It is not a secret that renting out a residential property is a business. Business makes money when revenues exceed costs. Today many of the real-estate investors maximize revenues by turning a single family houses into Lodging Houses (Rooming Houses). In this case, a house is being rented to several families rather than to one single one. In general, it brings higher income. The strategy is very attractive, but sometimes it can cause problems, because the creation of these houses is regulated by different levels of government and requirements are not always apparent and easy to comprehend. In many ways, they depend on location of the property.
More and more of our clients, those who already turned their single family houses into lodging ones and those who only plan on doing so, come to us with questions. “Enforcement officer wrote me a warning and requested to bring the situation in conformity with the law within 30(thirty) days, which, in fact, meant that I have to terminate the tenancy with one of my tenants right away. Whom can I evict first and how?”, – asked one client.” “Can I convert the house and make additional room(s) to rent?”, – asked another one, “Several students the house together. Does this mean that I do not have a Lodging House but rather a Single Family one?”, – inquired the third client. “How many rooms can I rent and how many tenants are allowed in my house?” etc. Those, whom the enforcement officer has already visited, certainly do not ask those questions, because everything has been already written and explained in the ‘Notice of Violation’.
Unfortunately, when the police officer appears at the front door, it becomes more complicated and expensive to correct the situation. The goal of this article is to introduce our readers to the factors and draw their attention to the requirements that they, probably, do not know about, but should know before starting converting their properties into lodging houses.
What is a Lodging House? Lodging House is a residential unit which is used by or on behalf of the owners to provide lodging units for hire or gain directly or indirectly to more than 3,4,5 (depending on the jurisdiction) people with or without meal. Basements apartments or units are different type of rentals. They are regulated differently as accessory dwelling units. This fact, of course, does not mean that a house with a Basement apartment cannot be transformed into a Lodging House.
The provincial legislations governing all types of homes, including Lodging House is Ontario are Building Code (Building Code Act, 1992 – O. Reg. 332/12) and the Ontario Fire Code (Fire Protection and Prevention Act, 1997 – O. Reg. 213 / 07), which put forward the general requirements for all types of homes. The law and regulations determine the maximum number of persons allowed as tenants in the house of a certain square footage, ceiling height in different rooms and areas of the house, number of doors and exits, materials that the doors, partitions should be made of etc.
Requirements vary depending on how many families live in the house. For example, if there are several families under the same roof, the house is considered to be a multi- unit property and the walls between the rooms must be made of a fire refractory material.
Also, zoning regulations set up certain conditions that shall be complied with. It is quite common that even within the same city, in the different parts of it, there can be different rules and regulations concerning Lodging Houses. At times they overlap and even contradict each other.
The City of Guelph would be a good example here.
In the city of Guelph Lodging Houses must be certified by the city. By one of the city’s by-laws, the house is considered to be a lodging house if more than 5(five) rooms in it are rented. It is interesting that in another by-law of the same City of Guelph, Lodging House is defined as the Residential Unit that provides accommodation to more than three persons. Lodging Houses are not allowed in all areas of the city and there is requirement of 100 (one hundred) meters with respect to the distance between them.
Different requirements apply to licenses. In Toronto, the situation looks quite interesting, because only in three districts of the city, namely, in Toronto (the area before the merger), Etobicoke and York Lodging Houses are officially permitted. Thus, while in Toronto and Etobicoke licenses are required, in York it is not. In 2015 in Toronto (Toronto area today) will be held in-depth analysis of Lodging Houses, after which the legislation might be amended drastically.
In conclusion, I would like to say a few words about liability. Liability for violations of the rules and regulations is generally administrative. However, sometimes non-compliance with the law, in regards to operating lodging houses, can lead to criminal liability, especially if an accident happened. Therefore, the matter should be taken seriously.
If you are planning to buy a house that is already operated or set up as a lodging house or thinking about converting into this type of rental property, we recommend that you seek an independent legal review and get a formal legal opinion. We will help you to determine the possibility of exploitation of a particular house as a Lodging House, and indicate the sequence of necessary steps to be taken, in accordance with your specific situation. We also will help you to challenge the decision of the local administration of the city, if necessary.