Legal Basement vs Illegal

Basement apartments are one of the highly sought-after accommodation options and can be a win-win for tenants and landlords alike. They offer affordable housing for renters while simultaneously creating an extra stream of income for homeowners. That said, it’s becoming increasingly important to ensure that basement suites being rented out are legal for the sake of both landlords and tenants. In this article, we’ll discuss what makes a basement apartment legal in Ontario, why they are in such high demand, and how to renovate your basement into a legal one.

Current Housing Crisis Scenario in Toronto

Can you rent an illegal basement? Yes. Many people do, but it comes with a risk. In recent years, the housing crisis in Toronto has gone from bad to worse and has created a shortage of affordable housing, which in turn, has driven up the cost of housing. This crisis stems from a low supply of new homes and a rapid growth in population. Between 2021 and 2023, Toronto saw a 50% decrease in the number of development applications across the GTA. The challenge that many Toronto residents face is the inability to find affordable housing. Ideally, housing costs should take up about 30% of a person’s income. However, the average household costs today claim about 66.1% of an individual’s income, which is a stretch for most.

In an effort to address the current housing crisis, the Ontario government has committed to spending hundreds of millions of dollars in an effort to construct new developments and infrastructure to meet the high demand for housing. The government has a goal of building 1.5 million homes by 2031.

What Falls Under the Definition of an Illegal Basement?

So, how can you tell whether your basement apartment is legal vs illegal? There are ways to distinguish between the two. An illegal basement is one that is being rented out without the appropriate permits and requirements established in the Ontario Building Code for basement apartments. For a basement to be legal, it must meet the legal basement requirements and comply with the Ontario Building Code.

These requirements include:

  • A separate entryway and adequate lighting, both natural and artificial.
  • The right clearance – ceilings that are at least 1950 mm (6’ 5”) under beams and ducts. However, at least 75% of the floor space must be at least 2100 mm (6’11”) high.
  • A good ventilation system that is up to code.
  • Appliances and fixtures that are functioning properly.
  • Must be part of a home that is detached or semi-detached and should be smaller than the primary residence.
  • Built to be a self-contained unit with a kitchen and bathroom.
  • Proper fire exits, fire alarms or smoke detectors, and sprinklers in case of a fire. 
  • In many cases, carbon monoxide detectors. 
  • An electrical system that meets the Ontario Electrical Code and is installed according to industry standards for electrical wiring.
  • Proper permits and inspections that show that your basement has been upgraded to meet building code regulations.

Why Illegal Basement Apartments Are on the Rise?

Understanding why there are so many illegal basement suites on the market being rented to tenants goes back to understanding why the housing crisis exists in the first place.

As we mentioned earlier, the cost of housing in the GTA has risen exponentially in recent years, making it difficult for many people to find homes they can afford. 

Much of this is the result of a fast-growing population in Toronto due to higher immigration rates. For many who cannot keep up with ever-rising housing costs, turning to more affordable options, like basement apartments, is their best option.

On the flip side, the crisis has given many homeowners with basements the opportunity to provide affordable housing by renting out their basements and increasing their household income.

The challenge is that it can be difficult to distinguish between a legal basement vs illegal one

Are there any Illegal Basement Fines in Ontario?

Yes. In an effort to discourage homeowners from renting out basement apartments that do not meet the building code, some fines have been put in place.

In Ontario, an illegal basement apartment can cost a homeowner a fine between $25,000-$50,000.

You may also be forced to evict any current tenants and conduct the necessary upgrades before renting it out again. In some cases, you may be required to remove the unit. 

If the landlord is a large property developer who has built illegal basement apartments, a higher fine of $500,000 may be issued, and up to $1,500,000 for repeated offenses.

Basement apartments that fail to meet the fire code under the Fire Protection and Prevention Act may cost a landlord a $50,000 fine or a $100,000 fine for a subsequent violation.

Legal vs Illegal Basements

It’s important to know how to check basement is legal or not and what it takes to make an illegal basement legal. Renting an illegal basement is dangerous and jeopardises the safety of those living in the illegal basement apartment. The Ontario Building Code provides guidelines, allowing you to assess your basement and see how it measures up against this code.

Here are some signs that your basement apartment may not be up to code:

01
Low ceiling height

If the height of the ceiling of your basement apartment is less than 1,950 mm including the ductwork and beams, this often tells you that your basement is an illegal one. Homes that have been built within five years have a minimum ceiling height requirement of 2,300 mm for at least 75% of the floor area and a minimum ceiling height of 2,100 mm at any specific point. In addition, for detached, semi-detached, townhomes, and row houses with at least two dwelling units, the minimum overall room height is 1,950 mm At least 50% of the floor area should be at least 2,030 mm.

02
No separate entrance

According to the Ontario Building Code, legal basements must contain a separate entrance. This may be an entrance through the garage, stairs, or a side entrance – as long as the tenants can access the basement from a separate entrance. Many think this is just about convenience but there is more to it. A separate entrance is a safety feature particularly when it comes to fires. The absense of this feature proves the basement is not a legal basement apartment.

