A Guide to Renting a Home in Toronto, Ontario
December 14, 2022
Here is a comprehensive guide to rent a home in Ontario.
It is important to remember that your rent payment and household-related expenses should not be higher than 35% of your gross household income. This will help you avoid putting yourself in an uncomfortable financial position and possibly missing rent payments. So for example, if your gross pay is $5,000 a month, then your housing costs should be limited to $1,750/ month.
Duration of a lease:
Standard leases are typically for a 12 month period and they go month to month thereafter. Although you can find short-term leases on Kijiji, Airbnb, and sometimes on MLS they are harder to find and often more expensive.
Types of homes you can rent and where to look:
- Apartments: These are typically owned by a company. The entire building will typically be renters and you will deal with property management to rent a unit. Apartment buildings will likely be the more affordable option over condos. Here is an example of a apartment rental
- Condos: Condos are like apartments but each unit is individually owned. Owners may rent out their units or live in them. So the building will be occupied by a mix of owners and renters. You can often find many condos for rent on MLS and the easiest way to search for them is on TopHouse. Here is an example of a condo for lease.
- Houses: These are standalone properties that do not share property management. A house typically comes with higher monthly utilities (see below for a breakdown). Here is an example of a house for rent.
- Multiplexes: These types of buildings typically only have only a few units in the building (typically 2-6 units. They can also be a great affordable housing option that has less traffic. Here is an example of a multiplex rental.
- Basements: Basements are the lower floor of a house converted into a separate unit to be rented out. They are often the most affordable option. Here is an example of a basement rental.
- Roommates: If you’d like to save money, don’t want to live alone, or simply can’t afford to live on your own. Having a roommate can be a great option for you. Here is a website that helps you find a room to rent with a roommate. Keep in mind, many of the rules under the Residential Tenancy Act mentioned below do not apply if the tenant must share a kitchen or bathroom with the landlord.
With the rental market moving quickly, it is important to follow the steps below to save you time and effort in the process.
- Determine location and type of home you would like to live in
- Check rental sites like TopHouse to see if you find options that match your affordability
- Prepare the documents you will need to get approved for a rental
You may not be able to secure the unit you want if you are not the most suitable candidate for the unit. Often a landlord may reject an applicant for poor credit, insufficient income to cover the rent, or a poor rental history. Sometimes you may also compete with other renters bidding for the same unit. A competing renter may be selected over you if the renter submits a higher offer, may be faster and more organised in submitting their documents, they have better credit history or they have higher or more stable income.
In a competitive rental market like today, it is very important to have your rental documents ready.
- Employment letter and recent pay stubs
- Credit check: You can obtain a credit report from Equifax or TransUnion. Some banks also provide a complementary credit report online.
- Rental application with references (often from past landlords). Here is a copy of a Rental Application
- Landlords or their representatives will also request ID to confirm your identity
Note: a landlord cannot discriminate or reject an applicant based on race, religion, sex, age, disability or marital status.
Once you have a place in mind, you’ll need to submit the documents above along with an agreement to lease. The Ontario government provides a standard lease form that can be used. If you are renting a unit from MLS the agent helping you will prepare the paperwork.
Rent deposit: For a monthly tenancy, the security deposit cannot be more than one month's rent. So typically you provide first and last month’s rent as a total deposit to secure a unit. For example, if the rent is $2,000/ month the deposit you provide is $4,000. The landlord also has the right to request a key deposit, a deposit that must be returned when the keys are returned. This deposit cannot be withheld for any other reason.
Additional costs of renting:
Your monthly rent payment is not your only cost of housing. It’s important to remember the following additional housing costs. Be sure to budget for these as well.
- Utilities: Typical utilities for condos is Hydro (electricity) ranging from $50-100/ month depending on size of the home and usage. For houses it can be hydro ($100-$150/ month), water ($25/ month), gas ($100-150/ month), garbage ($50/ month).
- Internet: ($50-100/ month)
- Tenant Insurance: ($25-50/ month)
- Moving expenses: ($1,000 - $2,000 one time cost)
The landlord and tenant may agree that rent can be paid by post-dated cheques or through automated payments (for example, deductions from the tenant's bank account or via credit card); but, the landlord cannot force the tenant to make payment with these options.
A landlord can raise the rent if 12 months have passed since the time a tenant initially moved in or since the last rent increase. The rent can only be increased with 90 days written notice.
Rent increases are controlled/ capped at a certain percentage. The rent increase caps are set each year by the Ontario Government and are typically in line with CPI/ Inflation numbers. The allowable rent increase for 2023 is set at 2.5%.
It is IMPORTANT TO NOTE There is an exemption to the cap increase for properties occupied after November 15, 2018.
Renewing a lease
At the end of a lease a tenant does not have to move out. The landlord and tenant can agree to renew the lease for another fixed term period, however, if this is not done, the tenant still has the right to stay:
- as a monthly tenant, if they paid their rent by the month in the expired lease
- as a weekly tenant, if they paid their rent by the week in the expired lease.
Where the tenant stays on as a monthly or weekly tenant, all the rules of the former lease will still apply to the landlord and tenant. As mentioned above, the landlord can increase the rent each year by the amount allowed.
If the tenant wants to leave
In a 1 year contract the tenant cannot end the lease until the 1 year term is complete. However, they are able to assign or sublet the the home. The tenant can end the tenancy at the end of the 1 year contract or later by giving 60 days notice. You can use this N8 form to give notice to your landlord. It is important to note that the termination period must be the end of a rental period. So for example, if you have been paying rent on the 1st of each month and you are on a month to month lease, if you give notice on October 15th, the earliest you can terminate your rent is December 31st, not December 15th as many mistakenly think.
Assigning your lease agreement
If you have signed a 1 year lease but must vacate the home prior to the end of your contract due to personal circumstances, you will need to assign or sublet the lease. A tenant must have the landlord's approval for an assignment or a sublet but, in either case, the landlord must have a good reason for refusing.
Subletting is often done if you will plan to return to the unit. If the person you’re subletting to doesn’t pay the rent or causes damage to the rental unit, you’re responsible.
Reasons a landlord can end tenancy and evict the tenant
- The landlord wants the rental unit for their own use or for the use of an immediate family member or a caregiver. It is now an offence under the Residential Tenancy Act, if a landlord evicts a tenant for personal use and subsequently advertises the unit for lease or for sale.
- The landlord has agreed to sell the property and the purchaser wants all or part of the property for their own use or for the use of an immediate family member or a caregiver
- The landlord plans major repairs or renovations that require a building permit and vacant possession
- The landlord plans to demolish the rental property
Note: In all cases above, the landlord must pay the tenant 1 months rent compensation or provide acceptable alternate unit to the tenant.
A tenant can also be evicted by the landlord for the following reasons:
- not paying the rent in full
- persistently paying the rent late
- causing damage to the rental property
- illegal activity
- affecting the safety of others
- disturbing the enjoyment of other tenants or the landlord
- allowing too many people to live in the rental unit ("overcrowding")
Protecting yourself against fraud
Here are a few reasons that you should be concerned about a fraudulent situation:
- the monthly rent is much less than the current market rate
- you’re asked to leave a deposit without any formal rental agreement or lease in place
- you’re asked to send a security deposit to a landlord outside the country
- you’re offered a rental unit, but no one does a background check on you
- when you ask about the rental unit, you get an email that sends you to a website asking for personal or financial information