• Hamilton Basement Apartment’s Future Appears Bright

    May 20, 2020
  • Hamilton Basement Apartment’s Future Appears Bright

    By: Robert Floris

    Lead Mortgage Broker with over 30 years of mortgage expertise, currently at Mortgage Architects.

    Thinking about buying a home with a basement apartment? You’re not alone.

    • What if the unit is illegal?

    • What is needed to understand before I buy?

    Let’s investigate.

    Basement apartment, Nancy Suite, Granny Suite, or whatever you’d like to call it, they are very popular in the Hamilton purchase market. What caused this?

    • Mortgage stress tests have led Canadians to qualify for lower mortgage amounts

    • Less Canadians have purchased and have decided to rent

    • More renters than landlords have had a huge effect on higher rents

    • Potential home purchases then decide ‘should I rent or maybe purchase a home with a basement apartment to help with the mortgage payment?’

    This is essentially what has happened. My parents did the same thing in the 60’s in order to get by. Is it wise to buy a basement apartment? Let’s look at one specific area with basements, legal and illegal units.

    Having a legal unit requires some of the following:

    • Complying with the zoning laws of the City of Hamilton

    • Applying for a builder’s permit

    • Meeting all electrical codes

    • Meeting all fire codes

    Problems with a home with an illegal second suite:

    • Neighbours can report you to the city

    • Some lenders do not recognize the additional income which hurts your chances to qualify for the mortgage

    • Can be sued for flood and fire damage by tenants (Ensure you have proper home insurance)

    • Many units use the same entrance

    Years ago, I wrote about Matthew Greene (Counsellor in Hamilton) cracking down on illegal units. It has not worked for the following reasons:

    • The dramatic increase of real estate prices

    • The lack of affordable housing in our steel town

    • Evidently, 80-90% of basement apartments are illegal as it’s very hard to control

    • The high rents in Hamilton, the fact that our city is the 10th most expensive rental market in the country

    The reality is that illegal basements are here to stay in the near future. In fact, a current counsellor commented on the condition of anonymity in the following “Hamilton has allowed them since the early 70’s. Last year, council passed a 2-year pilot to test relaxing some of the rules and in the next month or so, we hope to come forward with a city-wide discussion paper on accessary units, which are basement apartments or laneway type units”. It appears that illegal basement apartments will not disappear soon. However, as the City of Brampton soon discovered, two fatal fires since 2016 can change the thought process quite quickly. Brampton began to crackdown with these unlicensed homes. Hamilton, beware.

    Robert Floris has been in the mortgage industry for 30 years, including working as a Sales Manager for a major chartered bank. Over his career, he has personally lent over 1 billion dollars and proudly continues to advise and tutor his valuable clients.

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