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Basement apartments are the most common rental type in London, St. Thomas, and Strathroy. They are also the most frequently operated without full compliance — not because landlords are cutting corners, but because the requirements span four different regulatory systems most people don't know exist.
This guide covers everything you need to rent a basement apartment legally and profitably in southwestern Ontario.
What Makes a Basement Apartment Legal in Ontario
A legal basement apartment — officially called a "second unit" or "accessory dwelling unit" in municipal zoning language — must satisfy four overlapping requirements:
- Ontario Building Code compliance — ceiling height, egress windows, fire separation, plumbing, electrical
- Ontario Fire Code compliance — interconnected alarms, carbon monoxide detectors, proper egress
- Municipal registration or permit — in London, a Second Unit Registration; in St. Thomas and Strathroy, a building permit with inspection
- Rental Housing Licence — required in London; not currently required in St. Thomas or Strathroy
Each requirement is enforced by a different authority. A unit that passes the building inspection but has no Rental Housing Licence is still non-compliant in London. A unit with a licence but without proper fire separation is a code violation — and a potential criminal liability if a fire occurs.
Ontario Building Code: Physical Requirements for a Basement Apartment
A building permit is required to construct or formalize a basement apartment. This applies even if the unit was finished years ago — operating an unpermitted unit transfers the liability to you.
Ceiling Height
The Ontario Building Code requires a minimum ceiling height of 1.95 metres (approximately 6'5") in all habitable rooms. Exposed beams, ductwork, or low spots that fall below this height in any bedroom or living area will fail inspection. This is the single most common reason basement units cannot be legalized without significant renovation.
Egress Windows
Every bedroom in a basement apartment requires an egress window that meets all of these dimensions:
| Dimension | Minimum Requirement |
|---|---|
| Opening area | 0.35 m² (3.8 sq ft) |
| Opening height | 380 mm (15 inches) |
| Opening width | 450 mm (17.7 inches) |
| Sill height from floor | Maximum 1,000 mm (about 3'3") |
All four dimensions must be met by the openable portion of the window — not the frame. A large window with a small opening does not qualify. Egress windows are the most common building code failure in London basement apartment inspections.
Fire Separation
The basement unit must be separated from the rest of the house by a fire separation with a 30-minute fire resistance rating. In practice, this typically means:
- ½-inch type X drywall on the underside of the first floor (forming the basement unit's ceiling)
- Solid-core fire-rated door on any shared interior access point between units
- Weatherstripping on all shared doors to block smoke penetration
Separate Entrance
The Building Code does not require a completely separate exterior entrance — a shared entrance with a proper fire-rated interior door is technically acceptable. In practice, a private exterior entrance makes compliance cleaner, reduces daily friction with tenants, and is expected by most renters in the London market.
Plumbing and Electrical
- The unit must have its own kitchen and bathroom with hot and cold running water
- All new electrical work requires an ESA permit and inspection
- A separate electrical panel or meter is not legally required, but strongly recommended — shared metering leads to disputes about who owes what
Ontario Fire Code: Alarm and Egress Requirements
The Ontario Fire Code applies to existing buildings regardless of when they were built. It is enforced by the local fire marshal's office and is separate from the Building Code.
Smoke and Carbon Monoxide Alarms
For a two-unit house, the Fire Code requires:
- Interconnected smoke alarms on every level of the building — including both the basement unit and the main unit. When one alarm sounds, all alarms sound.
- Carbon monoxide alarms on every level where a bedroom exists and adjacent to any fuel-burning appliance (furnace, water heater)
- Alarms must be hardwired and interconnected in buildings constructed after 1975. In older buildings, battery-operated and interconnected alarms are acceptable.
Landlords are responsible for testing alarms before a new tenancy begins and after any maintenance that could affect them.
Sprinkler Systems
A sprinkler system is not required in a standard two-unit residential building. If a change-of-use permit is involved in converting a single-family home, the building department will advise whether sprinklers are triggered.
City of London: Second Unit Registration
In London, a basement apartment must complete a Second Unit Registration with the City — a step that is separate from both the building permit and the Rental Housing Licence, and that many landlords skip.
