Blog > The Complete Guide to Buying a Markham Home with a Legal Basement Apartment
The Complete Guide to Buying a Markham Home with a Legal Basement Apartment
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Michael John Lau is a top real estate agent in Markham and a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region. Before buyers rely on basement rent, he helps them confirm the unit is legal, insurable and financeable.
How do you know if a basement apartment is legal before buying a home in Markham
In Markham, a house with a second unit must be registered with the City under By-law 2018-57, after fire and building inspections of both units. A listing that says “separate entrance” or “in-law suite” does not mean the unit is legal. Ask the seller for the registration and permits, and contact Markham Fire Prevention to confirm. Under CMHC rules since 2015, lenders can count up to 100% of rent from a legal suite in an owner-occupied home with up to two units. If a tenant lives there, you take over the tenancy unless the seller serves a valid purchaser N12.
Legal, Registered or Just “Finished”?
| What the listing says | What it may mean |
|---|---|
| “Registered two-unit house” | Registered with the City after inspection: ask for proof |
| “Legal basement apartment” | Ask for the registration or permits behind the claim |
| “Separate entrance,” “in-law suite” or “potential income” | Often not registered |
Under Ontario’s Bill 23, urban residential lots can have up to three units. That allows a second unit, but the unit still has to meet building and fire rules and, in Markham, be registered.
How to Verify Before You Firm Up
- Ask the seller for the City registration, building permits and fire inspection records.
- Contact Markham Fire Prevention at 905-415-7521 about the unit’s registration and inspection status. The City has no online lookup.
- Check the unit standards: each unit needs its own kitchen, bathroom, living, sleeping and eating areas, plus a protected exit.
- Ask about age: suites created before July 1, 1993 may fall under Ontario Fire Code retrofit rules if the owner can prove the creation date.
- Make your offer conditional on your lawyer’s review and a home inspection.
Source: City of Markham, Registration: Basement Apartments and Second Suites.
How Lenders Treat the Rent
Since September 28, 2015, CMHC has allowed lenders to count up to 100% of rent from a legal suite, up from 50%, when qualifying an owner-occupied home with no more than two units. For an existing suite, lenders typically look at a two-year rental history; with less, only 50% may count. Policies differ between lenders and mortgage insurers, so confirm with yours. An unregistered unit may not count at all.
If you plan to add a suite instead, the federal secondary suite refinancing rules since January 15, 2025 allow borrowing up to 90% of the home’s value after the renovation, on homes worth up to $2 million.
Looking at a home with a basement apartment? Call Michael John Lau, REALTOR®, at (416) 700-0286 to review the paperwork before you offer.
Buying with a Tenant in Place
A buyer takes over an existing tenancy unless it is ended properly. If you or your immediate family will live in the unit, the seller can serve an N12 for purchaser’s own use once the sale is firm. Key rules:
- The property must have three or fewer residential units.
- The termination date must be at least 60 days after notice and fall at the end of a rental period.
- The tenant is owed one month’s rent as compensation.
If you plan to keep the tenant, ask for the lease, rent history and any deposit held. Increases are limited by the guideline, 1.9% for 2027, for units it covers. For more on running the unit, see the 2026 rule changes for first-time landlords.
Insurance and Taxes
- Insurance: tell your insurer about the rental unit. An undisclosed suite can put coverage at risk after a fire or flood. Tenants should carry their own contents insurance.
- Taxes: rental income is taxable, and renting part of your home can affect the principal residence exemption. Speak with an accountant.
Run the Numbers
Basement rents vary with size, ceiling height, light, parking and entrance. Rentals.ca reported Markham averages of $2,092 for one-bedroom units in September 2026, across all rental types, so check recent basement leases nearby rather than relying on a listing’s “potential income.” Subtract a vacancy allowance, extra utilities and repairs. For comparing a basement unit with a garden suite, see basement apartment vs. garden suite.
The Bottom Line
A legal, registered basement apartment can help with the mortgage or house family members close by. An unregistered one can create insurance, financing and safety problems. Ultimately, the decision is yours. The goal is to make sure you have all the information before you rely on that rent.
Next Steps
- Real estate investing in Markham: income homes that fit your plan.
- Buying a home in Markham: careful due diligence before you offer.
- Mortgage calculator: test the payment with and without rent.
Frequently Asked Questions
How do I know if a basement apartment in Markham is legal?
Ask for the City registration and permits, and contact Markham Fire Prevention. Markham requires two-unit houses to be registered after fire and building inspections.
Does Markham require basement apartments to be registered?
Yes. Under By-law 2018-57, two-unit houses must be registered. The City lists a $260 fire inspection fee and a $246 registration fee.
Can basement rent help me qualify for a mortgage?
Often, if the suite is legal. CMHC allows lenders to count up to 100% of the rent in owner-occupied homes with up to two units. Policies vary.
What happens to the tenant when I buy the house?
You take over the tenancy unless the seller serves a valid N12 for your own or your family’s use, with at least 60 days’ notice and one month’s compensation.
How many units can I have on a Markham lot?
Under Ontario’s Bill 23, urban residential lots can have up to three units, subject to building, fire and zoning rules.
Do I need special insurance for a basement apartment?
Tell your insurer about the rental unit. An undisclosed suite can put your coverage at risk.
Work With Michael John Lau in Markham
Michael John Lau helps Markham buyers evaluate income homes carefully: confirming registration, reviewing leases and rent history, and testing the numbers with your lender. The goal is rental income you can rely on.
📞 Contact Michael John Lau, REALTOR®
🌐 www.callmikelau.com
Considering a home with a basement apartment?
Michael John Lau can help you confirm the unit’s status, review the lease and compare recent sales of similar homes.
Michael John Lau, REALTOR® · Markham, Ontario · (416) 700-0286
Disclaimer. Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. Registration rules are from the City of Markham’s Registration: Basement Apartments and Second Suites page. CMHC suite income rules are as reported by Canadian Mortgage Trends (July 2015). Refinancing rules are from Finance Canada (December 2024). N12 rules are from the Landlord and Tenant Board. Rents are from Rentals.ca (September 2026). Michael John Lau is not a lawyer, accountant, tax advisor or mortgage professional. This article is general information, not legal, tax or financial advice. Speak with a qualified professional about your own situation.