It is not a secret that the red-hot Canadian real estate market is driven by several factors that include heavy demand, lower borrowing costs and tight inventory. Several Canadian provinces like Toronto, Alberta, and Ontario face a shortage of houses. This is the primary reason why basement apartments entered the market.

Canada is amongst the most desirable places globally, where the rental property markets have been on the rise over the past few years. Most homeowners have started managing rental properties as their future investments.

Some investors buy a separate rental unit, while others prefer partitioning their residence into a basement apartment as a secondary accommodation unit. If you are also building a basement apartment, you will require an excellent plan and a keen eye to create a safe place for your tenants. Read on to know more about basement apartments before renting them to the tenant.

Why Convert a Basement to an Apartment?

Basement to an Apartment

Most homeowners turn basements into apartments for rental purposes, while some use this space for themselves. The rental purpose basement renovation is answerable to legal restrictions, unlike the in-law suites renovated for personal use.

So, if you are building an in-law suite in your basement, you can use it as a granny pod or even a guest house. Also, it allows you to keep your younger children closer while offering them their privacy.

Real estate brings a lot of opportunities for investment and passive income. Your empty basement could be a great source of supplementary income for people who want to invest.

Canadian real estate market shattered records in the year 2020 with the approx 551,000 residential sales. Despite the global pandemic, Canada has recorded high demand and low supply in 2020 in real estate. With increased demand and low supply in real estate, 2021 was also an exciting year.

Considering the rise in the Canadian real estate market, most homeowners manage rental properties for investment purposes. People who are not purchasing the separate rental unit convert their basement into apartments for rent.

If you also wish to use your basement correctly, follow some easy steps below.

Essential Steps to Convert Basement into an Apartment

Essential Steps to Convert Basement into an Apartment

The first thing you would require to generate a passive income from your residential unit is to put it on rent. With the increasing demand and the shortage of rental units, many homeowners wonder about using their basement.

Although it is a great idea to turn your basement into a complete living space, you just require considering the below-mentioned aspects to turn it into something useful.

Exclusive Exterior Entrance

The exterior entrance in basement apartments is important for several legal reasons, fire safety, and for the convenience of your tenants.

Functional Layout and Defined Living Space

A defined living area is important to maintain a spacious look of the basement. But if you are skipping a traditional studio apartment layout, you don’t need to keep a defined living room.

Independent Cooling and Heating Systems

It is easy to split the bills when utilities like heating and cooling systems are installed independently from the main house. Also, you can easily turn off the if a particular area is unoccupied for an extended period.

Install Plumbing System with Proper Electric Facility

Provide the appropriate electricity facility in the basement because they are usually dark and have fewer or no windows. A separate plumbing system also helps make a comfortable stay here.

Insulate and Finish the Floors, Walls, and Ceiling

Light wall colours help brighten the basement apartment, with the finished floors and ceiling restricting the moisture build-up. Make sure your basement apartment is waterproof and up to the code to turn out a perfect rent apartment.

Legally Correct Basement Apartment

Legally Correct Basement Apartment

Make sure you create a whole-proof legal basement apartment. Although it’s your property and you are free to renovate it, some municipalities require you to abide by specific zoning rules. The legal basement apartment specifies the number of tenants to occupy the unit, parking requirements, and mandatory fire escape plans in the build-up.

Before you build a basement apartment, make sure to check on your city. If any zoning restrictions might affect your basement conversion plans, you must alter the aspects of your basement renovation according to the zoning laws. For this reason, it is good to know the rules in advance to avoid further changes in the process.

If your city doesn’t allow basement apartments for rent, you can still consider the conversion for your personal use, such as making an in-law suite.

Design Your Basement Apartment

Design Your Basement Apartment

First, decide whether you want to create a studio or a traditional basement apartment. If you choose to build your basement into a studio apartment, the open floor plan will save you time making new walls. You need to create a defined living space for a traditional design that increases your rental price.

After deciding the layouts, it’s time to focus on the floor plan to strengthen the foundation of the renovation. Next, you need to focus on the necessary rooms for your basement apartment.

Decorating Important Spaces

The essential basement apartment rooms list includes bedrooms, living area and dining area. You must pay extra attention to these spaces as everyone spends spare time specifically in these areas. As it is a basement, the focus should be incorporating ample lighting into these rooms.

Framing of the Walls

Strengthen the walls by establishing a base to avoid moisture build-up. Create a skeleton of walls and frame it using the two by 4s of wood. And it’s where the work starts with cutting, nailing, and dusting.

Floor Plan

Flooring differs from person to person depending on their taste, but some popular types are laminates and carpets. The carpets and laminate have low maintenance and are easy to install. Depending on your basement type, you can also opt for tiles or hardwood floors. Be careful when selecting the flooring plan, as it changes the whole look of your basement area.

Electrical and Plumbing Work

After wall work, next comes the electrical and plumbing section. Always use good quality electrical wires and check that all the wires go inside the wall skeleton to ensure safety. Also, keep a check on plumbing connections for proper drainage and water facility to make your laundry, sink, kitchen, and bathroom functional.

Important Utilities of a Basement Apartment

Fire safety

All the residents of Canada are required to comply with the National Building Code of Canada. It is essential because it provides fire and safety codes to the rental units, which differ from one municipality, territory, and province to other.

Fire safety also includes fire separation, which refers to the constructional barriers. It is mandated to slow the fire spread and allow residents to escape unsafe events.

Smoke Detector

Both carbon monoxide and smoke detectors are important for any accommodation. Thus, make sure to abide by the ideal installation rules to ensure quick detection at the time of unsafe fire events or CO build-up.


An emergency exit in a unit is a must. If your residential unit shares the entrance with the secondary unit, you need to create an egress window or a second exit door for a secure fire escape.

Final Thoughts

Canada is one of the most desirous places where people move with the purpose of the job, business or studies. This has become the primary reason for the boom in the Canadian rental market. The basement apartment idea is turning most owners into landlords.

The idea has brought a trend in the Canadian real estate market from legal basement apartments to in-law suites. The idea fulfils both your personal and financial needs depending on your usage.

Thus, we suggest you implement all the important steps while converting the basement into an apartment. From flooring, design, electric work, and fire safety to important rooms, wall framing, plumbing and egress exits.

You must always abide by legal basement apartment regulations to avoid any charges and changes later. Also, it’s helpful if you consult a licensed contractor because they come up with professional expertise to assist you throughout the process.


How much does it cost to convert the basement into an apartment?

The approximate cost to finish the basement is around CAD$18,395, whereas the estimated price to convert the basement into an apartment is around CAD$50,000 to CAD$75,000, inclusive of labour, material, and permit. 

What is a basement apartment?

A legal and valid basement apartment has its exit and entrance with a complete kitchen and bathroom. A basement apartment also has fire safety codes, a separate laundry area, and good plumbing and electricity facilities to comfort the tenants. 

How do you build a basement apartment?

Here are a few tips for a basement apartment:
– Separate entrance
– High ceilings to avoid moisture
– Complete kitchen
– Separate laundry
– Fire safety
– Complete bathroom
– Independent cooling and heating systems

How can you make a legal basement apartment in Canada?

– Approx 145 sq feet of space.
– Approx 1.95 metres of ceiling height.
– Egress windows are at least 2.5 per cent of your bedroom floor and 1.5 per cent of your living area floor.
– Independent fire safety, cooling and heating systems.