When the Titan team hosts it’s monthly Halton REI meetings we get to talk to a lot of active investors. We also get to talk to some beginner investors who are really looking to take action. During the meetings we have little networking breaks, which are my favourite parts because that’s when I can interact with all the fine folks who took time out of their day to spend it with us. One common question we get asked usually has something to do with what makes a basement suite legal.
The reason it’s such a common question is because the Titan team actively invest in real estate on the west side of the GTA, which happens to have a fair amount of bungalow-style housing. Especially in places like St. Catharines. So many of the investors who purchase a rental property there are also usually looking to add a legal basement suite, if the property doesn’t already have one.
In 2011, Bill 140 “Strong Communities through Affordable Housing Act” was finalized and approved. Thanks to the legalized Bill, the law now requires all Ontario municipalities to allow basement apartments in homes.
Basement suites are a great way for real estate investors to increase their income without needing to purchase another property. With the added income from a legalized basement suite, investors can pay off their mortgages faster or put the extra income towards another investment property. The opportunities are endless for investors who get to add an extra income to their revenue.
So, What Makes a Basement Suite Legal?
Before an investor can begin looking for tenants, it’s important they go over the rules and regulations required for basement suites. Not every house was built with the intention of adding on a basement apartment, so some homes will require more work than others.
In addition to the Provincial laws, every city has their own bylaws to consider when it comes to basement apartments. For example, a basement apartment in Ajax must have a separate heating system while in Burlington, basement apartments are only permitted in detached homes. The Provincial laws will be consistent from city to city, but it’s important for investors to dive into the bylaws as well. Knowing and implementing these laws will keep investors from failing inspections and keep the renovation costs to a minimum. It will take longer for investors to turn a profit if materials are wasted because the building plans didn’t include the municipalities bylaws as well.
8 steps an investor will need to complete their basement suite:
1. Visit City Hall
Talking to someone who works with the bylaws on a daily basis can help you understand what type of work will need to be done once you receive your building permits. While it’s recommended for investors to take the time to consult with a professional, there is also the option of reviewing the laws via the municipalities website or requesting a hardcopy from the city hall’s offices.
2. Contact An Inspector
An inspector will be used for many steps before and during the renovation process. Before the construction phase, the inspector will be inspecting the property to create a list of necessary adjustments needed for the basement to be safely approved by the city as a legal suite. The inspector will review both the provincial and municipal guidelines during their assessment of the property.
3. Draw The Building Plans
Once the inspector has given you the green light, you will need to hire an architect, engineer, or another qualified professional that holds a BCIN. A BCIN is a Building Code Inspection Number and is required for building officials, certain classes of designers, on-site sewage system installers, and registered code agencies. While the designer of choice does take care to ensure the plans meet the rules and guidelines, an investor who knows these laws as well can catch anything that is overlooked by the designer.
4. Hire An Engineer
Not every investor that wants to convert their basement into a suite will be required to hire an engineer. An engineer will only be necessary if the structure of the building will need to be altered in any way, such as a separate entrance needing to be installed. A separate entrance is required for all basement apartments.
5. Building Permits
After all the plans have been drawn and revised, it will be time to apply for all the necessary building permits. Forgoing building permits is a risk best avoided. Investors can receive hefty fines and material loss if they are caught and are forced to tear down the work already completed.
6. Hire a Contractor
Ask other investors for recommendations when hiring a contractor. Finding a credible contractor with a great track record will allow the building process to continue with minimal headaches. Generally, someone on the Titan team can recommend you someone. Just reach out to us and ask.
For a basement apartment to be legalized, the suite must be registered. Another inspection will likely be conducted before approval is granted to the investor. Unregistered basement suites can be fined by the city and can run upwards to $25,000 for first-time offenders.
Landlord insurance can provide you with insurance for building coverage, premises liability, and the landlord’s property (for property a landlord owns inside the house, such as the washer and dryer).
Ultimately it is the homeowner that assumes responsibility in making sure the plans and the work lives up to code. What makes a basement suite legal is how it complies with both provincial and municipal legislation as well as Ontario’s Fire and Electrical Codes. A thorough investigation into the fire and electrical codes will give investors a good estimate whether or not the property would benefit from converting the basement into a legalized basement suite.
The rules and guidelines are designed to keep both tenants and landlords safe. Converting a basement into a legalized suite takes work but investors that make it work can benefit from the extra income and new opportunities the suite will bring them.
Are you considering a basement suite renovation project? If it’s your first time and you’re unsure of where or how to get started, the best thing you can do is get started with Titan Investment Real Estate. We provides investors with the professionals and resources they need to take action on their real estate investment goals. Click Here if you want to see what we can do for you.