Do you have a sizable basement in your home? Is it a fully furnished living space with appliances, furniture, décor, a washroom, and a kitchen – maybe even a foosball table?
If you answered “yes” to these two questions, you’re in luck! You have an excellent opportunity to earn a nice side income by becoming a landlord. Basement apartments are an increasingly popular rental option for tenants. And with some creative work and prudent planning, you can capitalize on the demand.
According to a Canada Mortgage and Housing Corporation (CMHC) study, over 15% of houses in Toronto have basement rental units. The study also notes that basement apartments are more prevalent than alternatives like laneway homes and second-floor suites. Their popularity is partly due to cities encouraging their development to address rental shortages and steep home prices.
Despite their lucrative income potential, renting out your basement isn’t something you can do on a whim. There are specific requirements you must meet before you’re allowed to convert it into a rental unit.
In this article, we’ll walk you through the rules for setting up a legal basement apartment in Canada.
Making your basement rent-ready isn’t as simple as putting new drapes on the windows. In fact, you could unknowingly be breaking the law if you’re already renting out your basement.
According to a survey by Square One Insurance, about 17% of all secondary suites in Ontario, Alberta, and British Columbia are illegal.
Each jurisdiction has specific rules and regulations that determine whether a basement suite is legal. By failing to adhere to the minimum legal requirements, a basement apartment can present a substantial risk. And not just to its occupants but to the community at large.
Your basement apartment must comply with local:
Each municipality has zoning criteria determining whether you can legally convert a basement into a rental unit. Depending on your home’s location, your city may not allow you to operate a basement apartment in the first place.
For example, the city of Nelson in British Columbia allows basement apartments only in areas classified as R1, R3, and R6 zones. In addition, your home’s lot size must be a minimum of 276 square metres if it’s in an R1 zone.
Building codes encompass a wide range of health and safety requirements established by your municipality:
You’ll need to closely follow your local building code regulations to ensure any renovations you do are legal and safe.
This category covers fire safety, including smoke alarms, fire separation between units, and exits to escape a fire. For your basement suite to be deemed safe, your municipality may require a Fire Prevention Officer to conduct an inspection and issue a safety certificate.
Electrical Safety Regulations
Your existing electrical service must be able to handle the extra load generated by your new basement apartment.
A licensed electrician can determine if your current configuration is adequate or not. You may need to add an extra electrical panel (and possibly an electrical meter) if it’s insufficient. However, before performing any electrical work on your property, you’ll need to obtain an electrical permit from your province.
There are also other factors you need to consider, some of which are easy to overlook.
For example, is there enough space on your driveway for your tenant to park their car? If not, you’ll need to find out if parking in the street overnight is legal in your neighbourhood.
In addition, you also need to account for the excess garbage your home will produce and potential problems with water draining into the basement.
To convert your basement into a rental unit, you’ll need to get, at minimum, a building permit from your municipality. To obtain one, you need to submit an application form that typically includes the following details:
Depending on the size and scope of your project, you may need to obtain additional permits for heating, plumbing, fire, gas, and electrical work.
Now that we’ve covered the basics, it’s time to go in-depth. Below, you’ll find the 13 basic requirements you’ll need to follow to rent out a basement apartment.
Remember, the requirements may differ based on where you live, so verify your municipality’s regulations before you list your property on rental sites. You may need to do some serious renovations!
Converting your basement into another living space sounds like a lot of work, right?
Obtaining the essential permits, performing renovations, and adding sleek furnishings can take considerable time and effort. But the benefits a basement apartment offers can pay off handsomely.
In February 2022, for example, the average rent for a one-bedroom basement apartment in Canada was $1,400.
An extra source of income like this can bolster your monthly budget. You can pay off credit card debt, enlarge your savings account, or book an extra vacation at your favourite resort.
If you’re looking to list your brand new basement apartment soon and start earning some passive income, be sure to contact us. We have the expertise and resources to help get your rental unit up and running and find a high-quality tenant.