Basement Apartments Legal In Ontario?

February 7th, 2011 · 61 Comments · Property Management, Rental Property

snowy home
Creative Commons License photo credit: David A Villa

In 1995 the Ontario government did a stupid thing. They caved to pressure and allowed the municipalities the right to govern if each city would allow basement apartments or not…

Here’s a well thought out example from Brampton Basement Apartments

Unintended Consequences

About 15 years later… we have a mess of consequences.

  1. Millions of illegal basement apartment
  2. Tenants extorting landlords
  3. Why keep your apartment up to the Fire Code if you can be shut down any day by the city?
  4. A whack of investors being sold “investment properties” that count on the cash flow from an illegal basement
  5. Homeowners who think the same thing they have an illegal basement apartment they rent out.
  6. I’ve heard of past owners requiring payment for affidavits that the suite was there prior to 1996.
  7. Confusing mess of regulations

Landlords Being “Criminalized”

On the day that municipalities became able to decide that basement apartments were illegal, a bunch of illegal landlords were created. The basement apartments were grandfathered in…but going forward once the home changed hands a few times… currently to legalize one of those apartments you have to track down the owner in 1994-1995-1996 to sign an affidavit and provide rent receipts and a bunch of other crap that are highly impossible to still have filed over 10 years later.

If your basement apartment was built after that time in many municipalities it’s illegal therefore no one is telling these owners how to build them. If the owner gets caught… there is a hefty fine if they don’t remove the kitchen in the apartment. Owners rent out these illegal suites all the time.

Affordable Housing

Basement apartments provide the most affordable housing in the open market. The government of Ontario doesn’t want to provide affordable housing, it’s way too expensive. Plus there’s the other consequence of grouping a large number of low income people in a restricted area. Some of these low income people have social problems and “other disabilities” which is why they find it difficult to obtain and keep meaningful employment. You often see a fall out zone around these low income housing complexes.

There are waiting lists of years to get into these affordable housing complexes or rent geared to income buildings. So now they would like unsuspecting home owners to provide subsidized housing for these tenants. They haven’t said this…but if interest rates rise there will be an awful lot of homeowners considering renting basement apartments to make ends meet.

So Is This A Good Thing?

If the legislation passes that makes basement apartments legal, it would be good for the many landlords who are currently renting out illegal basements. I’m not sure how many there are exactly, but it’s a lot. So all these landlords can breathe a sign of relief. As the government has discovered time and time again you can’t legislate compliance in these types of situations.

I do think it’s a good thing, as someone who has been in this business for many years, I have really noticed the decrease in tenant quality. With any person with good credit and a job able to get a mortgage, landlords got the leavings. Over time this has seriously eroded landlord’s returns. Nowhere is this more evident than in basement apartments which are the least desirable kind of accommodation. With the trend reversing itself and access to mortgages being limited to people who have credit scores over 620 and 5% down and now 30 year amortizations, I am already seeing improvement in the applications I process. This will trickle down to basement apartments as well as people will choose to rent there and save money. They are also the most economical choice for tenants.

I don’t really think that there will be a flood of new basement apartments. It’s hard to justify spending $30,000 or more on renovations to make a return of well under a thousand $ per month in most cases. For those of us that have them though, it’ll be a welcome respite from the current mish mash of municipal regulations.

What do you think? Good Idea or Not? Do you have an illegal basement you’re renting out? Looking forward to the day when you’re not a crook anymore?

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61 Comments so far ↓

  • David

    Not sure it matters if they are legal or not, people do it anyway. You may have a few more people do it if it is legalized, so there would be a bit more cheap housing.

    What exactly are the penalties if caught?

    • Rachelle

      It will depend on the municipality… according to this website http://www.brampton.ca/en/residents/By-Law-Enforcement/Pages/Basement-Apartments.aspx

      Prosecution — If you do not meet City codes, you are breaking the law. You run the risk of being charged and can face fines of as much as $50,000 — or even a year in prison — for each charge.

      They’ll have to build a new jail for the landlords :) Like we don’t have enough problems… Usually the city doesn’t fine, they just make you take the kitchen out. I’ve never heard of people going to jail either.

  • Laurie Preiss

    Is there actually, at this point in time, legislation in the works to make basement apartments “legal” in Ontario?

  • Jesse

    I wrote on Vancouver’s experience at http://vancouvercondo.info/2011/02/city-coming-to-terms-with-vancouver-secondary-suites.html

    The major issue in my view is compliance to building codes for safety and ensuring income is properly declared. If those elements are met, it provides a way of quickly adding density to an area that may encounter affordable housing shortages.

