Houses in Scarborough are allowed a basement apartment and two other roomers. Increasingly, though, owners are dividing up houses in defiance of the rules and city councillors say such businesses are hard to inspect and shut down.

After hearing the city had fined Lushan Lu and co-owner Zhaun Wang $5,000 each for splitting a house on New Forest Square to create 18 rentable rooms, Ward 15 Councillor (Eglinton-Lawrence) Howard Moscoe said Scarborough needs a new approach - licensing.

But Moscoe, chair of Toronto's licensing and standards committee, said he's proposing licensing rooming houses as a way to limit and control them.

"There's a desperate need for that kind of accommodation," Moscoe said, adding he'll bring the issue to his city-wide committee after Scarborough councillors have time to react.

Even before he heard of Moscoe's proposal, however, Ward 40 (Scarborough-Agincourt) Councillor Norm Kelly said he wants to discuss allowing licensed rooming houses on Scarborough's arterial roads.

Chairperson of Scarborough Community Council, Kelly battled rooming houses in the past but now suggests that licensing and confining them to certain roads could protect streets of single-family homes from illegal - and often unsafe or unsanitary - businesses in their midst.

"Better to control something like that than to ignore it and fight a losing war against it," Kelly said, predicting with immigration the local demand for such rooms is going to increase.

Both councillors said licensing would have to ensure such rooming houses are safe and have proper amenities, including a standard for parking.

Lu, who advertised the house on a web page, ran for council in Ward 39 (Scarborough-Agincourt) in the 2006 municipal election and when asked at the time, did not deny he ran a rooming house.

Instead, Lu defended such operations as a practical, affordable way to welcome immigrants.

In one interview during the campaign, he said he was confident he could "find mutual solutions" with the city on what he saw as a difference of opinion. Sooner or later, he added, the bylaw would change.

This week, Denis Lanoue, president of the Heathwood Ratepayers' Association, which represents owners in Agincourt's northeast corner including on New Forest Square, said rooming houses should be built somewhere else.

"These people are making cash money at the expense of poor people," he said, insisting out of 1,400 homes in the neighbourhood, up to 100 are rooming houses.

"When I bought this house it was a single-family home area and I want it to remain that way."

Lanoue said Lu was fined only after repeated complaints to Ward 39 Councillor (Scarborough-Agincourt) Mike Del Grande, a licensing committee member and dedicated foe of rooming houses in his ward.

But Paul Dennison, with the Toronto Christian Resource Centre, a social agency for Regent Park and other downtown neighbourhoods, said people don't have much to fear from Moscoe's proposal.

Downtown rooming houses have been legal but in decline since 1974, when the city first had them licensed, Dennison said, adding it's no coincidence the number of emergency shelter beds has since grown.

But licensing has succeeded in improving the quality of rooming house stock and safety, said Dennison. All are inspected each year (or in cases where they are owner-occupied, every two years) with neighbours able to challenge the license renewal.

"A well-run rooming house disappears into the neighbourhood," said Dennison, part of a city working group on rooming houses that has concentrated mostly on Toronto's downtown.

"A proper licensing system up there could address 90 per cent of the fears people have."

Gael Gilbert, executive director of Agincourt Community Services Association, which works with homeless or marginally housed people in Scarborough, said licensing would be a good thing, ensuring people are renting inspected and livable spaces.

Though newcomers have been sharing space "since immigration began," Gilbert said her agency's clients report renting rooms that are unheated, too small to turn around in or filthy because no one is responsible for cleaning them.

"They don't feel comfortable complaining too loudly because it's still a roof over their head."

But Gilbert said she has also seen as many as four families sharing a tiny apartment in Scarborough, proving the issue extends beyond rooming houses to a general lack of affordable housing.