Legalizing Your Basement Apartment in Canada

Thanks to Canada’s dwindling rental vacancy and the number of professionals looking to live in some of the country’s largest cities, many people are choosing to buy homes with basements that could serve as rental apartments.

Other people are realizing that existing basements in their homes could be turned into living spaces, perhaps after their children have moved out.

Either way, it’s a great opportunity to generate some passive income, but there are a few steps you need to take to make sure your basement apartment is legal and functional.

Check city guidelines. Believe it or not, basement apartments are not actually legal in some Canadian municipalities. In others, they might have strict regulations about the number of tenants you can have. The first step is to check with your city or municipal government to see whether you are permitted to do this. Often, this information is easily available online.

Ensure everything is up to code. Even if your home already has a functioning basement apartment, it’s a good idea to have a professional assess whether the plumbing, electrical and construction is up to code and meets safety requirements for both you and your tenants. This is especially important in older buildings. If you’re building a basement apartment from scratch, it’s a good idea to hire or consult a contractor who has experience in this area. They can discuss options for layouts and design with you.

Make sure the unit has a separate entrance and is fire safe. Legally, your tenants need a safe way to exit the unit, usually in the form of a separate door. As you can imagine, the city requires your unit to meet certain fire protection requirements too. These include adding smoke detectors and the use of certain materials for walls and doors, which minimize the spread of fire. Check with your city or local fire department for more information about this.

Buying a home with a basement suite—or the potential for one—is a great idea if you’re in the market for an income property. Just make sure you follow these guidelines early on so your experience gets off to a smooth start.