What is a backyard cottage?
Backyard cottages are detached accessory dwelling units, a separate dwelling on the same lot as a primary residence in a residential zone. They are also called granny flats and laneway homes or ECHO housing. Unlike many types of ECHO housing they are permanent structures built to the same standards as new construction. Increasing numbers of municipalities are allowing backyard cottages. Backyard cottages are popular with municipalities because they provide affordable housing options and help them to meet growth management goals. They are popular with residents because they provide housing options that allow people to live where they work and play. Backyard cottages are regulated by zoning codes that limit their size, height, and location. In most cases the owner of the property must live in either the main house or the backyard cottage.
What backyard cottages are used for?
Aging in place
Aging in place is a catch phrase for seniors maintaining independence by living at home as long as possible, a goal most of us share. Unfortunately, many factors may conspire against this dream. Typical houses and living environments often don’t often favor seniors. In many instances our homes are not accessible for those with mobility impairments and may be located away from family and services.Backyard cottages are a great option for many seniors. On one hand, families may be able to build a backyard cottage on their lot enabling all the benefits of multi-generational living. However, unlike moving into a room in the main house, seniors and their parents are able to maintain their independence. Because new cottages can incorporate universal design standards that facilitate mobility they may be cheaper than remodeling an older house to say add a downstairs bath, or a residential lift. There are many other considerations like efficient environmental controls, easy to use hardware and appliances that will enable a senior to live and function comfortably in their home. A senior may also build a cottage on their own lot to house a caregiver or a family member.Beyond the immeasurable benefits of having family close by, there may be real financial incentives as well. In home assistance is much less expensive than assisted living or a nursing home care which runs in the range of $3,000 to $5,000 per month*. The cost of a cottage financed through an equity line of credit is in the range of $1,000 per month and increases the value property.*Genworth Financial 2008 Cost of Care Survey
Home office/guest cottage
Even those who embrace the downsizing ethos often need extra space. Because backyard cottages are new construction they cost less to build and are less disruptive than many additions. Backyard cottages can be an affordable alternative to leasing office space especially when factoring in the cost and time involved in commuting to and from work.
Investing where you live
Backyard cottages have distinct advantages over most investment properties. Because they share a lot with a primary residence the land they occupy is essentially free to the owner. And their construction may often be financed with an inexpensive equity line of credit. As a result, rental cottages in good markets can reasonably be expected to generate a net rate of return more than double most rental properties.
