Secondary Suite Requirements in Ontario: ADU and Laneway Housing Guide

# Secondary Suite Requirements in Ontario: ADU and Laneway Housing Guide

Ontario has undergone a dramatic shift in housing policy over the past several years, making it easier than ever for homeowners to add secondary dwelling units to their properties. Whether you are considering a basement apartment, a laneway house, or a garden suite, the regulatory landscape has changed in your favour. But "easier" does not mean "simple." There are still building code requirements, zoning rules, and practical considerations that every homeowner needs to understand.

This guide covers the current rules for secondary suites in Ontario, with particular focus on Toronto-specific programs and requirements, along with realistic cost estimates and revenue potential.

## Ontario's Housing Legislation Changes

The most significant legislative change came with Bill 23, the More Homes Built Faster Act, which received Royal Assent in November 2022. This legislation, along with subsequent regulatory updates, established province-wide as-of-right permissions for additional dwelling units on residential properties.

The key provisions include:

- **Up to three units per residential lot** across Ontario — the primary dwelling plus up to two additional units, without requiring a rezoning or minor variance.

- **Municipal charges and fees exemptions** — Development charges, parkland dedication fees, and community benefit charges are waived for secondary suites in most circumstances.

- **Restricted municipal interference** — Municipalities cannot impose minimum parking requirements for secondary suites if the property is within a specified distance of higher-order transit.

These provincial rules set the floor, not the ceiling. Toronto has gone further with its own programs that permit even greater density on residential lots.

## Types of Additional Dwelling Units

There are several ways to add a dwelling unit to your property, each with different costs, timelines, and suitability depending on your property and goals.

### Basement Apartment

The most common and generally most affordable option. A basement apartment involves converting existing below-grade space into a self-contained dwelling unit with its own entrance, kitchen, bathroom, and living area.

**Best for:** Properties with adequate ceiling height (at least 1.95 metres for habitable rooms), separate entrance potential, and sufficient window area for egress requirements.

### Garden Suite

A detached structure in the rear yard, separate from the main house. Garden suites are essentially small standalone homes built in your backyard.

**Best for:** Properties with sufficient rear yard space, particularly where the basement is not suitable for conversion or is already in use.

### Laneway House

Similar to a garden suite but specifically built on properties that have rear lane access. Toronto's laneway suite program has specific provisions for these units, which draw vehicle and pedestrian access from the rear lane rather than the front street.

**Best for:** Properties backing onto a public laneway, which are common in many older Toronto neighbourhoods including The Annex, Trinity Bellwoods, Leslieville, and Roncesvalles.

### Above-Garage Unit

A dwelling unit built above an existing or new detached garage. This approach combines vehicle storage with a rental unit and can be particularly space-efficient.

**Best for:** Properties with existing detached garages or sufficient space for a new garage with a second storey.

## Toronto-Specific Rules and Programs

Toronto has been proactive in creating pathways for additional housing units, going beyond the provincial minimum in several respects.

### Multiplex Program

Toronto's multiplex permissions, which came into effect in 2023, allow up to four units on most residential lots city-wide. This applies to properties zoned for single-family, semi-detached, and other low-rise residential uses. The multiplex permissions allow conversion of existing homes into multiple units or construction of new multiplex buildings, subject to building code and zoning performance standards.

### Laneway Suite Program

Toronto established its laneway suite program in 2018, making it one of the first municipalities in Ontario to formally permit laneway housing. The program has been refined over the years and now offers a relatively streamlined approval process.

Key features of the program:

- As-of-right zoning permissions (no minor variance or rezoning required in most cases)

- Building permits processed through a dedicated laneway suite review stream

- Design guidelines available from the City to help homeowners and architects

- No minimum parking requirement for the laneway suite itself

### Garden Suite Program

Toronto's garden suite permissions were added more recently, extending similar as-of-right provisions to properties that do not have laneway access but do have sufficient rear yard space for a detached structure.

