Second Unit Rental Basements

November 5, 2019

By Kamyar Oveisy

Rental Basements or Second Unit Basements are probably some of the most if not the most popular construction related topics going around in the Greater Toronto Area. Why? Simple because housing is no longer affordable, and in fact it hasn’t been for several years now. The Toronto housing market is evaluated to be “The world’s second most overvalued property market” according to the Financial Post []. A home in the Greater Toronto Area within the range of 1800-2500 SQFT starts at around $550,000 CAD up to and over a million dollars. Not only has the housing prices sky rocketed but almost everything else including food, clothes, and all sorts of other day to day expenses have also increased significantly in recent years.

This increase in cost has left many homeless, many barely surviving on pay cheque to pay cheque, and many who can barely afford anything new but their bills and minor expenses. Every problem has its solutions, but with every solution, new problems arise.

Over the past several decades basement finishing and the idea of basements it self has become more and more popular due to higher quality finishes and higher building standard requirements put in place by builders and the municipalities. People living in the GTA who have taken advantage of rental basements or second unit basements in this course of time have benefited greatly with a second source of income with little to no maintenance.

As we are experiencing the current housing market problem in the Greater Toronto Region, affordable solutions such as rental basements have started to take over in mass quantities. People all across the GTA are finishing their basements for the purpose of renting it out.

This solution allows the mass whom have been struggling financially to find a place called home in somebody’s basement. Is it affordable as they say? Yes and no. A typical 2-bedroom condo starts at around $2000-$2400 in areas like Mississauga or Richmond Hill. Downtown condos could start at $2500. Basements on the other hand can start from $1100 for an older yet moderate basement up to $1800 for a newly and professionally finished 3-bedroom basement.

Rental Basements or Second Unit Suites seem to be the key solution to our on-going housing market conflict, but is it as sweet and safe and it sounds? Is affordability the only thing people should be concerned about?

The building code was first introduced to the Canadian market in the early 1940’s, however, the code was kept in infancy for nearly 20-30 years before it was regulated strictly and further developed. For rental basements or second unit basements, generally there was some very minor fire proofing requirements if any and once the basement was completed, a fire marshal would provide the home owner with a permit to rent.

In present time, legal rental basements or second unit basements are built and approved in a completely different fashion. There are countless stages to this process if done by law and professionally.

The stages are as follows:

  1. In-home estimate by a professional estimator from a reputable company.
  2. Once the general requirements for a second unit are discussed, a professional engineer/architect is brought on site for a thorough inspection to create permit drawings.
  3. An application for a second unit is then initiated and submitted by the contractor or home owner along with the engineer stamped permit drawings.
  4. The city with generally ask for a few revisions if required, this depends on how well the engineer designed the second unit to meet the Ontario Building Code (OBC) requirements for a second unit dwelling.
  5. Once the permit has been approved and stamped by the city or the specific municipality, construction can immediately begin based on the approved drawings.
  6. If a separate entrance or an egress window is not already existing, they must be constructed based on the permit drawings. In most cases these items require digging and cutting of the structural foundation.
  7. There will be several inspections throughout the duration of the project in each category: framing and insulation, electrical (ESA), plumbing, HVAC, and fire separation. These will carry on throughout the project until the inspectors are satisfied with the required finishes.
  8. A final inspection is then completed when the basement is finished to wrap up the permit application.

By now you must be thinking that this process is not what you had in mind on how a rental basement is constructed legally. Truthfully, most people don’t know this as it is not general knowledge. However, it makes sense especially with our on-going housing market conflict.

The process is straight forward but lengthy and expensive. However, this process is a firm, safe, and reliable investment in your home.  But as we mentioned before, every solution comes with its own set of problems.

In this scenario, we have not one but two problems.

First problem is that most home owners and contractors have found a loop hole in the building code. They have developed a new method of obtaining a second unit permit without the general requirements of a second unit basement. These cases are extremely popular in areas such as Brampton and Mississauga where the population is increasing at a much higher rate than most other regions in the GTA.

What do we mean by “loop hole” and how do they do it? You don’t want to know! However, what we know for certain based on countless experiences and encounters is that they finish these basements without general fire proofing requirements and the worst part is that the city is approving these permits. This method of construction can easily lead to basement fires which leads to home fires. Unfortunately, these tragedies are quite frequent in the regions mentioned. When you are renting your basement to a group of strangers with access to electricity and a stove, it is best to not take a short cut just to save some money at first as it can potentially be more costly than you had ever imagined down the road.

The second problem and main problem is that most home owners in the Greater Toronto Region do not obtain a second unit permit whatsoever for their upcoming basement rental project. This is one of the leading causes of house fires, house wreckages, and countless other disasters which endanger the lives of the tenants, homeowners, and possibly the neighbours. When work is not professionally done or thoroughly inspected for safety concerns, you are putting your family and your home in jeopardy.

During a recent in-home consultation appointment, a client told us that his newly purchased home came with a separate entrance which was completed without a permit. He was concerned and wanted our guidance on how we can find a solution. However, this problem speaks for it self, this is a disaster! A separate entrance finished without any inspections and a city approved permit can not be guaranteed to have been completed properly. Neither does a finished basement which has a running stove, electrical outlets, and other finishes which can lead to various types of disasters if finished incorrectly. 

This is one of the most highly anticipated blogs within our company as it signifies several key solutions/problems to our existing basement finishing market. We hope that anyone who has taken the time to read this blog has had an enjoyable read and has obtained an important piece of information and knowledge which can be passed down to introduce possible solutions and warnings to those around them. When hiring a contractor for a second unit project, please do research on the by-laws and requirements and most importantly on the company you are looking to work with to ensure a safe and successful project.

Give us a call today at (647)-620-6601 or visit us on and let us show you why our basement renovations package is simply unbeatable and why hundreds of our clients have chosen to have their basements finished by us.


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