Adding a rental unit or in-law suite to your home used to be something you did in the dead of night, hoping the neighbours wouldn't notice and turn you in to the local bylaw enforcement officers. But in recent years, municipalities have been much more accepting of secondary suites in single-family homes.

From a housing policy point of view, secondary suites are a good thing because they offer generally affordable housing in areas that already have municipal services, and no government assistance is required. Since little rental housing is being built these days, it helps renters find accommodation. It doesn't contribute to urban sprawl and it makes good use of existing homes, helping to keep them well-maintained.

From a homeowner's point of view, having a secondary suite provides income to help make homeownership more affordable. It enables first-time buyers to get into the market sooner.

However, there's often neighbourhood opposition to secondary suites, especially relating to parking issues, and they were not allowed in many municipalities until recently. In recent years, as rental accommodations became harder to find, municipalities were forced to acknowledge that people were installing secondary suites in their homes illegally. By legalizing the suites, municipalities have control over health and safety conditions.

About one-fifth of the rental stock in Toronto is now secondary suites, legal and otherwise. Canada Mortgage and Housing Corp. (CMHC) estimates the cost of converting to a legal suite costs about $15,000, and says that money will quickly be recouped by rental income. However, major changes to the house may be necessary and could cost much more than that, and there's little incentive for someone who is already renting an illegal apartment to go asking the authorities to inspect the place. Many of those owners also do not pay income tax on the rental income.

The non-profit Landlord's Self-Help Centre in Toronto says there are many reasons why you should legalize your suite. The most important one is that if you rent out a non-conforming suite and there's an accident or fire, you could be held liable for the deaths and/or injuries of the occupants. The Landlord's Self-Help Centre says, "Ultimately the onus is on you to ensure that your home complies with provisions set out in the Ontario Fire Code. In all cases, minimum fire safety regulations must be met. The penalty for fire code violations is a fine of up to $25,000 or a prison term of up to one year, or both.”

It's also important that your insurance provider and your mortgage holder is aware of the second suite, says the centre. "Compliance with established standards increases the marketability of the property and may enable you to qualify for a larger mortgage loan,” it says. "If you buy a house containing a rental unit, you may find lenders or mortgage insurance brokers reluctant to provide funding if it does not meet fire safety standards….when purchasing a home containing a second suite, be sure to request and carefully review documentation relating to permits and inspections required for an authorized unit. Similarly, (if you are selling) consider upgrading the existing unit so that it fits within established standards, as compliance may make your home easer to sell,” says the Landlord's Self-Help Centre.

Canada's National Building Code does not address secondary suites, and building and fire codes and bylaws concerning secondary suites vary widely across the country. Some municipalities require the homeowner to live in the house with the accessory apartment. Many have specific rules relating to parking spaces. In Vancouver, sprinkler systems are mandatory in all new buildings.

In Toronto, the floor area of the second suite must be less than the rest of your house. Each unit must be contained from other rooms and areas by a fire separation. Walls between a common corridor and dwelling units must have a 30-minute fire resistance rating. You can have drywall and plaster walls and ceilings, but suspended ceilings, wood paneling and non-rated ceiling tiles are not adequate. There can be no exposed joists – ceilings must be continuous.

Doors must be solid wood or metal and at least 1.75 inches thick.

In Ontario, before a suite is legalized it must pass an inspection by the Electrical Safety Authority, and any deficiencies identified by the inspector must be addressed.

Recently a task group was formed to propose changes for the 2010 National Building Code, to address the issue of secondary suites. A CMHC report says harmonized code requirements will benefit building officials, builders and occupants as the code is adopted across the country by provinces and municipalities. The report says if adopted, the requirements for accessory apartments would be "easier to satisfy” than those requirements in the current code that do not specifically address secondary suites.

It also says the cost of meeting the code requirements may be significantly cheaper, particularly for renovations to existing buildings, if the new proposals are incorporated into the code.

In the meantime, if you're thinking about adding a second suite, it will still take a visit to your local city hall to find out what you have to do to meet health and safety requirements.

Published: August 18, 2009

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .