Renting Out a Basement Apartment Legally in Ontario

A basement apartment can help with the mortgage, but renting one legally involves more than putting up an ad. You need the right permits, a safe unit and a tenancy that follows Ontario's landlord and tenant rules.

This article covers the main building and fire requirements, when the Residential Tenancies Act, 2006 (RTA) applies to your tenant, and the rules for choosing a tenant, taking a deposit and ending the tenancy. Rules for second units have changed recently, so confirm the details with your municipality.

Permits and zoning for a second unit

Adding a second unit in a house requires a building permit from the local building department. The electrical work needs a separate permit and an inspection by the Electrical Safety Authority (ESA).

Planning Act s. 16(3) requires municipalities to adopt official plan policies that allow additional residential units, both in the main home and in another building on the same property. Local zoning may still set conditions, and it may not yet reflect recent provincial changes, so ask your municipality what applies to your lot. Ontario's guide also tells homeowners to ask whether a second unit must be licensed or registered.

Fire safety and basic building requirements

• Fire separation: the Building Code requires a 30-minute fire separation between units and between units and common areas, which can drop to 15 minutes if the whole house has interconnected smoke alarms.
• Smoke alarms must meet CAN/ULC S531.
• Carbon monoxide alarms are required where the house has a fuel-burning furnace or an attached garage.
• Ceiling height: a basement second unit may have a ceiling height of 1.95 m over the required floor area.
• Fire Code amendment O. Reg. 87/25 adds new smoke alarm requirements for existing two-unit residential occupancies, taking effect January 1, 2026, with a few exceptions.

These are highlights, not a full checklist. Your building department and local fire department can tell you what applies to your house, and they may inspect.

Does the Residential Tenancies Act apply?

In most cases, yes. The RTA applies to rental units despite any agreement or waiver to the contrary, and any lease term that conflicts with the Act is void.

There is one exception that matters for homeowners. The RTA does not apply where the occupant must share a bathroom or kitchen with the owner, or with the owner's spouse, child or parent, who lives in the same building. A self-contained basement apartment does not fall under this exemption.

For most private rentals, you must use the Ontario standard lease for new leases. If a tenant asks for it in writing and does not receive it within 21 days, the tenant may withhold one month's rent.

Choosing a tenant, deposits and guarantors

Everyone has a right to equal treatment in the occupancy of accommodation, without discrimination because of grounds such as race, sex, age, marital status, family status, disability or the receipt of public assistance. Using income information, credit checks, credit references, rental history or guarantees in the manner the regulation prescribes does not infringe the Code.

• You may ask for credit references and rental history, and for permission to run a credit check, and may use them to select or refuse an applicant.
• You may ask for income information only if you also ask for credit references, rental history or a credit check, and you must consider it together with that other information. If you asked for all of the listed information but obtained only income information, you may consider income alone.
• You may require a guarantee for the rent, and a security deposit only in line with RTA ss. 105 and 106.
• The only deposit allowed is a rent deposit of no more than one rent period or one month's rent, whichever is less, and it earns annual interest at the rent increase guideline rate.
• You cannot require post-dated cheques or other negotiable instruments for rent.

A guarantor who is named as a tenant in the lease but has no right to occupy the unit does not become a tenant under the RTA.

Ending a tenancy and what to do next

A notice to end the tenancy does not end it by itself. If the tenant stays, you must apply to the Landlord and Tenant Board (LTB), and only the Sheriff can enforce an eviction order. You cannot remove the tenant or change the locks.

• Ask your municipality about permits, zoning and any licence or registration.
• Have the unit checked against the fire separation, alarm and electrical requirements.
• Use the Ontario standard lease and keep any deposit within the RTA limits.
• Screen applicants only in the ways the regulation allows.
• Speak with a lawyer if you are unsure whether your unit counts as self-contained or how a notice should be given.

Frequently asked questions