Be Careful With Illegal Basement Apartments (Peel Region Real Estate Market Update)

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In this episode we take a look at the current Brampton, Mississauga, Ajax, Whitby, Pickering Real Estate home prices and market trends for week ending May 15, 2024. We also discuss illegal basement apartments and what risks you should know when buying a home that has one.
This video will focus specifically on Brampton, Mississauga, Ajax, Whitby, Pickering but be sure to SUBSCRIBE for more reports on other areas!
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Santo Sessa & Daniel Sessa
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*This video, nor any of the other videos on the Team Sessa Real Estate KZbin channel, does not constitute legal or financial advice. This is strictly intended for educational and entertainment purposes only.

[@Devilcity6275]

This is the very same reason why I am not renting. Laws are not protecting Home Owners.

[@James-n8z6w]

Good topic Santo. Keep in mind that a tenant could report the landlord to the city or LTB, withhold rent and force all the deficiencies to be fixed. That could cost the landlord $$$$$$. Imagine if the basement windows are tiny ones, the landlord may have to replace them by larger ones to meet fire code, very costly. Not worth the headaches and sleepless nights worrying "what if".....

[@SuperLoveyouloads]

Tenants are never allowed to withhold rent - LTB standards

[@NickM-i3s]

You are correct but with all due respect Santo, real estate agents across the GTA promote these illegal basement apartments in the home's listing. I am an architectural designer and I can tell just by the pictures if the apartment is illegal. I have reached out to listing agents to remove "basement apartment for passive income" from their listing due to the fact that is illegal, it could force the new homeowner to be on the hook to pay. If the Municipality deems the apartment illegal and issues an Order to Comply, the new homeowner is responsible to legalize the apartment not the previous homeowner who built the apartment. The new homeowner is responsible to hire someone like myself to produce new architectural drawings that meets Ontario Building Code requirements and submit for a building permit. If the existing apartment does not meet Building Code (Egress, fire separation, natural lighting etc.) and or zoning bylaws (side yards, parking etc.) then the new homeowners are on the hook. The City building departments will not care if the new homeowner says "I purchased the house with the basement apartment already there..why do I have to pay to repair?" This can put a new home owner in a difficult situation because they may have worked out their numbers with the income of the apartment will help them afford the house but if they have to pay to legalize the apartment it may result in them not being able to afford the house. I blame this on listing agents who falsely advertising "second income with existing basement apartment". For all buyers especially first time buyers who would rely on the income from a basement apartment to help offset the mortgage payment, always put the condition of inspection.

[@teamsessa]

Appreciate your input. And yes, many/most homes with illegal basement apartments are described the way you say. To protect the Seller, listing agent/brokerage, the offer should have a clause stating the basement is not a legal apartment, which the buyer accepts. The big problem is the buyer rarely understands or knows the consequences.

[@rudfil]

It’s a problem for sure and the cities in the GTA especially in Toronto officials turn a blind eye to these illegal apartments just because they know housing is a major problem.

[@thebigbigdaddy]

Call it "room for rent" and you likely averted the entire issue and likely also avoid the landlord tenant board which is horrible. Do so with caution.

[@erenbuyukbicer4329]

That is not true. The law changed. The act applies if the occupant is not sharing a kitchen or bathroom with the owner or a member of their immediate family.

[@purabsharma77]

That's why, we can let out our basement saying room for rent. Try to give it to student and work permit holders. Also, dont give them best facilities. Your apartment must have some drawbacks so they dont plan for long term. Also, dont let out at cheaper rate then market because they wont vacant. If we let out at higher rate, they wont pay rent after few months. Rent them month on month basis.

[@thebigbigdaddy]

@@erenbuyukbicer4329 so, then, share the kitchen and other amenities and mention it in the contract. Contract saying room for rent is no different than what airbnb is allowing for.

[@erenbuyukbicer4329]

@@thebigbigdaddy Again, an enclosed bedroom is now considered a rental unit under the residential Tenancies Act. I don't think that the LTB would believe that they are sharing a kitchen and bathroom with the owner if there are kitchens and bathrooms in the basement where their bedroom is. A contract does not prevent the LTB from ruling on matters in their jurisdiction. So if you want roommates, then don't build a kitchen in the basement. That is the only way to prevent them from being tenants.

