How to Turn Your Basement into a Legal Second Unit in Ontario

A legal basement apartment can bring in rental income, house a family member, or add value to your home. But "legal" is the key word: the unit is built under a building permit and inspected along the way. This guide walks through what the rules cover, how the permit process works, and what it typically costs and takes in the GTA.

What a legal second unit is

Ontario calls these additional residential units. A second unit is a separate, self-contained home inside your house. To make it legal, you need a building permit. Building inspectors from your municipality review the work at stages during construction.

Since November 28, 2022, Ontario has allowed up to three residential units per lot as of right in many existing residential areas, for example up to three units in the main house, or two in the house and one in a separate building like a garage. This applies where residential uses are permitted in settlement areas with full municipal water and sewage services. "As of right" means you do not need to apply for a rezoning to add the unit, but you still need a building permit.

Step 1: Check whether your house is a good fit

Before you spend money on drawings, look at the things that are hardest to change.

Ceiling height

Ontario's guide sets a minimum ceiling height for a basement unit of 1.95 m, which is about 6 feet 4 3/4 inches. Ducts and beams can bring parts of a basement below that. If the ceiling is too low, the options are rerouting ducts, or lowering the floor, which is a much bigger job.

Exits

Your second unit needs safe exits, either its own exit or a shared exit that meets the fire separation and smoke alarm requirements. In many homes that means a new side entrance, which is one of the biggest cost items in a basement apartment.

Zoning and parking

Ask your municipality about its zoning requirements and standards, including parking, before you start. Under the province's framework, municipalities cannot require more than one parking space in connection with these units, and cannot apply minimum unit sizes.

Step 2: Understand what the Building Code requires

Ontario's guide to adding a second unit lists the main safety requirements. These are the ones that shape the design and the budget.

Fire separation

The Building Code requires a 30-minute fire separation between units, and between units and common areas. On the basement apartments we build, much of that work is in the ceiling between the basement and the main floor and around shared spaces like a furnace room, and your drawings and inspector confirm exactly what your house needs.

Smoke alarms

You will need smoke alarms in the second unit that meet the CAN/ULC S531 standard, on every level, outside sleeping areas and in each bedroom.

Electrical

The electrical work needs its own separate electrical permit, and the Electrical Safety Authority (ESA) inspects it.

Keep in mind

Ontario's Building Code is updated from time to time, and the current edition is published by the province. The requirements that apply to your house are confirmed by your building department when you apply for the permit.

Step 3: Drawings and the permit application

With the plan settled, we prepare the drawings for the permit application. You or your agent then apply at your local building department. Once your complete application has been submitted, the guide says you will hear back within 10 business days whether it has been approved.

In our experience across GTA cities, the whole permit stage, including preparing drawings, getting the application complete and answering any questions from the city, often takes 4 to 10 weeks depending on the city. Permits and drawings usually add $2,000 to $6,500 to the project.

Step 4: Construction and inspections

Construction runs in stages, and the municipal building inspector reviews the work at points during construction. A typical order of work looks like this:

1. Demolition and structure. Opening up the space, any new entrance, and window openings.
2. Framing. Walls for bedrooms, the bathroom and the kitchen.
3. Rough-ins. Plumbing, electrical and HVAC run inside the open walls and ceiling.
4. Insulation and fire separation. Insulation on exterior walls and the fire-rated assemblies between units.
5. Drywall and finishes. Drywall, flooring, the kitchen, the bathroom, doors, trim and paint.
6. Final inspections. Building and electrical sign-off before the unit is finished.

With us, construction on a legal basement apartment typically takes 12 to 18 weeks, plus the permit stage before it.

What a legal basement apartment costs

With us, a legal basement apartment typically costs $80,000 to $150,000 before HST. Where your project lands mostly depends on four things:

• A new side entrance, if the unit needs its own exit.
• Egress windows, if bedrooms need new or larger windows.
• Fire separation between the units.
• HVAC work for the new unit.

Underpinning to gain ceiling height is extra, and permits and drawings usually add $2,000 to $6,500. On the other side of the ledger, Ontario's guide says development charges are not collected for a second unit built in an existing house.

If you only want the space for your own family and do not need a separate unit, a basement with a bedroom and a 3-piece bathroom typically runs $45,000 to $85,000, and an open rec room $35 to $55 per sq ft.

How we help

We handle the design, the drawings and the permit, and we book the inspections, so you are not managing the city on your own. Every trade is done by our own crew, the owner personally oversees every job, and every job comes with our written workmanship warranty. We are WSIB certified and carry $5M in liability insurance.

Frequently asked questions