The registration verifies that the unit meets code standards, confirms the lot has adequate municipal servicing, and formally assigns a separate municipal address.
The sequence in London:
- Confirm zoning permits a second unit (R1, R2, and R3 zones allow second units as-of-right under the provincial More Homes Built Faster Act)
- Pull a building permit and pass inspection
- ESA permit for all electrical work
- Apply for Second Unit Registration
- Receive the municipal address for the unit
- Apply for the Rental Housing Licence
Registration typically takes 4–8 weeks from application to confirmation. For a detailed walkthrough, see City of London Second Unit Registration.
City of London: Rental Housing Licence
Once registration is complete, you need a Rental Housing Licence before you can legally rent the unit in London.
The licence application requires:
- Proof of second unit registration
- Emergency contact information
- A property standards inspection scheduled by the city
Inspectors check fire separation, egress, smoke and CO alarm installation, heating (minimum 21°C between September 1 and June 15), plumbing and electrical functionality, and general cleanliness.
Approximate first-year cost: $275–$350. The licence must be renewed annually. Operating without a licence in London is an offence under the city's Licensing By-law, with fines up to $50,000 for corporations and $25,000 for individuals.
See City of London Rental Housing Licence for the full application process, and Rental Housing Licence Renewal for the annual renewal cycle.
St. Thomas and Strathroy: What Applies There
St. Thomas has no rental housing licensing program. A building permit with inspection is required for any new construction or formalization of an existing basement apartment, but there is no second-unit registration requirement. The City of St. Thomas Property Standards By-law still applies — heating, plumbing, electrical, and structural standards must be maintained.
Strathroy-Caradoc has no licensing or registration program either. A building permit is required for new construction. The Township's property standards by-law sets baseline maintenance obligations.
In both municipalities, the Ontario Building Code and Fire Code requirements are identical to London. Those are provincial standards — they apply everywhere in Ontario regardless of the municipality.
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The RTA and Your Basement Apartment Tenant
A tenant in your basement apartment has exactly the same rights as a tenant in any other rental unit under the Residential Tenancies Act. The fact that it is a basement unit, or that you live upstairs, does not create exceptions.
Entry rights. You cannot enter the unit without proper notice under RTA Section 27, even if the furnace or water heater is located inside the tenant's space. Entry to shared mechanical areas requires 24-hour written notice. See landlord entry rights Ontario for the full rules.
Maintenance. You are responsible for maintaining the unit in good repair under RTA Section 20, including the shared mechanical systems that serve it. A furnace failure is not the tenant's problem. See landlord maintenance responsibilities Ontario.
Noise and interference. Living directly above a tenant creates friction that does not exist in other rental arrangements — footsteps, plumbing sounds, pets. Failing to respond to inter-unit noise complaints can result in a T2 application for interference with reasonable enjoyment.
Standard Lease. The basement apartment requires a signed Ontario Standard Lease — the same form used for any residential tenancy. An oral agreement is still a legal tenancy under the RTA, but you have no documentation to rely on for rent amount, deposit, or move-in condition. See how to write a lease agreement Ontario.
What Does Rent Look Like for a Basement Apartment in London?
Current asking rent ranges for basement apartments in London as of late 2026:
| Unit Type | Typical Monthly Rent |
|---|---|
| Bachelor / Studio | $1,100 – $1,350 |
| 1 Bedroom | $1,350 – $1,600 |
| 2 Bedroom | $1,650 – $1,950 |
East London and Fanshawe-adjacent areas typically come in 5–10% below these figures. North London and Wortley Village-adjacent properties run 5–10% above. For pricing methodology, see how much to charge for rent in London Ontario.
Insurance for Basement Apartment Landlords
Standard homeowner's insurance does not cover a rental unit once a tenant moves in. You need a landlord or rental dwelling policy that covers:
- The basement unit as a separate coverage item
- Landlord liability for tenant injury in the unit
- Rental income replacement if the unit becomes uninhabitable
Tell your insurer the unit is tenanted before a claim — not after. An undisclosed tenancy can be grounds for a claim denial. For what to look for in a policy, see rental property insurance Ontario.