[@vitaliys07]

​​@@erenbuyukbicer4329no it is not, Simply remove the kitchen from the basement 😁 easy. Can't say the kitchen isn't shared when there is no kitchen in the basement lol Exemptions from Act 5 This Act does not apply with respect to, (i) living accommodation whose occupant or occupants are required to share a bathroom or kitchen facility with the owner, the owner’s spouse, child or parent or the spouse’s child or parent, and where the owner, spouse, child or parent lives in the building in which the living accommodation is located;

[@garylileikis9367]

I had a legal basement apartment and everything was fine for a while. Afterwards I discovered that as a landlord all of the laws were against me. I had a tenant who said that she didn't smoke but as soon as she moved in she was smoking at least 2 packs per day. I was alergic to cigaret smoke. The tenant moved in with the intention of not paying rent and smoking. This is what she did. when I took her to court I found out that the court hates landlords. I had to pay for my landlord and she got one paid for by the goverment(my taxes). I could not get her out even though she was notpaying the rent. As a last ditch effort I decided to try and re-ocupy that space and that was how I eventually after many months got her out. By re-ocupying the appartment I could no longer rent it for at least a year afterwards. On top of this the federal government will step in and the house is no longer tax except for capital gains. NO WONDER THERE IS A SHORTAGE OF LIVING SPACE!!!. Make it reasonable to rent your basement and the rental shortage will go away!!

[@leonchen89]

This is what’s driving landlords to resort to Airbnb. Monthly rental, without tenant rights.

[@Jo-mf2vu]

​@@leonchen89Is that how you are paying for your g wagen?

[@wendystewart6918]

I wouldn’t be a landlord 😮 no way

[@Theguys1]

Gotta do your homework on the tenant - check employment, bank, referrals, prior history. Probably, you went on a gut feeling about high rent being worth it.

[@James-n8z6w]

Gary, here is a hint. When you interview a tenant, make sure you, your wife or a friend try to sniff them, do you smell smoke on their clothings? I had a prospect tenant who said he does not smoke, he took my rental application and filled it in his car. When he gave it me 15 min later I could smell smoke on the application. Also a tenant could say they don't smoke or have pets but after they move in, they smoke and bring a cat and a dog. As a landlord, there is nothing you can do. If you want to get rid of a tenant, the options are to go to LTB, follow the procedure and lose 10-12 months rent or "cash for keys", give the tenant $5K on condition they they leave and avoid LTB. I don't rent anymore, this is risky today. LTB take 10-12 months for an order and 1 month for the sheriff to evict. By that time you lost over $30K - $40K . And the gvt is wondering why the vacancy are low. The gvt told the adjudicators to slow things down to avoid evictions. They don't want to see homeless people in the street. Have you googled "homeless in California" ? The videos are unbelievable, rents went up sky high and people are living in tents on the sidewalks. This is all over America now , not just California.

[@saty.7]

Good topic. Illegal basements are everywhere in GTA, but it’s treated as business as usual. Lack of insurance coverage is a scary thing, a huge risk and could wipe out all the gains from renting, and probably can bankrupt owner, but still that doesn’t stop them.

[@royberger2259]

I had an illegal basement apartment in Mississauga. I didn't have the right to throw out garbage. However when it was time to leave I had no problem breaking the lease. I didn't like the lack of fire escape.

[@Opinionated363]

How much is the fine? If it’s small, then this practice will continue.

[@omarkhuffash8027]

Its a slap on the wrist 💀

[@xyz1663]

It should be 100,000 per violation.

[@James-n8z6w]

it's not just a fine. If you have tenants living there they can withhold rent until everything meets code, $$$$$.

[@TheNewMediaoftheDawn]

Yup, as someone else said, in Toronto the city turns a blind eye, luckily, as not enough affordable housing here. I guess it’s good for the tenants and landlords, unless something goes wrong.

[@trevors1410]

In Malton people are sleeping in garages and out in the bushes

[@yb9355]

Question. If I turn my primary residence's basement into a rental suite will I have to pay any capital gains when I decide to sell the house? Thanks

[@johnnybojangles]

the basement apartment in lived game me some type of foot algee, too late for your news unfortunately but thanks for you vidoes, theyve meant a lot in these trying times

[@teamsessa]

Foot allergy? From a basement apartment?

[@EshkinKott1]

Thank you a lot for the super important information 👍!

[@DennisJWilson]

i was renting a basement apartment got kicked out cause i lost my job that is no excuse to get kicked out i was paying 1300 a mouth

[@lrs333]

Can you please do weekly home prices and insights numbers for Holton region

[@sheenamordasiewicz4386]

Hi love the video. How can tenants check if an apartment is legal or illegal before renting?

[@erenbuyukbicer4329]

Ask the homeowner to produce the registration certificate from the municipality then call the building department to check its authenticity.

