Renting out a property in Ontario can be a lucrative investment, but it also comes with responsibilities and legal obligations that landlords must adhere to. This guide will help landlords navigate the process of renting their properties in Ontario while ensuring compliance with provincial laws and creating a positive rental experience for both parties involved.
1. Why Rent your Property?:
- Earn a steady stream of monthly income which can help offset mortgage payments and property expenses.
- Exposes you to the potential of long-term financial gains through property appreciation.
- Expands your portfolio beyond stocks and bonds, offering a tangible asset with the potential for capital
growth.
- Diversifies risk and hedges against fluctuations in the market for other financial products.
2. Understanding Ontario’s Rental Laws:
- Familiarize yourself with the Residential Tenancies Act, which is the law that governs most aspects of residential
tenancies in Ontario.
- Understand that disputes between landlords and tenants are heard by the Landlord and Tenant Board, a tribunal in
the province of Ontario designated under the Residential Tenancies Act.
- Stay informed about any updates or changes in rental laws, as they may impact your responsibilities and rights as
a landlord.
3. Preparing Your Rental Property:
- Ensure your property is in good condition, clean, and meets all safety requirements.
- Consider making necessary repairs and improvements to attract quality tenants.
- Install smoke detectors and carbon monoxide alarms as required by law.
- Depersonalize the property, allowing tenants to visualize themselves living in your property.
4. Setting a Competitive Rental Price:
- Research the local rental market to determine a competitive rental price.
- Instruct your real estate professional complete a comparative market analysis of recently leased properties
- Consider factors like location, size, amenities, and condition when setting the rent.
- Get feedback from tenants to determine how much they would pay for your property and how much they can afford.
5. Listing your Property:
- Sign a listing agreement with your REALTOR®, outlining the terms and conditions of their services and how much
commission you will pay.
- Work with your REALTOR® in completing an MLS Data Information Form if your property will be listed on the Multiple
Listing Service System, identifying the property’s features.
- Allow your REALTOR® to coordinate professional photographs and video of your property to quickly attract
high-paying tenants.
6. Tenant Screening:
- Create a tenant screening process to select reliable tenants, that specifies to your REALTOR® the minimum criteria
in selecting among prospective tenants.
- Request that prospective tenants complete a rental application, in which they will outline their residence and
employment histories as well as provide personal references. To see the common information commonly requested in
rental applications, check out our rental application through the link below:
- Request that prospective tenants provide a credit score, which will outline open credit accounts, current financial obligations and delinquencies. Use this information to paint a picture of the prospect’s creditworthiness. Many landlord request that prospective tenants supply their Equifax credit score, link below:
- Request that tenants provide a copy of their proof of employment, which may include: an employment letter, recent
paystubs, Notice of Assessment, bank statements or a combination of these.
- Work with a REALTOR® that specializes in leasing. Borrow from their experience in identifying a great tenant from
among your shortlist of prospects.
7. Drafting a Lease Agreement:
- The Residential Tenancies Act specifies that all Ontario residential tenancies must be drafted on the Ontario Residential Tenancy Agreement (Standard Form), which can be accessed through the link below:
8. Deposits:
- Once both parties have signed and accepted a lease agreement, the tenant will be required to submit a deposit
usually equal to last month’s rent plus first month’s rent.
- If you are working with a REALTOR®, the deposit is oftentimes deposited in their brokerage’s trust account and
provided to you on the start date of the lease. The brokerage may apply any commissions payable against the
deposit.
- Be cautious taking deposits in excess of last month’s rent, as it is a contravention of the Residential Tenancies
Act and may expose you to liability as a landlord.
9. Closing Procedures:
- Ensure that any agreed-upon repairs and maintenance are completed before the date the tenant is scheduled to move
in.
- Receive and approve of any deliverables of the tenant, which may include post-dated cheques, tenant insurance, key
deposit cheque and/or utility transfer confirmations, whichever applicable and outlined in the lease agreement.
- Attend the property with the tenant on the move-in date and complete an inspection for outstanding damage and
property conditions. Take photos and document conditions and repairs.
- Keep a copy of all documentation produced in the course of the transaction.
- Provide them a set of keys and any garage or entry remotes (if applicable)
10. Evictions, Terminations and Disputes:
- Understand that tenants cannot be evicted for any reason whatsoever, and that there are prescribed legal grounds
for eviction, such as non-payment of rent, property damage or illegal activities.
- Evicting a tenant in Ontario is not as simple as changing the locks. Any eviction must be approved of by the
Landlord and Tenant Board following a hearing and provision of an order.
- Follow the guidelines of the Landlord and Tenant Board and follow the rules of the Residential Tenancies Act when
undergoing the eviction procedure and delivering notices.
- One the Landlord and Tenant Board has provided you an order allowing the eviction, you may apply to the sheriff’s
department of the local courthouse to evict the tenant.
- Understand that evictions are costly and lengthy, oftentimes taking in excess of six months to evict a tenant. Be
open to communication and resolve issues with tenants amicably whenever possible.
- You may choose to procure the services of a paralegal or lawyer to represent you in a Landlord and Tenant Board
hearing.
Renting out a property in Ontario can be a rewarding venture, provided you understand and adhere to the province’s
rental laws and regulations. By following this guide, landlords can navigate the rental process successfully while
fostering positive and lasting relationships with tenants. Please note this guide is intended for informational and
educational purposes only and is not intended to be a comprehensive instruction to landlords or tenants.
Engaging the services of a REALTOR® as a landlord in Ontario can bring about several valuable advantages. Firstly, a
REALTOR® has access to a broader tenant pool due to their extensive networks and marketing resources. This means
that you’re more likely to find qualified and reliable renters for your property, reducing the risk of vacancy and
income loss.
Furthermore, a REALTOR® possesses a deep understanding of the local rental market, which is indispensable. They can
help you set competitive rental rates that strike a balance between maximizing your income and attracting quality
tenants. This expertise in the market also translates into their knowledge of Ontario’s rental laws and regulations,
ensuring that your lease agreements, tenant screening processes, and eviction procedures are fully compliant with
the Residential Tenancies Act.
One of the most significant advantages of working with a REALTOR® is the time you save. They can handle various
time-consuming tasks such as property showings, responding to tenant inquiries, and negotiating lease agreements.
This allows you to redirect your time and energy towards other aspects of property management or your additional
investments. Additionally, they excel at marketing properties. They employ various channels such as online listings,
signage, and networking to ensure your property receives maximum visibility, attracting potential tenants swiftly.
Tenant screening is a critical aspect of successful property management, and a REALTOR® may excel in this area. They
conduct thorough checks, scrutinizing credit histories, references, and employment details to select tenants who are
not only reliable but also more likely to meet their lease obligations.
While there may be associated costs in the form of fees or commissions, the benefits of collaborating with a
REALTOR® in Ontario often outweigh these expenses. They can help you save time, minimize vacancies, and guide you
through the complexities of the rental market and legal requirements, making your role as a landlord more efficient
and less stressful.