## Requirements for All Secondary Suites

Regardless of the type of secondary suite you are building, Ontario Building Code (OBC) and City of Toronto requirements establish minimum standards that must be met.

### Minimum Unit Size

The Ontario Building Code sets minimum floor area requirements:

- **Bachelor/studio unit:** 145 square feet (13.5 square metres) minimum

- **One-bedroom unit:** Larger, with the bedroom itself requiring a minimum area based on occupancy

- **Each habitable room** must meet minimum area and dimension requirements

These are minimums. A functional, rentable unit will typically need to be substantially larger to attract tenants and comply with livability expectations.

### Ceiling Height

- **Habitable rooms** (living rooms, bedrooms, kitchens): Minimum 1.95 metres (6 feet 5 inches)

- **Non-habitable areas** (hallways, bathrooms, laundry): Minimum 1.8 metres (5 feet 11 inches)

Ceiling height is the single most common barrier for basement apartment conversions. Many older Toronto homes have basements that fall short of these requirements, necessitating either lowering the floor (underpinning/benching) or raising the house — both expensive undertakings.

### Fire Separation

Fire safety is the most critical code requirement for secondary suites:

- **Fire-rated assemblies** between the secondary suite and the primary dwelling — typically a minimum 45-minute fire resistance rating for the separating floor/ceiling assembly

- **Interconnected smoke alarms** in both units, on every level and outside sleeping areas

- **Carbon monoxide detectors** on every level near sleeping areas

- **Fire-rated doors** where the suite connects to common areas

- **Fire blocking** in concealed spaces to prevent fire spread within wall and floor cavities

### Separate Entrance

Every secondary suite must have its own entrance. This can be:

- A direct entrance to the exterior (most common for basement apartments — a side or rear door)

- An entrance through a common vestibule or hallway that leads to the exterior

The entrance must provide a safe and accessible path to the public way without passing through the other unit's private space.

### Egress Windows

Each bedroom in a secondary suite must have an egress window that meets minimum size requirements:

- **Minimum clear opening area:** 0.35 square metres (3.8 square feet)

- **Minimum clear opening dimension:** No dimension less than 380 millimetres (15 inches)

- **Maximum sill height:** 1,000 millimetres (39 inches) above the floor

For basement apartments, meeting egress window requirements often means enlarging existing window openings, which involves cutting through the foundation wall — a significant construction task.

### Full Kitchen and Bathroom

The suite must contain:

- A full kitchen with cooking facilities, a sink, refrigerator space, and counter space

- A full bathroom with a toilet, sink, and bathtub or shower

### Heating and Ventilation

- The suite must have its own heating system or be served by the main house's system with independent temperature control

- Adequate ventilation, including bathroom exhaust fans vented to the exterior and kitchen range hood exhaust

- Fresh air supply meeting OBC requirements

### Parking

Toronto generally exempts secondary suites from parking requirements, particularly for properties located within 800 metres of higher-order transit (subway stations, LRT stops, GO stations). This exemption eliminates what was historically one of the biggest barriers to secondary suite approval in Toronto.

## Laneway House Specifics

Laneway houses have their own set of dimensional and servicing requirements beyond the general secondary suite standards.

### Dimensional Requirements

- **Maximum height:** Typically 6 metres (approximately 2 storeys), though this can vary by zone

- **Maximum lot coverage:** The laneway suite plus all other structures on the lot must not exceed the permitted lot coverage for the zone

- **Setbacks:** Minimum setbacks from the rear lot line (laneway), side lot lines, and the main house are specified in the zoning bylaw

- **Maximum floor area:** Generally limited to a percentage of the lot area or a fixed maximum, whichever is less

### Servicing

Laneway houses require full municipal servicing:

- **Water supply** — Connection to the municipal water main, which typically runs under the front street. This often means running a new water line the full depth of the property.

