The city took a significant step toward changing its housing policy Wednesday, after a local community council voted to allow housing suites in the city's backyard laneways.

The Toronto East York Community Council voted unanimously to amend the city's Official Plan and Zoning By-Law to allow laneway suites in Toronto and East York. The matter will now be considered by the full Toronto council at its next meeting at the end of the month in advance of a final vote.

"This clearly shows that we're taking housing matters and issues seriously," said Coun. Ana Bailao, who represents Ward 19, Davenport. Bailao has led the effort to change the policy along with Coun. Mary-Margaret McMahon since Toronto started to consider the issue in 2015.

The changes would streamline the approval process for homeowners across the city seeking to create a laneway suite — a small apartment or suite at the back of a residential lot that is separate from the main residential unit. Homeowners will be able to erect new two-storey structures or convert existing ones, such as garages, into spaces for living or renting.

Toronto has around 2,400 laneways spanning 300 kilometres snaking across the city. Most are used to store vehicles.

The community council originally deferred a decision at its May meeting because councillors wanted more time to consider the changes. They passed some amendments, including a $1-million affordable housing pilot that will see the city provide subsidies to help people rent their suites at below-market rates.

Bailao and McMahon have been working in conjunction with two local nonprofits that promote healthier living in cities: Evergreen and Lanescaping. Both organizations collaborated on a report based on extensive community consultation on laneway housing in 2017.

"We're very excited," said Jo Flatt, a senior manager at Evergreen. "We still have a big hurdle with city council but we're pretty confident that this can keep going."

Flatt said laneway suites are not going to solve the affordability crisis, but they will increase flexibility for homeowners.

"What it allows you to do as a homeowner is to actually increase your rental income so that you can cover your mortgage or be able purchase a home knowing that you'll have that rental income," said Flatt.

The community council approved the proposal after hearing from members of the public and other interested parties, including a former city planner, architects, and residents associations.

Barbara Vokac Taylor, a local architect, spoke at the meeting on behalf of the Toronto Society of Architects. She told CBC's Metro Morning that making it easier for homeowners to erect laneway houses will help the "sandwich generation" — people raising young children at the same time as caring for their aging parents.

She said council heard from a number of "regular people who are in a pinch with a housing stock that isn't flexible for their growing needs, and they're seeing a potential solution literally in their backyards."

Laneway housing is also a great opportunity to transform some of the city's lightly-used spaces, said Vokac Taylor.

"I think there is great potential for activating those spaces that are currently neglected, often litter-strewn, lonely," she said.

If Toronto council approves the policy, Canada's largest city will join Vancouver, which has relied heavily on laneway homes to increase supply in its hot housing market.

Vancouver has granted 3,000 permits to homeowners since first adopting a laneway housing program in 2009, according to the city's website. A city report says 12 per cent of Metro Vancouver's new housing stock came from laneway units in 2017.