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
About 15 years later… we have a mess of consequences.
- Millions of illegal basement apartment
- Tenants extorting landlords
- Why keep your apartment up to the Fire Code if you can be shut down any day by the city?
- A whack of investors being sold “investment properties” that count on the cash flow from an illegal basement
- Homeowners who think the same thing they have an illegal basement apartment they rent out.
- I’ve heard of past owners requiring payment for affidavits that the suite was there prior to 1996.
- 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.
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.