[@EndOfIt]

when its a legal bsmnt the owner will back the high rent onto that fact 😇

[@paulshealthfitness7922]

Is a basement with 20 people in it rented for $150 each legal? Found a good deal on a place with jt

[@xyz1663]

Sounds legit 😂

[@erenbuyukbicer4329]

No. 2 people per legal bedroom maximum.

[@Opinionated363]

The reason why they have illegal,apartments is because owners do not want to pay income taxes on them. These are cash cows . How does one find out if an apartment is legal or illegal?

[@kimsedgwick8119]

Can't wait to be a homeowner

[@probalroy76]

How does CRA consider illegal basement rental as income and tax on it?

[@jwg9338]

If you rob a bank, they want their cut.

[@erenbuyukbicer4329]

The source of the income is irrelevant to the CRA. The income was not obtained through fraud and is not repayable to the renter.

[@vitaliys07]

Why would anyone bother with apartments... Renting rooms much less issues and more money.

[@shanmarg]

What garbage man Santo, legal basements cost double to finish. Who is going to pay?

[@199496db]

Yes City can do it.., But there’ll be lot more people on the streets..these basements are very cheap and one step towards homelessness.

[@vert911]

Who's ready for some rate cuts?

[@xyz1663]

Rate cuts will only come after massive job cuts & recession fully ignited. This is how it always worked in the past. Banks don’t lend during those times and property prices crash because of that…every time… despite the slightly lower rate. It is a zero credit period and only AAA institutions can borrow. This was explained to u many times, so either u have issues… or u have issues… either way it is pathetic to see u beg for bailouts and trying to FOMO people into buying so u can have a chance to dump without a loss.

[@vert911]

@@xyz1663 imagine thinking the upside of an economic cycle is a "bailout". IMAGINE. This time last year you were calling for 10% rates by now and massive price crash. I have predicted everything that has happened. You have not been listening to ME.

[@vert911]

@@xyz1663 Oh I'm not dumping. I'll just jack up your rents and sell for a half mil profit in a few years. RIP

[@vert911]

@@xyz1663 200bps drop incoming. Transaction quantity to follow. Competitive price appreciation realized. Learn the business and get out of your parents basement.

[@xyz1663]

Last year we had a 20% drop. Hello… U awake? Globally RE dropped everywhere drastically. Prices are only up from Jan/Feb but prices are down compared to this time last year. Worst spring market in 15 years. Active listings at 10 year high and climbing. By the end of the year Jan/Feb prices will be down another 20%. Year after that drop another 20%. If mortgages were not extended to 75 years… prices would have crashed 60%+ by now. You predicted nothing. On every rate decision u were wrong. Yes, I predicted 1.5 years ago that mortgages would climb to 10%… What followed was the fastest i rate rise in history. We got 8% mortgages (so far). That was when an army of people like u thought i rates were going back to 0. Almost none of those people post anymore. Prob bankrupt. Don’t worry… you will see mortgages much higher than 8% in what is to come. Nothing is selling. Avg price means nothing when volume is so low. If 1 house sells per month… than avg price is price of that 1 house. That’s just regular criminal money laundering. Not financial advice.

[@saroginidevithambapillai3640]

Toronto is not the best place to rent .

[@louisdelaroca5598]

It’s legal. Lol

[@erenbuyukbicer4329]

Don't waste your money building in a legal basement apartment. we have a great legal walk-out 3 bed 2 bath basement apartment near the University of Toronto Mississauga campus that brings in great income from students. But we can't sell. Legal basement apartments help the province's numbers, NOT yours! Leave an unfinished basement and sell. Get out. Don't stay stuck with a house you can't sell.

[@xyz1663]

Why can’t u sell?

[@teamsessa]

Yes, why can’t you sell it?

[@erenbuyukbicer4329]

Because each time we went to list it after construction, the market turned bad, just like now. Very slow buyer interest.

[@EndOfIt]

​@@erenbuyukbicer4329thats just you having bad luck/timing... simple formula to sell... under list it... gets more eyes/aptmnts/offers coz say if mrket price (not what u desire) is 1 mil.. dont list above or at 1 mil... u will hear crickets... list at 900k and u will garner ton of attn and an offer or more... coz at 1 mil or above the buyer starts picking things they dislike, at under par price u target more eyes and same buyer will now start to fall in for the property and overlook some things... and take all offers and counter them (even a low offer when engaged can become a good one by countering), engage other buyers that u got offer etc... be smart not emotional... and only take an offee u like, no gun to ur head to be forced to a low baller... best of luck...

[@Dickingmail]

Guido