    To give you an idea, in Vancouver, well over 50% of east side properties have basement suites, in some cases two. Suites are legal in certain neighbourhoods, illegal in others. It’s to the point where City inspectors deliberately turn a blind eye to a property that has obvious suites. They inspect and as soon as they’re out the door, contractors come in and retrofit the not-to-code upgrades to facilitate a basement suite.

    Vancouver is different from eastern cities because its lots are generally more spaced out. It is difficult to increase density due to this — row housing is virtually nonexistent. The City has recently allowed carriage houses to be built as well. So in theory a homeowner can have a main house with two suites in the basement, along with a carriage (laneway) house. The term “single family home” is a dying animal out here.

    • Rachelle

      Well a survey of my street reveals that 3/4 of the houses in Toronto have these suites. Out of those 4 three of the suites are not for rented. It is very common. All of them are illegal even mine.

      I think part of the problem is that people view renting out part of their house as a temporary measure.

  • Apartments

    You can make basement and some place its illegal. But now time is changing according to new polices the basement is legal that’s great news.

  • Carmen

    This new proposition of making basement apartments legal in Ontario may be good for renters and would be landlords, but pathetically wrong for homeowners in upscale homes, specifically zoned “single family residential”.

    I for one, own such a home, located in a subdivision / neighborhood of expensive homes. We already have one neighbor who rents his basement illegally, and having set the precedence, we all fear the influx of lower income renters in our community.

    We are VERY concerned over the unavoidable deterioration of our property values if this proposition follows through.

    The lack of affordable housing should not adversely affect those of us who purchased homes that were zoned “single family” and assured by the municipality that it would remain that way!!

    What’s next? A garbage dump in an area previously proclaimed to be “green belt”? A heavy industrial plant in the middle of a residential subdivision? Seems that if this passes, anything is possible…..

    Unless they impose certain restrictions on where these units can be allowed, and they also address the rights of homeowners who don’t want them in their neighborhood, this is an absolutely abhorrent proposition!

    • Rachelle

      Dear Carmen,

      Have you read the latest Ontario Human Rights Tribunal’s views on the matter? You are not allowed to discriminate based on income, age, race, disabilities and so on. This also includes municipalities. A while back the OHRT sent an open letter to the city of North Bay that was trying to enact guidelines for student housing. I’m afraid the trend is toward more inclusion of “those people” not less.

      The lack of affordable housing affects everyone and I’m pretty sure in your exclusive neighborhood a few of your neighbors could use a little mortgage help. Furthermore the entire city of Toronto allows basement suites and guess what happened? Nothing.

      You have no right to tell your neighbor what they can and cannot do with their property, just as they have no right to force you to make a basement suite in your home and provide affordable housing.

      Furthermore I can assure you that the idea of creating and living with basement apartment dwellers in your own home sounds great in theory, but in reality with the rights that tenants have in Ontario and the skill of the new landlord, many people will just build the apartment rent it out a few times and then give up the entire thing as a bad job.

      • Ryan

        Dear Carmen,

        I’m not sure that low income people should be compared with garbage dumps. Say your aging parent lives on a pension, and you want to put them in a safe legal basement apartment.

        An abhorrent idea I know! Sent them to the slums

        • Rachelle

          Ryan I’m not sure why you would put your aging parents in a basement when in many areas your parent could live in a building for a hundred or two more per month. In my area if you have decent credit you can rent a decent above ground apartment for the same price.

    • Rachelle

      I’m afraid that you’re going to see more of “those people” in your neighborhood not less.

  • Shehryar

    If you construct a basement yourself according to the building code, but don’t rent it out for extra income and use it for yourself, would that be considered illegal as well? With bathroom and kitchen.

    • Rachelle

      It’s the act of renting it out that make it illegal. If you want to rent out the upstairs but you as the homeowner want to live in the 5 foot tall dirt floor basement and pee in a bucket no problem. But you cannot rent it out not without risking severe sanctions.

  • n/a

    The province legalized basement apartments in April 2011. Bill 140. The Conservatives and NDP supported the bill.

    • Rachelle

      The Bill is still waiting for signing by the Governor General so still not law yet. We still have to wait to see the impact of this law and what happens.