- **Sanitary sewer** — Connection to the municipal sewer, again typically at the front of the property.

- **Storm drainage** — Managed through lot grading and potentially a separate storm connection.

- **Electrical service** — Separate hydro meter and service connection from Toronto Hydro.

The servicing requirements are a major cost driver for laneway houses. Running water and sewer lines from the front of a deep Toronto lot to a structure at the rear can cost $30,000 to $60,000 or more on its own.

### Cost Range

A complete laneway house in Toronto typically costs between $250,000 and $500,000 or more, depending on size, finishes, site conditions, and servicing complexity. Larger or higher-end laneway houses can exceed $500,000. This does not include soft costs such as architectural fees, permit fees, and engineering.

## Garden Suite Specifics

Garden suites share many requirements with laneway houses but have some distinctions.

### Permanent vs. Temporary

Under Ontario's provincial framework, garden suites were originally conceived as temporary structures with a maximum 20-year lifespan. However, Toronto's current policies allow garden suites as permanent structures, which makes them a more attractive investment.

### Size Limits

Garden suites are subject to maximum floor area limits, which vary based on lot size and zoning. In Toronto, garden suites are generally limited to a maximum gross floor area that ensures the rear yard retains adequate open space.

### Property Line Setbacks

Garden suites must maintain minimum setbacks from side and rear property lines, as well as a minimum separation distance from the main house. These setbacks can significantly constrain the buildable area on smaller lots.

## Cost Comparison

The following table provides realistic cost ranges for secondary suite construction in the Toronto market as of 2025-2026. Actual costs vary significantly based on scope, site conditions, finishes, and market conditions.

| Suite Type | Typical Cost Range | Timeline | Key Cost Drivers |

|---|---|---|---|

| **Basement apartment** | $80,000 - $150,000 | 3 - 6 months | Underpinning (if needed), egress windows, fire separation, plumbing |

| **Garden suite** | $150,000 - $350,000 | 6 - 12 months | Foundation, servicing, size, finishes |

| **Laneway house** | $250,000 - $500,000+ | 8 - 14 months | Servicing, foundation, size, site access constraints |

| **Above-garage unit** | $150,000 - $300,000 | 6 - 10 months | Structural upgrades to garage, insulation, servicing |

### What Drives Cost Variation

- **Underpinning** — If your basement does not meet ceiling height requirements, underpinning can add $40,000 to $80,000 to a basement apartment project.

- **Servicing** — Running new water, sewer, and electrical to a detached structure at the rear of the property is a major expense for laneway and garden suites.

- **Site access** — Difficult access for construction vehicles and material delivery increases labour costs and extends timelines, particularly for rear-yard structures on narrow downtown lots.

- **Finishes** — The difference between builder-grade and mid-range finishes can add 20 to 30 percent to the total cost.

## Revenue Potential in Toronto Neighbourhoods

Rental income from a secondary suite can be substantial in Toronto's competitive rental market. The following are approximate monthly rental ranges for secondary suites by area, based on current market conditions.

| Neighbourhood | Bachelor/Studio | One-Bedroom | Two-Bedroom |

|---|---|---|---|

| **Downtown / Old Toronto** | $1,600 - $2,000 | $2,000 - $2,500 | $2,400 - $3,000 |

| **Midtown (Davisville, Leaside)** | $1,400 - $1,800 | $1,800 - $2,200 | $2,200 - $2,800 |

| **East End (Leslieville, Riverdale)** | $1,400 - $1,800 | $1,800 - $2,300 | $2,200 - $2,800 |

| **West End (Roncesvalles, Junction)** | $1,400 - $1,800 | $1,800 - $2,200 | $2,200 - $2,700 |

| **North York** | $1,200 - $1,600 | $1,600 - $2,000 | $2,000 - $2,500 |

| **Scarborough** | $1,100 - $1,400 | $1,400 - $1,800 | $1,800 - $2,200 |

| **Etobicoke** | $1,200 - $1,500 | $1,500 - $1,900 | $1,900 - $2,400 |

At these rates, a well-executed basement apartment generating $2,000 per month in rental income would produce $24,000 annually. A $120,000 basement conversion would be fully paid back in five years from gross rental income alone — and you would continue generating income indefinitely after that.

