In Brampton, many people are asking about houses for sale with a basement apartment. Now, in the areas that have the zero-lot line houses, one will be able to find these basement apartment houses, and because these are smaller homes (compared to most other areas of Brampton or Bramalea) the pricing will be amongst the lowest in the freehold category of houses.
The thing to keep in mind is that because most of the houses in the zero-lot neighbourhoods are 2-storeys, the footprint of the homes are smaller, and therefore the basement apartments will also be much smaller…means less rent. Having said that, rental prices in Brampton, and Peel region, generally, are extremely high, so a small basement apartment can still pull in $700 – $1000 each month, while bigger apartments can fetch up to $1500 – $1700 each month.
Legalizing A Basement Apartment – The Process
There is a real distinction here, and having a legal basement apartment is the preferred route, obviously. Without getting too technical and detaily, the legality of a basement apartment in Brampton is all about the Fire Code, Ontario Building Code, Local Zoning, and the ESA (Electrical Safety Authority)…I’m sure there’s something I’ve missed!
- Getting from illegal to legal is no small task. First the registration fee of $700 if you owner occupy your dwelling, but $1,200 if your an absentee owner.
- Then there’s the building permit, which can be up to $1,000. Let alone all the actual costs of making the physical changes to the apartment to become compliant, safe, and legal.
- Provide an official survey of the property.
- Provide 3 sets of proper architects/engineers drawings.
- Do the construction work, according to all the appropriate guidelines.
- Call for all necessary inspections.
- Once approved, complete the registration process.
Don’t let the 7 short bullet-points fool you. This is a long and arduous process….usually taking months to complete. Having said that, you have 18 months from the date of making the application, to complete the registration process.
If you really want to legalize your basement apartment, then go here…
What If My Basement Apartment Is Not Legal
Well, there’s something like 30,000 illegal apartments in Brampton (just an estimate), and most of them are getting away with it….so far. Apparently, there’s some sort of a task force whose mandate is to catch homeowners who have an illegal basement apartment.
There are potentially hefty fines attached if you’re caught. Up to $25,000 for an individual owner, and up to $50,000 for a corporation.
So, is it worth taking the risk? My money says “No”. There’s another potential problem to keep in your mind. If there were to be a fire, and one didn’t have the apartment legalized, or didn’t disclose the existence of the apartment to the insurance company, you could void your policy, and have no claim for insurance monies.
The bottom line is that you’re taking a chance if you rent illegally….but most of the existing apartments are already being rented out illegally. It’s your call…
Buying a Property with a Legal Apartment
If you’re a buyer, and need to have rental income, then buying a legalized scenario is the way to go. You’ll have peace of mind, and no one can ever shut down your secondary source of income.
To illustrate the point, I have a client who at the time of writing owns 3 Brampton houses with legal basement apartments. I sold them each to him within long intervals (2 to 3 years). The first one he bought, he installed a basement apartment, and then legalized it. He lives in one of the units, and rents out the other. He then went on to buy the other two houses, each time renting out the main part of the house, while simultaneously building the basement apartment, then legalizing it.
Finally, they all rented extremely quickly and for top dollar. Granted this was a few years ago, and some of his tenants are long term, so they’re getting a deal on the rent by today’s standards, but still a very nice income, collectively. He pulls in around $5,500/month with 5 units rented (remember he lives in one of them). If each of these units were to rent out today, the income would be around $7,000/month.
….and he has no fear of losing that income, or being fined $25,000
From A to Z, there is much to consider. However, if you’re up for it, it can be very rewarding. Property management is another big factor, and definitely beyond the scope of this article. I will write another post with the nuts and bolts of residential property management. Keep your eyes open for more on this topic.
Also, it’s wise to do some preliminary research on the government Landlord and Tenant Board, or the LTB. This can be found here.
This is a convenient website, as all the forms, and rules are there, and available to you free of charge.
Feel free to contact me for a no-obligation consultation, to see if this is right for you. Also, if you’d like a list of properties with basement apartments. Click Here…