// adding units

Additional residential units (ARUs) in London

Last reviewed October 30, 2026

An additional residential unit is a self-contained second (or third) home on a residential lot. It might be a basement apartment, an addition, or a garden suite in the backyard. Ontario and the City of London have both moved to make ARUs easier to create, and for homeowners and investors they're one of the most practical ways to add rental income.

What London permits

According to the City of London, ARUs are permitted with single detached, semi-detached and townhouse dwellings, and also on lots with duplexes, triplexes and converted dwellings, provided zoning allows it. A lot can have up to three additional residential units, to a maximum of four dwelling units in total, and two of the ARUs can be in a detached building such as a garden suite or coach house. Setbacks, parking, servicing and building requirements still apply.

Council adopted a zoning by-law amendment on March 3, 2026 to make some interim ARU zoning changes permanent (the City notes it is under appeal), and staff are working on further amendments. Until the appeals are resolved, an Interim Control By-law continues to apply. Check the City's Additional Residential Units page for the current rules before you plan or buy, or contact the City's ARU team.

Requirements to expect

• Zoning compliance: lot size, setbacks, height and coverage rules, especially for accessory buildings.
• Building permit: creating a unit requires a permit under the Ontario Building Code. That includes plans, inspections and final occupancy.
• Fire and life safety: fire separations between units, smoke and CO alarms (often interconnected), egress windows or exits, and safe heating arrangements. Existing buildings converted to two units have specific Fire Code requirements.
• Electrical: Electrical Safety Authority (ESA) requirements apply to new wiring.
• Servicing: water, sewer and sometimes a separate address for an accessory unit. Check with the City.
• Parking: provincial changes have limited parking requirements for ARUs, but confirm current local rules.

Costs to plan for

Costs vary enormously by project. A basement unit in a home with good ceiling height, an existing side entrance and accessible plumbing is a very different job from one that needs underpinning, new egress windows and a new HVAC system. Garden suites are generally the most expensive, since you're building a small house. Budget categories:

Get at least two or three quotes from contractors experienced with legal second units in London. Ask them for examples of completed, permitted projects.

Financing an ARU

• Refinancing: federal mortgage insurance rules introduced in January 2025 allow eligible homeowners to refinance insured mortgages to help fund building secondary suites, within program limits. Ask your lender whether you qualify.
• Home equity line of credit: common for owners with existing equity.
• Purchase-plus-improvements mortgages: when buying, some lenders will finance renovation costs as part of the mortgage, with funds released when the work is complete.
• Government programs: federal, provincial and municipal incentives for adding units come and go. Check the City of London and CMHC for current programs.

Buying a home with ARU potential

If you're shopping with a future unit in mind, look for:

• Basement ceiling height and a dry basement (ask about water history)
• A side or rear entrance, or room to create one
• Plumbing stacks positioned for a kitchen and bathroom
• Electrical service with capacity to spare
• A lot large enough, and with rear access, for a garden suite
• Parking for two households

Ask your agent to help you check zoning before you make an offer, and consider a condition allowing time to consult a designer or contractor.

Renting the unit

Once complete, the unit is a rental under the Residential Tenancies Act, and it may need a City rental licence. See rental licensing and landlord basics. Units first occupied after November 15, 2018 are generally exempt from the annual rent increase guideline, which matters for newly created ARUs.