  • Vaidhy

    Is it illegal to have additional kitchen in basement? Its not being rented out and owner occupied only. The fact is we inherited this basement in our recent purchase with non retrofit status from seller.
    The exit from basement is only through staircase to ground level and 1 window in kitchen. The ceiling is more than 6 feet (taller than myself)

  • Dani

    My situation is a little more complicated. You stated that you can have a basement suite as long as you’re not renting it out? Well technically it’s being rented out. There are upstairs tenants who pay part of the mortgage, and me and my fiance who pay the other portion of the mortgage monthly. It is my fiance’s home. It was bought for her. It’s just in her parents name is the thing. The upstairs tenants are threatening to call bylaws on us because they refuse to turn on the heat for us. Do they have a right? And will it even matter?

  • Dani

    It is an illegal suite by the way.

  • Dani

    Also I might add that the upstairs tenants have taken it upon themselves to turn off the heat on us (they control the thermostat). We have asked to have the heat on while we are here, (it gets really cold in a basement suite) They refuse and have now blackmailed us with the threat they will call bylaws about the illegal suite if they hear another word about the heat.

    • Rachelle

      I’d run another thermostat problem solved. Well kind of. So call a heat and AC guy and they’ll be able to run a new wire to a new thermostat. Or you can do what many people in basement suites do and get a space heater or two. I have my office in my basement apartment now and I have a space heater down there. It helps to dispel the humidity and keeps me from having to overheat the rest of the house to keep the basement warm.

      Also good news since January 2012 they passed a law that makes basement apartments legal as long as they comply with fire codes. The municipalities must allow them. Unfortunately they’re still catching up with the realities of this so I keep hearing about people who are getting “caught” under the old laws.

  • Ron Brydges

    Legal or not legal that is the question. I’m baffled. It seems the province is or already has legalized basement apartment but my city of St. Catharines is dictating that my basement apartment is not allowed and therefore seemingly illegal because of zoning. I would appreciate some clarity on this matter.

    • Rachelle

      Regardless of if basement apartments were legal before January of this year…they seem to be legal now except some cities haven’t caught up with the times yet. Landlords are still being harassed.

      For Instance here is Mississauga’s stance on their current webpage http://www.mississauga.ca/portal/residents/accessorydwellingunits but then look at this… http://www.mississauga.com/news/article/1306024–basement-apartment-meeting-a-success-councillor its the same in St Catharines I presume. The people who have been dead set against basement apartments are having them shoved down their throats. About time too! I was sick of small landlords being marginalized. Most of them had no idea and the realtors never tell anyone that they can’t rent it out in these cities. “Look you have a perfect mortgage helper here!” For a while I was convinced the cities of Mississauga & Brampton were checking the mls as so many new owners were getting busted.

      Anyways it’s legal now just wait for your city to catch up.

      • Jessie

        Richmond Hill still says basement apartments are illegal. My basement has a bathroom, kitchen, two rooms and living room but no separate entrance and has never been rented. Is that illegal? Thanks!!!

  • Luke

    So am I correct in understanding that every municipality is now legislated to allow for basement apartments? What would happen if I purchesed an investment property with a currently illegal basement apartment? Could I argue in the court that I acted in good faith based upon provincial standards?

    • Rachelle

      There’s more to legalizing a basement than municipal legislation. The basement has to also conform to Fire Code & Building Codes. Before this law passed it didn’t matter how high quality your basement was it could never be legal. I think we may see more quality basements now that they are legal.

  • Luke

    Also, does anyone know where I would go to obtain more information regarding the change to provincial legislation or plans for the Region of Peel to address this issue?

  • Greg Nadon

    I purchased a duplex with an illegal apartment in Kitchener the apartment was rented out when I purchased and i live in one unit and rented out the second unit. Now I’m due for mortgage renewal and had a appraisal done and my bank informed me that i cannot count my rent from the basement unit as income and i can’t be insured. So therefore they would not re-new this mortgage. Let me remind you this institute was not the original mortgager but i wanted to take my mortgage to them to keep my two mortgages with one bank.. Now they don’t want to re-mortgage my first property that I have with them because of owning this duplex and having a illegal apartment and also now all my numbers are out of whack. My question is am i better off to sell everything and start over or should i make the investment and have it comply with zoning and fire and electrical and hope to boost my revenue and value of my property? And how much would this cost me? I have had it fire inspected at my purchase five years ago. Thanks for any and all your thoughts in advance.

    Greg

    • Rachelle

      I think that it’ll be cheaper to get your basement legalized than it would be to sell. Real estate fees are not cheap. It’s hard to say without knowing what the work required is. Also look up the RRAP program through CMHC they may provide you with some much needed funding.

