The Rental Market Landscape
The housing scene in 2024 is intense, to say the least. Tensions between renters and property owners have reached new heights as housing costs skyrocket, scams proliferate, and questionable practices abound. With both sides slinging harsh labels and pointing fingers, the outlook for tenant safety and landlord investments seems pretty grim.
Let’s break down some key facts:
- Currently, it takes about 6 months to get a hearing at the Landlord and Tenant Board (LTB).
- After the hearing, you’re looking at a few more weeks for an order, depending on who’s handling your case.
- We’re seeing more and more stories of conflicts between landlords and tenants hitting the news.
The Law: Residential Tenancies Act (RTA) in Ontario
Alright, let’s talk about the big kahuna of rental laws in Ontario: the Residential Tenancies Act (RTA). If you’re stepping into the landlord game, you’ve got to get cozy with this legislation.
Here’s the thing: the RTA’s main goal is to protect tenants. It says so right at the beginning: “to provide protection for residential tenants from unlawful rent increases and unlawful evictions.” Surprise! The emphasis is not balancing rights equally between tenants and landlords.
When you sign a lease, you’re actually giving up some of your property rights in exchange for rent. Many first-time landlords don’t realize just how many rights they’re handing over until they’re in the thick of it. This realization can be pretty jarring, leading some landlords to feel overwhelmed by their responsibilities or even lash out at tenants (which, by the way, can land you in hot water legally).
Ending a Tenancy: It’s Not as Simple as You Might Think
Here’s a shocker for many new landlords: you can’t just decide to end a lease on your own. Nope, not even if:
- The tenant lied on their application
- They’re not paying rent
- You want to move in yourself, more on this later
In Ontario, a tenancy only ends when:
- The tenant agrees to leave, or
- The LTB orders it
That’s it. No exceptions.
Many landlords mistakenly believe they have some say in when a lease ends. But here’s the truth: tenancies in Ontario don’t have a set end date. Even if you wrote one in the lease, once that date passes, it automatically becomes a month-to-month arrangement.
So, whether you have a “good reason” or no reason at all, if you want a tenant out and they don’t want to go, you’re headed to the LTB. This can feel pretty disempowering for landlords, as their property rights are essentially in the hands of either the tenant or an adjudicator.
Now, let’s break down the legal stuff in simpler terms:
- Eviction isn’t a snap decision. Even for “no fault” evictions, there’s a process to follow.
- Notice periods vary depending on why you’re evicting.
- In Ontario, tenants have what’s called “security of tenancy.” This means they can stay put until:
- They choose to leave (with proper notice)
- You both agree to end the tenancy
- You give them a valid notice to leave (as per the RTA)
- If they disagree with your notice, you apply to the LTB, and the LTB says they have to go
There are two main types of reasons for ending a tenancy:
- “For cause” reasons:
- Not paying rent
- Damaging the property
- Disturbing others
- Illegal activities
- “No fault” reasons:
- Major renovations (that require permits)
- You or your family want to move in
- You’ve sold the property, and the new owner wants to move in (only applies to buildings with three or fewer units or condos)
For “no fault” evictions, you’ll usually need to compensate the tenant. The amount depends on the reason and the size of your building.
Remember, while you’re sorting out an eviction notice, you can’t lock out your tenant or toss their stuff. It’s their home until the LTB says otherwise.
Here’s some friendly advice: evictions can be time-consuming and expensive. Your best bet? Screen tenants carefully and work on building good relationships. It’ll save you headaches in the long run.
Personal Use Eviction: It’s Not as Simple as You Might Think
So, you need your rental property for yourself or a family member. Seems straightforward, right? Well, not so fast. In Ontario, even this seemingly simple situation can get complicated.
Here’s the deal: You’ve got two paths forward.
- The Easy Way: Your tenant agrees to move out, and you both sign the paperwork. Simple and smooth.
- The Not-So-Easy Way: Your tenant doesn’t agree (which happens more often than you might think). In this case, you’re headed to the Landlord and Tenant Board (LTB) for a hearing.
Now, here’s where it gets tricky. Because of the tenant protections built into the law, the LTB is going to assume you’re acting in bad faith when you claim you need the property for personal use. Yep, you read that right. The law starts off thinking you might be trying to pull a fast one.
Why? Well, there’s a financial incentive for landlords to falsely claim personal use to get rid of tenants. Some tenants are wise to this and might keep an eye on the property after they move out to make sure you’re actually living there.
Let’s break down the legal stuff in plain English:
The law assumes you’re acting in bad faith if, within a year after the tenant moves out, you:
- Put the unit up for rent
- Rent it to someone else
- List the property for sale
- Demolish the place
- Try to convert it to something other than a residential unit
This “suspicious period” starts the day you give the tenant notice and ends a year after they move out.
There’s even talk of making this stricter. The government’s considering a rule that would assume bad faith if no one from your family moves in within a certain timeframe after the tenant leaves.
So, what does this mean for you as a landlord?
- Be absolutely sure you need the property for personal use before you start this process.
- Keep detailed records of your plans and actions.
- If your plans change after the tenant moves out, document why. Life happens, but you want to be able to prove you were acting in good faith.
- Be prepared for the possibility that your former tenant might be keeping tabs on the property.
Remember, the law is designed to protect tenants from unfair evictions. As a landlord, you need to be aware of these rules and follow them to the letter. It might seem frustrating, but understanding the process can save you a lot of headaches (and potentially, legal troubles) down the road.
