An accessory dwelling unit (ADU) is a self-contained home located on the same lot as a house, with its own kitchen, bathroom, sleeping area, and entrance. ADU is the North American umbrella term. Ontario law calls the same idea an additional residential unit (ARU), and the Ontario Building Code calls a second home inside a house a secondary suite. Basement apartments, garden suites, and granny flats all sit under that umbrella. Ontario homeowners add them for rental income, multigenerational living, and to create housing on land they already own.
What Makes a Space an ADU?
A space counts as an ADU when someone can live in it independently of the main house. Four features separate it from a spare room or a finished rec room:
- Cooking facilities: a kitchen not shared with the primary household.
- A private bathroom: toilet, sink, and a shower or tub.
- Private living space: living and sleeping rooms used only by the occupants.
- Its own way in and out: a separate entrance, or a shared exit that meets fire separation rules.
The code’s definition of a dwelling unit lines up with this: a suite operated as a housekeeping unit, usually containing cooking, eating, living, sleeping and sanitary facilities. A finished basement with a bedroom and bathroom but no kitchen is extra space for the primary household, not a second dwelling.
The word accessory matters too. The ADU is secondary to the principal dwelling: it shares the lot, and usually the water, sewer, and hydro connections. That’s how it differs from a standard apartment in a multi-tenant building. Under the 2024 code, a secondary suite and the other home in the building form a single real estate entity, so it isn’t a separate property you can sell on its own.
Accessory Dwelling Unit vs. Additional Residential Unit in Ontario
Ontario statutes don’t use the phrase ADU. The Planning Act’s term is ARU, and the ARU rules decide whether you can build one. The names below overlap, which is why research on a single project turns up four different terms.
| Term | Where you’ll see it | What it covers |
|---|---|---|
| Accessory dwelling unit (ADU) | US planning guides; some Ontario towns, such as Woolwich and Belleville | Any self-contained secondary home on a residential lot |
| Additional residential unit (ARU) | Ontario Planning Act and O. Reg. 299/19 | A second or third dwelling on a lot with a house, semi, or rowhouse |
| Secondary suite | 2024 Ontario Building Code | A self-contained dwelling unit in a building holding only one other dwelling |
| Coach house, laneway house | Municipal zoning bylaws | A stand-alone home in the rear yard or facing a lane |
So when an Ontario municipality talks about ADUs, it almost always means the ARU permissions below. The site’s guide to additional residential units in Ontario covers approvals in more depth.
How Many Homes Ontario Allows on One Lot
On a lot with a detached house, semi, or rowhouse, the Planning Act permits three homes in total: the primary dwelling plus two ARUs. Two layouts qualify:
- All three inside the house.
- Two in the house and one in an accessory building, such as a backyard cottage or converted garage.
These as-of-right permissions arrived with Bill 23, the More Homes Built Faster Act, 2022, part of Ontario’s Housing Supply Action Plan. They apply to urban residential land with full municipal water and sewage services, so a single-family zone no longer blocks a second or third home on most serviced lots. Rural properties on wells and septic systems fall back on the municipality’s own official plan and zoning.
Limits Municipalities Can No Longer Impose
- A minimum floor area.
- More than one parking space per ARU.
- Development charges on qualifying second and third homes, which the Development Charges Act, 1997 exempts.
- Angular plane, floor space index, and minimum lot size rules, lot coverage limits below 45%, or building separation over 4 metres, under the December 2024 amendments to O. Reg. 299/19.
Setbacks, height limits, and lot coverage above that 45% floor still come from local zoning regulations. Two neighbouring cities can treat the same backyard build very differently, so read the bylaw for your zone before paying for drawings.
Types of ADUs in Ontario
Four layouts cover almost every project, and the right one depends mostly on what the lot and the existing house already give you.
Backyard ADUs
A detached ADU is a separate building in the backyard. Think of a small cottage, carriage house, or garden suite, or a laneway house where the lot backs onto a lane. Nobody shares a wall, so privacy is the best of any option, but it needs its own foundation and service lines run back to the street or the house.
One planning detail catches people out: a backyard ADU uses up the single ARU allowed in an accessory building. A lot with one can still add another dwelling, but only inside the house.
Attached Additions
Attached ADUs connect to the primary home as a side or rear addition, or sit above an attached garage. Sharing a wall, and often the electrical panel and water service, keeps servicing simpler than a stand-alone build. Sound transmission and fire separation between the two homes are the design points to get right.
Basement and Interior Conversions
Converting an existing basement, attic, or den into a legal apartment is usually the lowest-cost route because the structure already exists. The work centres on fire separation, a second means of egress, plumbing, and ceiling height, which is the most common deal-breaker for a basement apartment in an older house.
Garage Conversions
A garage conversion reuses the slab, walls, and roof. An attached garage becomes part of the house; a stand-alone one counts as the accessory building ADU. The usual catch is parking: if the conversion removes a space the bylaw requires for the main house, approval gets harder. See the guide to converting a garage in Ontario for costs and code details.
