Basement Suites in Vancouver: Authorized vs Unauthorized

Basement suites offer an attractive source of secondary income for homeowners in Vancouver. The monies received in rent can contribute to what may be very high monthly mortgage payments. The intention to receive rental income from the property can influence your mortgage approval amount. When your dream home is in Vancouver, this is a make or break deal.

There may have been a time when you rented out a basement suite from the owner because it was (and still is) a more affordable option. Your rent was lower to compensate for the low ceilings, dark and dingy rooms with little natural light, and poor ventilation. This throwback might give you a sense of nostalgia if nothing else. But now that you’re considering being a landlord you have a lot more stringent building codes to adhere to.

Here’s everything you need to know about authorizing your Vancouver basement suite.

WHAT IS AN AUTHORIZED BASEMENT SUITE?

In a nutshell, an authorized basement suite has passed the minimum requirements per the BC building code for secondary suites. These requirements include size, accessibility, and safety measures that deem the area to be fit for accommodation. An unauthorized suite may very well meet these requirements, but hasn’t gone through the permit process. Use these quick links to view the requirements in your city:

Vancouver

North Vancouver

West Vancouver

Burnaby

New Westminster

Coquitlam

Can you rent out/sell a property with an unauthorized basement suite?

Technically, yes. In fact, 80% of rental suites in Greater Vancouver are not authorized. Unauthorized basement suites are also referred to as “illegal” suites. The Rental Tenancy Act (RTA) applies to all rented suites, regardless of “legal” status. Unauthorized basement suites are rented out with little to no issues, which is why this number is so high. Many people don’t bother going through the authorization process because the RTA defines the roles between tenant and landlord.

The question becomes is it even worth getting your basement suite authorized?

BENEFITS OF AUTHORIZING YOUR BASEMENT SUITE

There will be some renovation, or finishing costs involved to bring your suite up to code. The age and condition of your home – or potential home if you’re in the market to buy – will determine how much of investment this is. The upfront cost might be intimidating at first, but it’s important to consider the long term advantages:

• Adequate home insurance coverage – An authorized (or “legal”) suite will be able to obtain the proper insurance coverage that will better protect you, and your investment. Your claim could be rejected if your secondary suite is “not up to code” when disaster strikes.
• Happy neighbours, renters, and peace of mind – Anyone at any time could report you for having an unauthorized basement suite (including your tenant). Injuries, noise, and parking disputes are common issues that could cost you significant penalties.
• Higher rent value – When you authorize your basement suite for rent, you comply with a number of health and safety standards. This is attractive for renters and could help you find a higher quality tenant.
• Increase home value – Ready to sell your home? The marketing effects of listing your property with “authorized basement suite” will bring your renovation spend find its way right back to your pocket. On the other hand, an unauthorized basement suite could have potential buyers running for the hills. This is because they understand the property carries a greater risk.
• Boost your financing potential – Secure a higher mortgage rate! Rental income from an unauthorized basement suite will not be recognized by your lender.

CLOSING THOUGHTS

The city recognizes that basement suites are an important source of affordable housing. The permit certifies that your accommodation is built safely, of high quality, and deemed suitable for living. The combination of additional income, recognition and appreciation from the community, and ease of approval from a mortgage lender are all good reasons for homeowners to get this done.

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