03
The lack of windows in bedrooms and living spaces

Legal basements must have windows for any bedrooms and the living space in a basement. If the basement in question does not have any windows, it is an illegal basement. Windows in the living room and dining rooms must cover at least 10% of the area served. This is the requirement for homes that are less than five years old. For bedrooms, the requirement is 5% of the area served. Homes more than five years old are only required to have windows that cover 5% of living room and dining rooms and 2.5% of bedrooms.

04
No smoke alarms in bedrooms

The Ontario Building Code requires bedrooms in basement apartments to have smoke alarms. But simply having some alarms is not sufficient – it is imperative that they are interconnected. This detail makes all the difference. So when it comes to smoke alarms, the difference between legal basements vs illegal ones is whether the alarms are interconnected. Illegal basement apartments do not have any interconnected smoke alarms inside the main unit, even though they may have individual alarms.

How to Make Sure Your Basement Apartment is Legal

You want to make sure that your basement apartment is legal to avoid illegal basement fines and provide a safe dwelling for your tenants.

To achieve this, you must know what steps to take to make sure your basement complies with basement requirements in Ontario. These steps are:

Examine your basement to determine whether it meets the requirements for a legal apartment according to the building code. This involves measuring the ceiling height, the size of the windows, and noting whether the basement has a separate entrance, adequate lighting, and a good ventilation system.

Homeowners need to ensure that their basements have the necessary permits for occupancy. This includes making sure permits were granted for upgrades and inspections were conducted for plumbing, electrical, ventilation, and other modifications..

If your basement is not up to code, there are ways that you can renovate it to ensure that it becomes a legal basement apartment. Additionally, renovations improve appeal, safety, and your home’s value. Consider upgrading fire and electrical systems to meet safety standards and work with professional renovators to construct a separate entrance.

Once renovations have been done and the apartment is now up to code, the city will conduct a final inspection to verify that your basement can be classified as a legal basement suite and registered as one.

It’s important to have periodic inspections to ensure that your basement continues to be compliant over time. When necessary, upgrade the electrical, plumbing, and other components of your basement so it continues to provide a safe environment for your tenants.

Success Stories of Meeting Legal Basement Requirements

This homeowner moved into an unfinished basement just before the pandemic and decided to turn the unused space into an entertainment centre with a kitchen. The result: a breathtaking finished basement and happy clients who are making the most of their basement!

Another successful renovation project for the RenoDuck team. Finishing this project during the pandemic posed some challenges with materials and coordinating tradespeople, but the team was able to complete this stunning basement on time, much to the delight of this happy client.

Financial Considerations and ROI

So, is converting your basement into a legal basement suite worth it? Yes! In addition to allowing you to generate additional income for your household, legal basements allow you to maximize the return on investment (ROI) on your home. The truth is that any update to a basement will add value to your home, but the type of updates you make will determine how much the return on the investment will be.

Finished basements have an ROI of roughly 70%,  which is a huge indicator of how financially rewarding basement renovations can be. Renovations to ceiling and trim, new flooring, exterior wall, insulation, lighting and other changes that enhance design and improve function pay off big time in the long run. 

Something else to keep in mind is that there are sometimes unexpected expenses in basement renovations. This is usually due to some unforeseen issues that a contractor discovers after the project begins. An example of this is the presence of mould underneath drywall and flooring due to prior water damage. We recommend hiring a renovation company that is thorough and looks beyond surface level issues. Find out about our renovation process.

Common Mistakes and How to Avoid Them

There are some costly errors that homeowners often make when updating their basements to meet legal basement requirements. Avoid these mistakes to maximize your ROI and achieve the best results.

  • Ignoring waterproofing – This is a grave mistake. Renovating a basement is expensive and it’s important that you protect your investment by waterproofing to avoid water damage. This is of upmost importance because flooding cannot always be predicted, and when it does happen, the results can be disastrous.
  • Doing DIY projects – The idea of saving money may sound appealing but basement renovations are complex and best left to those who are trained and experienced. Fixing mistakes can be expensive. 
  • Relocating large equipment – Basements are ideal for large home equipment like water heaters and furnaces. You may be tempted to move these from the basement to make the space more attractive and free up some space. But doing so may interfere with the performance and accessibility of these functional pieces.
  • Relying on an automatic sump pump – Sump pumps eliminate water that gathers in the ground of a basement and discharges it outside the home to prevent pooling. Consider installing a back-up battery-operated sump pump to make sure it continues to work during a power outage.
  • Insulate pipes – Prevent heat loss and condensation on pipes with insulation. This can protect your drywall and ceiling and offer savings in the long run.


Making your basement a legal basement apartment is possible with the help of our skilled basement specialists at RenoDuck. We’re happy to help you make your basement suitable as a rental unit.

Get in touch with our team to learn more about our professional basement renovation process.

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