As a landlord or real estate investor, it is essential to know the legal rights of tenants, as well as the obligations landlords must adhere to. Ontario is known for having more complex and strict tenant rights and requirements compared to some other provinces in Canada. Ontario’s Residential Tenancies Act (RTA) governs the relationship between tenants and landlords, ensuring fair practices and offering protections for both parties, but other relevant regulations and requirements also apply.
Rent Control and Increases
Ontario enforces some of the most regulated rent control policies in Canada, making it a significant aspect for real estate investors to understand. The annual rent increase is capped by the provincial government based on inflation, which limits how much landlords can raise rent each year. For 2024, the rent increase guideline is set at 2.5%. Landlords must provide tenants with at least 90 days’ written notice before implementing any increase, and they can only raise the rent once every 12 months.
Rent control, however, does not apply to newer properties first occupied on or after November 15, 2018. This exemption offers flexibility to investors managing newer units, allowing them to set rental rates that better reflect market conditions.
Eviction Rules
Ontario’s eviction regulations are among the most stringent in the country, ensuring tenants are not unfairly removed from their homes. Landlords can only evict tenants for specific reasons, such as:
- Non-payment of rent
- Property damage
- Illegal activities within the rental unit
- The landlord’s personal use of the property (e.g., moving in or housing a family member)
Even in these situations, landlords must adhere to strict notice requirements before proceeding with an eviction. Landlords must give written notice using the proper form provided by the Landlord and Tenant Board (LTB), giving the reason for the eviction. Landlords must also apply for and receive an eviction order from the Landlord and Tenant Board. Self-eviction or forcible removal is illegal.
Moreover, landlords wishing to evict a tenant for personal use must compensate the tenant with the equivalent of one month’s rent or offer a comparable rental unit. This differs from other provinces like Alberta, where eviction regulations are generally less administratively complex and provide landlords with more flexibility.
Maintenance Obligations
Ontario also imposes maintenance responsibilities on landlords, requiring them to ensure that rental units meet the required standards for health, safety, and maintenance. Tenants have the right to a habitable living environment, and landlords are required to promptly address any necessary repairs. If a landlord fails to maintain the property, tenants can file a complaint with the LTB, which may result in penalties for the landlord.
This level of detailed maintenance obligation is stricter than in some other provinces, where maintenance regulations may be less prescriptive, although landlords are still required to provide a habitable property.
Security Deposits and Rent Payments
Ontario is unique in that it prohibits landlords from collecting security deposits for potential damages. The only deposit landlords can collect is a ‘last month’s rent’ deposit at the beginning of the tenancy. This deposit cannot be used for any other purposes, such as covering damages or additional fees.
In contrast, provinces like British Columbia allow landlords to collect both a damage deposit and a pet deposit, providing them with more financial security if damages occur during the tenancy.
Landlord and Tenant Board (LTB)
The Landlord and Tenant Board (LTB) plays a central role in resolving disputes between landlords and tenants in Ontario. It provides a legal avenue for tenants to challenge rent increases, file maintenance complaints, or dispute eviction orders. For landlords, the LTB is a resource for addressing non-compliance from tenants, such as unpaid rent or damage to the property.
Tenant Protection During Sales
When a property is sold in Ontario, tenants have the right to continue living in the unit under the same lease terms. The new owner must honor the existing lease unless they wish to evict the tenant for personal use, in which case compensation is required. This protection ensures tenants have security even when a property changes ownership.
While other provinces may have similar regulations, Ontario’s requirement for compensation during eviction for personal use makes it more tenant-protective in this regard.
Ontario’s tenant rights and landlord obligations are more comprehensive and regulated compared to many other provinces. From strict rent control measures to rigorous eviction processes, the province’s laws ensure that tenants are protected and landlords are held accountable for maintaining rental units. For real estate investors, understanding these regulations is essential to ensure legal compliance and foster positive relationships with tenants. Familiarizing yourself with key areas such as rent control, maintenance obligations, and eviction rules can help prevent legal disputes and create a successful rental business in Ontario.
