I have heard many people say that they want to rent out their basement or that they want to buy a property that can accommodate a tenant. Whether this is prompted by changes in life circumstance, cash flow, or it is the condition on which you can afford to buy the property you are looking at, it is important to consider that there are rules and regulations that govern the ‘second suite’ in Toronto.
If you are considering purchasing a property because it has the potential for rental income, make sure you do it right. Make sure that the unit complies with municipal by-laws, building code, fire and electrical requirements. This may sound like a tall order, but if you don’t ensure the space is compliant, how will you confidently be able to rent it out? Most homes that are listed for sale with a second suite will not provide any warranty about the legality of it. You are assuming the risk – the vendor is very unlikely to provide any assurances one way or another.
If you are determined to purchase a property with a second suite, follow the instructions contained in the information kit that the City of Toronto has prepared – it provides information on how to create a legal second suite in Toronto. It is available at the Access Toronto desk at each Civic Centre and City Hall.
In addition to structural safety issues, you need to consider that once you move a tenant in to your house, you become a landlord. While this seems obvious, the legal implications are significant. I would suggest that you ought to get relatively comfortable with the Residential Tenancies Act – this is one piece of legislation that will be guiding your relationship with your tenant. You should also get familiar with the Landlord and Tenant Board. The website (formerly the Toronto Rental Housing Tribunal site) is fairly user friendly and easy to navigate.