Other Names for the Same Idea
Terminology changes by province, municipality, and real estate listing. These are the names you’ll run into most:
- Secondary suite: the code term, widely used for basement conversions.
- Second unit or secondary dwelling: older Ontario terms used before the ARU rules.
- Garden suite: a backyard home, sometimes called a backyard cottage.
- Laneway house: a rear-lot home facing a public lane, common in older Toronto neighbourhoods.
- In-law suite: a name based on who lives there, not a separate legal category.
- Granny flats: an informal term for a senior-friendly home, rarely used in official documents.
- Coach house or carriage house: historically a home above a garage or in a converted stable.
Whatever the label, the zoning and building code tests are the same, whether family lives there or a paying tenant.
What Makes an ADU Legal in Ontario
Zoning permission is only half the test. A legal ADU also needs:
- A building permit before construction starts.
- Construction to the Ontario Building Code. The 2024 code (O. Reg. 163/24) took effect January 1, 2025, with transition rules for projects permitted or substantially designed before then.
- Electrical work inspected by the Electrical Safety Authority (ESA).
- Fire Code compliance. Older two-unit houses that predate the mid-1990s cut-off fall under Ontario Fire Code Section 9.8 retrofit rules; the City of Toronto explains which houses that covers.
- Registration where the municipality requires it. Markham, for example, runs a registration program.
An ADU that skipped these steps is an illegal apartment even if zoning would have allowed it. That gap tends to surface at a sale, a refinance, or an insurance claim after a fire.
How an ADU Project Moves From Idea to Occupancy
- Check your zone. Pull the zoning map and the rules for your zone, confirm municipal water and sewer, and note whether an accessory building already holds a dwelling.
- Design the space. Decide on family use or rental, then hire a qualified designer who knows Ontario code to avoid redesigns during permit review.
- Apply for a building permit. Submit drawings to the building department. Projects needing a minor variance take longer.
- Build or renovate. Use licensed contractors who know the inspection sequence for a legal basement apartment or secondary home; a missed framing or fire separation inspection can mean opening finished walls.
- Pass final inspection. After sign-off the ADU can be occupied. Keep every permit and inspection record for a future sale or refinance.
Why Ontario Homeowners Build ADUs
- Rental income that offsets part of the mortgage.
- Multigenerational living. An in-law suite keeps aging parents nearby while each household keeps its own kitchen and door.
- A first home for adult children priced out of the local market.
- More affordable housing options. This gentle form of housing adds rental housing to established neighbourhoods without new roads or towers.
Financing opened up in 2025. CMHC’s insured refinance for secondary suites allows up to 90% of the as-improved value on properties under $2,000,000, with up to four homes in total and amortization up to 30 years. The borrower or a close relative must live in one of them, and no rental can run shorter than 90 consecutive days.
Costs and Trade-Offs to Weigh
As typical estimates, an interior conversion starts around $50,000, garage conversions usually run $80,000 to $140,000, and stand-alone builds with full foundations and separate services cost $150,000 to $250,000 or more. Servicing distance, soil, and finishes move real quotes more than layout does.
- Property tax: new legal living space raises the value assessed by the Municipal Property Assessment Corporation (MPAC), and taxes follow.
- Landlord duties: renting puts you under the Residential Tenancies Act, 2006, including its rules on rent increases and ending a tenancy.
- Insurance: tell your insurer before anyone moves in, since a policy written for one household may not cover a rental.
- Yard and parking: a backyard build takes outdoor space, and neighbours notice extra cars.
Start by confirming which ARU permissions apply to your lot, then decide whether your accessory dwelling unit belongs in the basement, the garage, or the backyard. If an outbuilding already holds a dwelling, plan the next one inside the house. When you’re ready, the team at ADU Ontario can walk you through zoning, design, and construction from the first phone call to final inspection.
Frequently Asked Questions About ADUs
Does an accessory dwelling unit need a kitchen?
Yes, in practice. The Ontario Building Code defines a dwelling unit as a suite usually containing cooking, eating, living, sleeping and sanitary facilities. Without its own kitchen, the space is treated as part of the primary home rather than an independent dwelling.
Can I have more than one ADU on my property in Ontario?
Yes, up to two on most serviced urban lots in a residential zone. The Planning Act allows a primary home plus two ARUs, either all inside the house or two in the house and one in an outbuilding. Only one may sit outside the house.
Is an in-law suite the same as an ADU?
Yes. It’s an ADU named for who lives in it. Ontario applies the same ARU zoning and code rules whether the occupant is a parent, an adult child, or a paying tenant.
What is the cheapest type of ADU?
An interior conversion, usually of a basement, is typically the cheapest because the foundation, walls, and roof already exist. Typical estimates start around $50,000, compared with $150,000 or more for a backyard build.
What are the downsides of an ADU?
The main downsides are the upfront cost, higher property taxes after reassessment, landlord obligations if you rent, and lost yard or parking space. None is a deal-breaker for most owners, but each belongs in the budget before you commit.