In-Law Suites – Yes or No?

Property values in Hamilton have risen over time, but the experience of buying through different market cycles has not been the same for everyone. Some people bought earlier, others stepped back during the most competitive years, and many are reassessing opportunities now under very different conditions.

As housing costs and rents have shifted, both homeowners and buyers have looked more closely at secondary living spaces as a way to offset household expenses or support multi-generational living. On paper, adding or renting out an in-law suite can appear to be a practical solution.

That’s often where the question starts for homeowners: does it make sense to use extra space to help carry the costs of the home? The idea of having part of a property contribute to its own expenses can feel both reasonable and responsible.

There’s also the resale angle. Buyers are frequently willing to pay more for homes that offer a separate, self-contained living space, particularly when flexibility or potential income is part of their longer-term plan.

So, if a property has the physical space for an in-law suite, does adding one automatically make sense from a financial standpoint?

The answer is… maybe.

Things to Consider About In Law Suites as a Seller:

The first and most important consideration is legality. Provincial and municipal by-laws governing secondary suites are enforceable at any time, often as the result of a complaint from a neighbour or tenant, or a report made to the City. In some cases, even listing a property that appears to contain a second unit can prompt closer scrutiny.

If a municipality investigates an in-law suite and determines that it does not comply with local by-laws, the owner may be required to bring the space into compliance or remove it altogether. Beyond the cost of construction or remediation, fines may also be imposed.

Liability is another critical factor. Building codes and property standards exist to protect the safety of the people living in the home. If a non-compliant suite contributes to a fire, flood, structural failure, or other incident resulting in injury or loss, a homeowner could face serious legal and financial consequences. Insurance coverage may also be at risk if the insurer was not properly informed about the secondary unit or if it is not accurately documented in the policy.

Most landlords would never want to live with the knowledge that someone was harmed due to a preventable issue. That risk alone is reason enough to take compliance seriously.

If you already have a second living space in a single-family home and are preparing to sell, transparency is essential. Never suggest that a unit is legal unless the appropriate permits and approvals are in place. Provide any documentation you have, answer questions directly, and allow buyers to assess the situation with clear and accurate information.

Things to Consider About In Law Suites as a Buyer:

If you’re considering a property with a secondary suite, or one with in-law potential, it’s still important to do your homework. In Hamilton, Additional Dwelling Units (ADUs) are now formally permitted on many residential properties, including single detached, semi-detached, and street townhouse lots, provided zoning requirements are met and the proper approvals are in place through the City of Hamilton.

That means a home with a basement apartment or even a backyard suite can be legal, but only if it was created or converted with the appropriate permits and inspections. Ownership alone does not make a unit legal. Buyers should confirm both that the use is permitted on the property and that the work was properly approved.

When reviewing a property with an existing or potential secondary unit, there are two key questions to answer:

• Does the property’s zoning allow for the type of additional dwelling unit being proposed or advertised?

• Were the required permits, inspections, and approvals obtained?

Speaking directly with the City’s planning or building department, or reviewing official zoning and permit records, is the most reliable way to confirm this. Factors such as zoning designation, lot size, parking availability, access, ceiling height, fire separation, and safe exits all influence whether an ADU is permitted and approvable.

We’ve seen this play out in real situations. In one case, clients purchased a bungalow as an income property and completed a full basement conversion with proper permits and inspections. When they later listed the unit for rent, nearby neighbours assumed it was an illegal apartment and attempted to report it to the City.

Because everything had been done properly, there was no issue. Had that not been the case, the outcome could have been very different, including fines or an order to remove the work altogether. Doing things by the book mattered, even when the concern itself turned out to be unfounded.

If rental income is critical to your financial plan, these checks matter even more. Verifying compliance upfront helps avoid costly surprises and reduces long-term legal and liability risk.

I Want a Legal Accessory Unit – Where Do I Begin?

Zoning and site-specific requirements are the starting point. While Hamilton has expanded where ADUs are permitted, not every property will qualify automatically. Eligibility depends on meeting a combination of zoning rules, building code standards, and property-specific criteria.

Common considerations include adequate parking, appropriate setbacks from property lines, minimum unit size and ceiling height, and compliance with fire and safety standards. If one or more of these requirements cannot be met, a minor variance may be required. In some cases, approval may not be possible at all.

Because the rules involve multiple layers of regulation, many homeowners choose to work with an experienced builder, designer, or architect who is familiar with local requirements and approval processes. Their guidance can help identify potential issues early and avoid costly missteps.

Even then, interpretation can be challenging. Municipal by-laws occasionally overlap or conflict, and the City’s own Property Standards By-Law acknowledges this reality:

“Where a provision of this By-law conflicts with the provision of another by-law, Act or regulation in force within the City, the provision that establishes the higher standard to protect the health and safety of persons prevails.” — City of Hamilton Property Standards By-law No. 23-162

Where conflicts arise, the higher standard intended to protect health and safety prevails.

For many homeowners, the additional effort required to create a legal in-law suite or duplex is worthwhile. When done properly, a compliant unit offers peace of mind, improved safety, and more reliable long-term value.

If you’re considering a property with an existing unit or exploring the possibility of adding one, careful research upfront can make the difference between a smart investment and an expensive problem.

Updated December 2025