The Rent Payment Conundrum: What You Need to Know
As a landlord, you might think that if a tenant doesn’t pay rent, you can simply evict them. But hold on to your hat, because it’s not that straightforward in Ontario.
Here’s something that might surprise you: being a landlord essentially means being a creditor to your tenant. When a tenant doesn’t pay rent in full, they’re essentially “borrowing” from you. And here’s the kicker - the Residential Tenancies Act (RTA) doesn’t consider this unlawful by itself.
Let’s break it down:
- No Penalties for Late Payment: There’s no automatic penalty for delaying rent payment. In fact, any eviction notice can be voided if the tenant pays up.
- Interest-Free “Loan”: This period of non-payment is interest-free, and it doesn’t show up on credit reports.
- Financial Incentive: For tenants in a tight spot, not paying rent might actually be financially smarter than, say, not paying a credit card bill.
This situation can be frustrating for landlords who didn’t sign up to be lenders. But here’s the reality: delayed rent payments are a risk you take on when you become a landlord. It’s crucial to factor this into your rent calculations and tenant selection process.
Now, you might be thinking, “What about persistent late payments?” Well, it’s not always grounds for eviction. In many cases, tenants are given a conditional order to pay rent on time for 12 to 18 months. If they stick to it, no eviction occurs.
For example, in the case of Stevenson v. Lariviere (March 30, 2021), the LTB took this approach. You can read more about it here.
Moreover, minor delays in rent payment usually don’t result in any penalties for tenants. The case of Malhotra v. Price-Persaud-Persaud (February 1, 2022) illustrates this point. Check it out here.
Let’s look at what the law actually says about non-payment of rent:
According to Section 59 of the RTA:
- If a tenant doesn’t pay rent, you can give them a notice of termination. The effective date depends on the tenancy type:
- For daily or weekly tenancies: 7 days after the notice
- For all other cases: 14 days after the notice
- Your notice must include:
- The amount of rent due
- A statement that the tenant can avoid termination by paying the due rent before the termination date
- Here’s the crucial part: “The notice of termination is void if, before the day the landlord applies to the Board for an order terminating the tenancy and evicting the tenant based on the notice, the tenant pays: (a) the rent that is in arrears under the tenancy agreement; and (b) the additional rent that would have been due under the tenancy agreement as at the date of payment by the tenant had notice of termination not been given.”
What does this mean for you? Even if you serve an eviction notice for non-payment, if the tenant pays up before you file with the LTB, your notice becomes void.
The takeaway? As a landlord, you need to be prepared for the possibility of late or missed rent payments. It’s not just about choosing good tenants (although that helps), but also about understanding the legal landscape and managing your finances accordingly. Consider building a financial buffer to handle potential delays in rent payment, and always keep clear records of payments and communications with your tenants.
The Bottom Line: Being a Landlord is Not for the Faint of Heart
Alright, future landlords, it’s time for some real talk. Being a landlord in Ontario isn’t just about collecting rent checks and fixing the occasional leaky faucet. It’s a high-risk business that requires careful planning, financial savvy, and a thick skin. Let’s break down what you need to know before you dive in:
Your Window of Control is Small
Here’s the truth: your main control as a landlord comes before the lease is signed and keys are handed over. Once that’s done, your property rights become limited. So, what can you do to protect yourself?
- Vet Potential Tenants Thoroughly
- Get verified previous landlord references. And we mean verified. Some applicants might try to pull a fast one with fake references. Remember, there’s no penalty for tenants who lie on their applications after they move in, and you can’t end the lease just because they weren’t truthful.
- Check Rent Payment History
- Look for third-party records like bank statements showing rent payments for past years. Credit reports don’t typically show rent payments, so you need to dig deeper.
- Set Your Rent to Reflect the Risks
- Price in the reality that you can’t easily end a lease. Consider what compensation you need for this limitation on your property rights.
- Factor in the risk of non-payment and potential debt collection costs.
- For rent-controlled properties (occupied before November 15, 2018), consider how the length of tenancy might impact your finances long-term.
The Rent Control Conundrum
Rent control can be a major source of landlord-tenant conflict. Here’s why:
- Your costs (taxes, mortgage) aren’t capped, but your rental income is.
- As market rates rise, long-term tenants paying below-market rent might expect you to absorb the loss.
- This can lead to desperate landlords seeking illegal ways to end tenancies.
Think of it like a fixed-rate mortgage: if rates go up, the borrower wins. But in this case, you’re on the losing end.
Since the RTA doesn’t offer ways for landlords to break leases due to financial loss, you need to prepare for these scenarios upfront. Consider setting initial rents higher to mitigate potential long-term losses.
The Bottom Line
Renting out property is a business, plain and simple. You need to carefully evaluate the risks and rewards before jumping in. Ask yourself:
- Can this business be profitable in the long run?
- Am I prepared for the potential challenges and limitations?
- Do I have the financial cushion to handle unexpected costs or periods of non-payment?
If you’re not comfortable with the risks or don’t think you can turn a profit given the regulatory environment, it might be better to consider other investment options. Selling the property could be a smarter move than becoming a landlord if the numbers don’t add up.
Remember, being a landlord isn’t just about owning property—it’s about running a business in a highly regulated environment. Go in with your eyes wide open, do your homework, and make sure you’re prepared for both the rewards and the challenges. If you do decide to become a landlord, make sure you’re charging rents that truly compensate for the risks you’re taking on.
In the end, successful landlords are those who understand the landscape, plan for the worst while hoping for the best, and treat their rental properties as the serious businesses they are.