## Financing Options

Most homeowners use one of the following approaches to finance secondary suite construction:

- **Home Equity Line of Credit (HELOC)** — The most common financing method. You borrow against the equity in your home at relatively low interest rates. The flexibility of a HELOC suits the staged payment nature of construction projects.

- **Construction mortgage** — For larger projects like laneway houses, a construction mortgage releases funds in stages as construction progresses. This is more structured than a HELOC but may offer better rates for large amounts.

- **Refinance** — Breaking and refinancing your existing mortgage to access equity. This makes sense if current rates are favourable or if you can consolidate other debts simultaneously.

- **CMHC MLI Select** — For purpose-built rental projects, CMHC's MLI Select program offers favourable mortgage insurance terms for projects that meet energy efficiency or affordability criteria.

- **Personal savings** — For basement apartments at the lower end of the cost range, some homeowners self-fund from savings, avoiding financing costs entirely.

## Rental Regulations Under the Residential Tenancies Act

If you rent your secondary suite to a tenant, the Residential Tenancies Act (RTA) governs the landlord-tenant relationship. Key provisions that every new landlord should understand:

- **Rent control** — Units in buildings first occupied for residential purposes before November 15, 2018, are subject to Ontario's annual rent increase guideline. Newer units (including newly created secondary suites) are exempt from rent control, meaning you can increase rent by any amount with proper notice.

- **Standard lease** — Ontario requires the use of the standard lease form for most residential tenancies.

- **Tenant rights** — Tenants have strong protections under the RTA, including the right to quiet enjoyment and restrictions on eviction. Familiarize yourself with the rules before becoming a landlord.

- **Owner-occupied exemption** — If you share a kitchen or bathroom with your tenant, the RTA may not apply. However, this exemption has limited applicability for self-contained secondary suites with their own facilities.

## Property Tax Implications

Adding a secondary suite to your property can affect your property tax assessment. The Municipal Property Assessment Corporation (MPAC) may reassess your property to reflect the additional residential unit, potentially increasing your assessed value and, consequently, your property tax.

However, the increase is often modest relative to the rental income the suite generates. In many cases, the additional tax is a fraction of the annual rental revenue. Some homeowners have reported minimal or no property tax increase after adding a legal basement apartment, though experiences vary.

The key point is that operating an illegal, unpermitted secondary suite does not protect you from reassessment — MPAC can and does identify unreported units — and it exposes you to far greater risks including fines, insurance voidance, and liability.

## Making the Decision

Adding a secondary suite to your Toronto property is one of the highest-return investments a homeowner can make. The combination of strong rental demand, favourable regulatory changes, and significant property value enhancement makes secondary suites an attractive proposition for most homeowners with suitable properties.

The most important steps are:

1. **Assess your property** — Determine which type of suite is feasible given your lot size, building configuration, and budget.

2. **Understand the requirements** — Review the Ontario Building Code requirements and Toronto's specific zoning provisions for your property.

3. **Budget realistically** — Include all costs: construction, permits, architectural and engineering fees, servicing, landscaping, and a contingency of at least 15 percent.

4. **Hire experienced professionals** — Work with an architect or designer experienced in secondary suites, and a contractor familiar with the building code requirements specific to secondary dwelling units.

5. **Plan for the long term** — A well-built, code-compliant secondary suite will generate income for decades and adds permanent value to your property.

Toronto's housing market shows no signs of becoming more affordable, and the demand for rental housing continues to grow. A legal, well-built secondary suite positions your property to benefit from these long-term trends while contributing to the housing supply that the city urgently needs.