This sort of assumes one lives someplace where rents are cheap. If you rented that basement apartment in the first place, it's a pretty good sign you were in need of somewhere extremely cheap... And in markets like NYC where you need a minimum of 4x the monthly rent just to move in, it can be hard to climb out of the basement (both metaphorically and literally)

Ah got you. I live in the Scottish countryside where property is cheap. Forgot about insane city prices.

Depending on the zoning laws it might be legal for the landlord to rent the house to two families, so they might only be renting the (finished) basement with limited rights to using amenities like the garage and kitchen.

Not OP, but a few things come to mind:

1) Possibly to decrease coats of living?

2) Location might not have much better to offer? (Dunno how likely?)

3) Social situation (family, friends, niche industry?)