Quick Answer
Yes. A permitted garden suite is a legal self-contained dwelling, and long-term rental is one of the main reasons homeowners build them. New one-bedroom garden suites across Toronto and the GTA typically rent for about $1,900 to $2,600 per month, with two-bedroom suites achieving more. Standard Ontario landlord-tenant rules apply, including the standard lease. One important limit: short-term rentals in Toronto are only permitted in your principal residence, so nightly Airbnb-style rental of a backyard suite is generally not allowed.
Long-term rental: yes, that is largely the point
A garden suite built with permits and passed inspections is a legal, self-contained additional residential unit, and you are fully entitled to rent it to a long-term tenant. This is the core investment case for most of the suites we build: a purpose-built rental on land you already own, with its own entrance, kitchen, bathroom, laundry, and outdoor space, commanding rents that basement apartments cannot match. Tenants consistently pay a premium for what a garden suite offers over other secondary units: no shared walls with the landlord, above-grade windows on multiple sides, private entry without passing through anyone's home, and a genuinely house-like feel at a one-bedroom price. Legality matters commercially too: a permitted suite can be advertised, insured, and financed without the risks that shadow unpermitted units, which can face orders to vacate and complicate insurance claims. If rental income is your goal, say so at the design stage, because it shapes decisions from durable finishes and sound insulation to sub-metering, storage, and how the suite's entrance and outdoor area are separated from your own backyard life.
What rent to expect across Toronto and the GTA
New one-bedroom garden suites in Toronto and the GTA typically achieve about $1,900 to $2,600 per month, with position in that range driven by location, transit access, suite size, finish level, parking or bike storage, and whether utilities are included. Two-bedroom, two-storey suites can rent meaningfully higher, which is part of why lot-maximizing design matters. As brand-new construction, garden suites also sit at the top of the market for their bedroom count; tenants compare them to new condos, not to aging basement apartments. Under current Ontario rules, units first occupied after November 2018 are exempt from the annual rent-increase guideline, which gives landlords of new suites more flexibility over time, though tenancy law evolves and should be confirmed when you lease. Decide early how utilities will work: including them in rent is simple, while private sub-metering of hydro and water lets the tenant pay for what they use and typically supports a cleaner landlord-tenant relationship. Vacancy risk on well-located garden suites has been low, as the GTA's supply of ground-oriented one-bedroom rentals remains thin.
Your obligations as a landlord
Renting a garden suite makes you a landlord under Ontario's Residential Tenancies Act, with the same framework that governs any rental: use of the Ontario standard lease, limits on deposits, proper notice rules, maintenance responsibilities, and access to the Landlord and Tenant Board for disputes. The practical obligations are manageable, especially with a new build: you are responsible for keeping the unit in good repair, but a suite that starts life with a new envelope, new mechanicals, and a 2-year workmanship warranty has far fewer surprises than a converted basement. Tell your home insurer before a tenant moves in, since rental use changes your coverage needs, and declare the rental income on your taxes, where offsetting expenses such as financing interest, insurance, and maintenance generally apply; an accountant is worth consulting in year one. Screen tenants properly, document the suite's condition at move-in, and keep the relationship professional even though the tenant lives in your backyard. Many of our clients find the proximity a feature rather than a problem: good tenants become neighbours, and managing one new unit thirty feet away is about as easy as landlording gets.
Short-term rentals: generally not an option in Toronto
If your plan is nightly or weekly Airbnb-style rental, Toronto's rules stop most garden suite versions of that idea. The city permits short-term rentals only in the operator's principal residence, the home you actually live in, and requires registration. Since your garden suite is a separate dwelling unit in your backyard rather than the home you occupy, renting it short-term is generally not permitted; the framework is designed precisely to keep dedicated dwellings in the long-term housing supply. Attempting it anyway risks fines and enforcement, and platforms delist unregistered Toronto listings. The sound business plan for a garden suite is the long-term one, and the numbers do not need nightly pricing to work: $1,900 to $2,600 per month of stable, low-vacancy income against an all-in build cost of $285,000 to $450,000 for custom or from $225,000 for prefab is the investment case in its honest form. If flexible family use plus income is the goal, a long-term tenancy punctuated by family occupancy between leases is the compliant way to get both. Rules evolve, so confirm the current short-term rental bylaw before building a plan around any exception.
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