  • Ling

    When will Richmond Hill legalize basement apartments? Stupid b*itch of a tenant extorting us, she either lives here for free or she calls the cops saying we have an “illegal” basement apartment.

  • Simon

    Hi there,

    How about Barrie? Is Barrie in line with this now, or where can I check to see when they finally come in line with the new law?

  • Harland

    Hi Rachelle, I have a question about subletting my basement! My partner, 2 kids, and I rent a bungalow style house (12-1400sq/ft) in the country. It has a semi-finished basement with plumbing for a bathroom and kitchen (neither installed). It is just one large open room right now. Access from outside is 2 walk-out patio doors and it has 3 windows (2 would be unusable for emergency exits) and 9ft ceilings. The inside access to the basement is thru the garage, so the house can be sealed off when we are not home. We are in a prime tourist, fishing, & hunting area where 600sq/ft cottages rent for $1000/week! I want to cash in on that to help put money aside for a mortgage. Aside from attaining permission from my landlord to sublet, what steps would I need to take to make the basement compliant and suitable to sublet on a weekly/weekend basis (late spring thru early fall). We are very desirable tenants and our landlord is very cooperative. What is the bare minimum just to get the ball rolling? The house is only 3 years old. Thanks in advance, I’ve been searching for a while for answers and it’s difficult to sort out based on what I want to do!

    -Harland

    • Rachelle

      Hi Harland,

      You’d have to contact the city for the answer to your question. Every city has slightly different rules for basement suites so I cannot answer you.

  • Debra

    Hi Rachel,
    Can you please give a website that I can go to that shows the law has been passed that all of Ontario can rent basement apartments legally.

  • chris gibson

    Have a new house soon to be completed in Woodstock… Basement is being finished by the builder… Just needs kitchen to complete… Was going to be an in-law suite… But mother-in-law passed away. We want to rent for a few years only. I know our zoning is wrong… And not likely to be changed.
    So is this legal or not… Assuming it passes other code. Also… If not… Do we have any rights as landlords? Does a signed lease mean anything?

    Thanks

    • Rachelle

      According to Ontario Law as long as your basement complies with bylaws you should be able to rent it out, no problems. Look up affordable housing act ontario.

  • El

    So if I have already rented out my basement and I realize that it’s illegal cause the basement can only have one unit but it actually has two units does that mean I have to evict one renter? Which one? And do I have to compensate their living expenses and pay for the difference in rental cost if they find a new place? I think someone called the city in to check.

    • Rachelle

      Wait until the city tells you what to do.

      • EL (aka Eleanor)

        The city has actually already said my basment is only zoned for one apt and I have to let them know what my intentions are. I’m assuming therefore I have to evict one ? Do I evict the smaller apt that pays less or the one that won’t fight me? If they were to fight me would I have to give all their rent back, cover their moving expense, rent abatement and the cost of finding a new place. My tenants are all great and we are in a great neighborhood in North York but I’m not sure what to do ! As a follow up I tried asking one of them to leave but they are asking for money to move and a month of free. If they are a working couple and can afford it do I have to pay them to leave?

        • Rachelle

          The one that won’t fight you is probably the best bet. You can renovate the basement later to create one apartment where 2 used to be.

  • El

    The city has actually already said my basment is only zoned for one apt and I have to let them know what my intentions are. I’m assuming therefore I have to evict one ? Do I evict the smaller apt that pays less or the one that won’t fight me? If they were to fight me would I have to give all their rent back, cover their moving expense, rent abatement and the cost of finding a new place. My tenants are all great and were in a great neighbourhood in North York but I’m not sure what to do !

  • phil

    I am thinking about renting out a basement apartment in my house in Toronto. The way the layout of the basement is, the bathroom is technically outside the unit (across the hall). Is this legal?

  • phil

    unfortunately not, it is just the way the place was designed decades ago. Yes the tennants wont like that, but i think the reduction in price is the only way around that. This one detail is the biggest hang up. Where would i be able to ask to find out the answer to this question?

  • vyckid

    Rachelle. I live in an illegal basement apartment. I just recently decided.to.move because of better opportunities. Do i have to absolutely give 60 days notice or can about 5 weeks be okay. Do i have rights? Helppp!!

  • Sima

    Rachelle, I have a basement apt. in townhouse that has been rented since 6 months ago. this is in Aurora and just wonder if the new affordable housing act Ontario is for townhouses too ? If my basement apt will still considered as illegal? thank you

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