size of your suite. If you are considering going to the Committee of Adjustment (CofA) to seek a minor variance, ensure you are considering the CofA application and consulting fees that may be required for that part of the work. If you are applying for a permit to injure or remove a tree there is a separate application fee, and you may be subject to costs associated with required tree replanting.
When adding a unit, or constructing new space on your property, the Municipality typically levies Development Charges (DC’s), based on the size and nature of your project. Laneway suites are unique in that they are exempt from DC’s, whether that is via the city’s Development Charge Deferral Agreement, or the fees being waived based on the number of units on your lot.
When selecting your design consultant, be sure to ask questions about their experience, fee structure, inclusions/exclusions, and timing of payments. An experienced designer will be able to clearly outline every anticipated cost along the way and if there are any unknowns that should be accounted for beyond your agreed scope of service.
Hard costs are those associated with material and labour, typically paid to the general contractor, or construction manager. While it is difficult to determine an exact budget before investing in some preliminary design work, we recommend collecting feedback from various experienced sources to understand a general cost range before committing to the project.
The first rule of budgeting is to set realistic expectations. When doing your research, ensure you are comparing apples to apples. Some estimates may be lower than others at first glance, but they can often exclude big-ticket items like servicing, foundations, finishing or landscaping. Do not be afraid to ask questions and trust your common sense. It is also important to identify your key priorities. Who is the end user and how does cost, maintenance and durability factor into your design decisions? Use this as a basis to identify any areas of strategic investment like building performance, finish quality or energy efficiency, and adjust your budget to suit.
Maintaining a contingency fund is important throughout all stages of the project. This accounts for variations in site conditions and items that may be discovered during demolition and excavation. Service connection costs may vary depending on the property and in some cases there may be additionals for replacing existing components, upgrading utilities and remediating areas of the basement. In recent months, construction materials like lumber and aluminium have also increased in cost, so the contingency can assist in mitigating those uncontrollable factors, ensuring they do not jeopardize the viability of your project.
When taking on a major building project for the first time, it is easy to overlook some common costs that have a significant impact on the final spend.
Firstly, consider how you will fund the project and what your carrying costs will be during construction – time is money. Determine a realistic timeline and factor in your cost of borrowing, cross referencing that with the financing options you have available.
Sales tax also has a significant impact on the budget if it is not considered from the outset. 13% HST will be charged on both your hard and soft costs, so keep this in mind when evaluating consultant proposals and contractor quotes. You may qualify for a partial rebate on HST depending on your circumstance, so it is always beneficial to understand any incentives that may be available in your situation.
The last question to ask is what kind of temporary provisions will you have to make during the build? You may require temporary parking permits, storage arrangements for your garage contents, or to provide alternative accommodation for tenants at certain times. Consider your options depending on how long you expect to be without a garage and work with your experienced design and construction team to understand the extent and timing of disruption to the main house.
Preparing your budget is the first step in an exciting and rewarding process. An informed financial breakdown lays the foundation for a successful project well before pencil hits paper or a shovel hits the ground. Remember to consider the entire picture, factor in unknowns, and avoid stretching yourself thin. Make sure you are not only comfortable with your spend, but your return on investment as well. Our team offers a complete financial schematic as part of our Preliminary Design phase intended for this exact purpose. Give us a call, or send us an email for more information We are here as a resource. Happy budgeting!