Common Mistakes
1. Skipping the building permit. Many basement apartments in London were finished without permits. Renting one doesn't make it legal — it transfers liability to you. A Rental Housing Licence application will fail without permit confirmation in the city's records.
2. Measuring the wrong part of the window. An egress window is measured by the openable area, not the frame. A window that looks large may have an opening well under the required 0.35 m². Measure before assuming.
3. Confusing the Second Unit Registration with the Rental Housing Licence. London requires both — in sequence. One does not replace the other.
4. Using a verbal tenancy agreement. A basement apartment tenancy without an Ontario Standard Lease is still a legal tenancy — you just have no written record of rent amount, deposit, or move-in condition. Always use the standard lease.
5. Not updating your insurance policy. A basement apartment that experiences a fire or flood without a registered rental policy leaves you exposed to property loss and tenant injury claims with no coverage.
6. Treating it as a casual arrangement because you live upstairs. Owner-occupancy does not reduce your obligations under the RTA. Full entry rules, maintenance standards, and eviction procedures apply.
7. Missing the London licence renewal window. The Rental Housing Licence must be renewed annually. Operating on a lapsed licence — even if you held one last year — is a by-law offence.
FAQ
Do I need a separate electrical meter for a basement apartment? No. Ontario law does not require separate metering. If utilities are shared, include a written agreement in the lease about how the costs are split. Never cut off utilities as a remedy for non-payment — that is a violation of RTA Section 21 regardless of the metering arrangement.
Can I rent my basement while living upstairs? Yes. An owner-occupied house with a basement apartment is one of the most common rental arrangements in London. The RTA applies in full. Living upstairs does not create any exemption from tenant rights or entry rules.
What if the unit was built before the current Building Code? Most existing buildings are judged under the code in effect at the time of construction for structural purposes. However, the Fire Code applies to existing buildings as they stand today. Smoke alarms and egress must meet current standards regardless of when the unit was built.
How much does it cost to legalize a basement apartment in London? Costs vary significantly depending on the unit's current condition:
- Building permit: $200–$800 depending on scope
- Second Unit Registration: approximately $100–$300
- Rental Housing Licence (first year): approximately $275–$350
- Renovations — egress windows, fire separation, alarms, ceiling height corrections: $3,000–$20,000 depending on starting point
Does a basement apartment qualify for rent control exemption? It depends on when the unit was first occupied as a residential rental. Units first occupied on or after November 15, 2018 have no guideline cap — you can raise rent by any amount with proper notice. Units occupied before that date are subject to the annual guideline (2.5% for 2026). See Ontario rent control exempt properties for how to determine which applies.
What happens to a basement apartment tenancy if I sell the house? The tenancy transfers automatically to the new owner under the RTA. The new owner takes on all landlord obligations — including the existing rent amount, lease terms, and last-month's-rent deposit. They cannot end the tenancy because ownership changed. See buying property with existing tenants Ontario.
Can I evict a basement tenant more easily since we share a building? No. Owner-occupancy does not simplify the eviction process. The same N-form notices, LTB applications, and waiting timelines apply. If you need the unit for your own use, an N12 is the correct process — 60 days' notice, one month's compensation, and you must genuinely intend to occupy the unit.
Is a separate entrance required for a basement apartment? The Ontario Building Code does not require a completely separate exterior entrance, but it is expected practice in London. A shared entrance with a proper fire-rated interior door is code-compliant but creates daily friction with tenants. Most renters and the Rental Housing Licence inspection process expect separate access.
Managing a Basement Apartment
Basement apartments generate solid rental income with relatively low vacancy — but they come with a compliance load most first-time landlords underestimate. Between the building permit, second-unit registration, Rental Housing Licence, Fire Code requirements, and the RTA obligations that apply the moment a tenant moves in, there is a lot to track.
Prospera Properties manages basement apartment rentals in London, St. Thomas, and Strathroy. If you want the rental income without the day-to-day management and compliance tracking, see how Prospera works.