How to convert your basement into a legal rental apartment

As Canadians look for alternative housing options – and existing homeowners seek ways to balance the increased costs of ownership – basement apartments represent a practical solution. They can be more affordable for renters as well as relatively straightforward conversion projects for homeowners. However, creating a basement apartment involves more than putting down flooring and adding some plumbing.  There are in fact several factors that make a basement apartment legal in Canada, and many considerations for homeowners to take into account as they think about converting their residence.

If you’re considering converting your basement into a legal apartment, here are answers to six frequently asked questions.

What makes a basement apartment legal in Canada?

In Canada, building and fire codes are provincially regulated, so each province will have its own requirements that must be met to deem a basement apartment “legal.” In addition, municipalities may have separate and specific by-laws that must be complied with. For the most part, regulations will dictate the following specifications:

• Minimum square footage and ceiling height

• Minimum size and number of windows

• Plumbing basics – such as hot and cold water, essential fixtures, sinks and access to laundry

• Heating and ventilation requirements

• Kitchen and bathroom specifications

• Proper fire separation, escape plans and the installation of smoke and carbon monoxide detectors

• Electrical safety, such as grounded electrical plugs, GFCI outlets, etc.

• Proper exit pathways

What is an illegal basement apartment?

An illegal basement apartment is one that violates any of the required codes or hasn’t been registered with your local municipality. If you have redeveloped your home to have a basement apartment in an area where it’s not allowed, that would also be considered illegal.

While there are surely illegal basement apartments across Canada, cutting corners is not worth the risk – to your tenants or to yourself. Keep in mind, regulations are in place to keep tenants safe, and prospective renters have a right to request documentation that confirms that the unit is in compliance with all relevant codes. If you’re caught renting out an apartment that doesn’t meet all the requirements, you could face steep fines.

Does a basement apartment need two exits?

Yes. Every basement apartment must provide a means of escape in the event of a fire. One could be a window, as long as it can be easily opened from the inside and is large enough for an adult to fit through. It is the landlord’s responsibility to ensure all exits, including windows, are in full working order at all times.

In some provinces, a basement apartment must have a separate entrance to the outside. In others, a common or shared exit is allowed, as long as there is a second exit that leads to an open space. Check with your local municipality on what is required for your property.

How much does it cost to create a basement apartment?

The cost to build a basement apartment will vary considerably depending on the current state of your basement. If you already have plumbing, large enough windows and a sufficiently high ceiling, it will cost less to convert than a completely unfinished basement.

Keep in mind, even if you have a finished basement, you may have a lot of work ahead to convert your space into a legal apartment. As you evaluate the costs and effort, consider that the apartment needs a full bathroom, kitchen, independent entrance and systems that adhere to building and fire codes.

How much does a basement apartment add to a home’s value?

For many prospective homebuyers, buying a home with a finished basement is highly appealing. When the basement could be an opportunity to earn rental income or be used as a space to house aging parents or older children, the space can be even more attractive.

While real estate experts suggest that homeowners may not recoup 100% of the costs put into a basement apartment conversion, a common sentiment is that you could see a 75% return on investment. So, if you spent $50,000 on retrofitting your basement, you could expect to get $37,500 back upon the resale of your home.

Where do I start?

Building a basement apartment in your home can be a complex undertaking – so getting professional assistance is a must! Obtaining a few quotes and finding a builder/general contractor that you’re comfortable working with is an important first step – they can evaluate your space, advise you on the specific regulations of your province and municipality and help you get the permits you need to get started.

Getting your financing in order is critical, and you should do this before you embark on your project (or sign any agreements). The RBC Construction Mortgage program, which is designed to help homeowners add new housing units to their property, could be the perfect financing solution for you.  An RBC Mortgage Specialist can also offer the support you need throughout your construction project.

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