How to Become a Landlord in Ontario: What You Actually Need

Becoming a landlord in Ontario, whether you’re converting a property you already own or buying a second one specifically to rent out, comes with real legal obligations that start before a tenant ever moves in and continue for as long as you own the property. Most first-time landlords piece this together from six different searches: what registration applies, what the Residential Tenancies Act actually requires, how tenant screening has to work, when rent can go up, what tax is owed, and what happens if it doesn’t work out. This guide is the single starting checklist for all six, pointing to the full guide on each topic where TorontoProperty.ca already has one rather than re-explaining any of them here. For everything else owning property in Toronto involves, see our complete Toronto real estate guide.

What Ontario actually requires before you rent out a property

For a standard long-term rental in Toronto, a house, a condo, or a basement or main-floor apartment in a home you own, there’s no municipal rental-registration or licensing requirement at all. That surprises people who’ve heard Toronto has rental rules: it does, but they apply to two specific, different situations, not to an ordinary landlord renting a unit long-term. RentSafeTO, the City’s apartment-building standards program, only covers buildings with three or more storeys and ten or more units, so it doesn’t touch a single-landlord house or condo. And Toronto’s short-term rental registration, covered in our guide to Toronto’s short-term rental rules, only applies to a property listed for stays under 28 days, an Airbnb-style listing, not a standard lease. If you’re renting a unit out long-term, neither program applies to you.

Insurance is the real step people miss. A standard homeowner policy is built for an owner-occupied home, and most insurers won’t cover a tenant-related loss, a fire, water damage, a liability claim from an injured tenant, if you haven’t told them the property is a rental. Landlord insurance, sometimes called rental property insurance, is a distinct product built for exactly this, and while it isn’t legally mandatory in Ontario, most mortgage lenders require it as a condition of the loan, and a condo corporation may require it too if the unit is part of one. Calling your insurer before you hand over keys, not after, is the one step in this whole process that genuinely has to happen first.

A landlord’s core obligations once a tenant moves in

Under the Residential Tenancies Act, you have to keep the unit in a good state of repair and fit for habitation for as long as the tenancy runs, meeting all health, safety, housing, and maintenance standards, whether or not the tenant knew about an issue when they moved in. You can only enter the unit with proper notice, in writing, at least 24 hours in advance, stating the reason and the time, generally between 8 a.m. and 8 p.m., except in a genuine emergency. And the only deposit you can collect is a rent deposit, capped at one rent period’s worth (most commonly last month’s rent), applied only to the final rent period of the tenancy and never used for damage; Ontario doesn’t allow a separate security or damage deposit at all, and you owe annual interest on that deposit at a rate the province sets. Our guide to eviction and tenant rights in Ontario covers what happens when a tenancy goes wrong and the process for ending one, in full, rather than repeated here.

The real rules around screening and selecting a tenant

You’re allowed to screen tenants, but the Ontario Human Rights Code sets real limits on how. You can ask for income information, credit checks, credit references, and rental history, but only with the applicant’s consent, and only as part of a genuine, consistent process applied to every applicant the same way, never as a way to screen out anyone based on a protected ground like family status, receipt of social assistance, disability, or the other grounds the Code covers. A blanket income cutoff, refusing anyone whose income doesn’t clear some fixed multiple of the rent, is specifically the kind of rule the Human Rights Commission has found discriminatory, since it screens out people who could genuinely afford the unit through other means.

A blanket “no pets” policy in your lease doesn’t hold up either, for a different reason: section 14 of the Residential Tenancies Act makes a no-pets clause void in almost every residential tenancy in Ontario, with a narrow exception for some condo buildings whose own declaration restricts pets. You can still act if a specific animal causes a real problem, a genuine safety issue, serious damage, or a legitimate allergy conflict with another tenant, but that’s handled case by case under the Act, not through a clause that bans pets outright before you’ve met anyone.

When you can first raise the rent, and by how much

You can’t raise the rent at all in the first 12 months of a tenancy, and after that, only once every 12 months, with 90 days’ written notice on the correct form. How much you’re allowed to raise it without applying to the Landlord and Tenant Board is set every year by the province’s own rent increase guideline, which changes annually and applies differently depending on when the building was first occupied. Rather than restate a percentage here that will be out of date within a year, our guide to Ontario’s rent increase guideline covers the current figure, how it’s calculated, which units it doesn’t apply to, and what’s involved if you want to raise rent above it.

What tax you owe on rental income

Rental income is taxable, reported on your return whether the tenant pays by cheque, e-transfer, or cash, and the core CRA mechanics are the same whether you’re renting a unit out long-term or running it as a short-term listing. Our guide to Airbnb and short-term rental income tax in Canada covers what counts as taxable income, what expenses you can typically deduct against it, mortgage interest, property tax, insurance, repairs, and a portion of utilities among them, and what records the CRA expects you to keep. The compliance-linked deduction rule that guide covers specifically targets short-term listings, so it doesn’t apply to a standard long-term lease, but everything else in it, what’s taxable and what you can deduct, applies to long-term rental income the same way.

What happens if it doesn’t work out

Not every tenancy runs smoothly, and Ontario has a specific, legal process for each way it can go sideways rather than leaving you to figure it out from scratch. If you genuinely need to end a tenancy, whatever the reason, our guide to eviction and tenant rights in Ontario covers the grounds, the correct notice, and the process through the Landlord and Tenant Board. If the reason is a genuine renovation that requires the unit empty, or you’re worried about being accused of using renovation as a pretext to push a tenant out, our guide to renovictions in Toronto covers the N13 process and Toronto’s own separate renovation licence bylaw. If a tenant wants out before their term ends, a job relocation or a relationship change, our guide to breaking a lease in Ontario covers the legitimate routes, mutual agreement, assignment, or sublet, so you know what you actually have to accept and what you don’t. If a tenant falls behind on rent and you’d rather see them get real help than head straight to an eviction application, the Toronto Rent Bank is a genuine resource to point them toward, a grant program a struggling tenant applies for directly, not something you administer. And if you’re the one who can’t keep up with the mortgage or the numbers on a rental stop working, that’s a different kind of problem entirely, one worth discussing with a mortgage professional or a real estate lawyer before it becomes a bigger one.

Frequently asked questions

Do I need a licence to rent out a property in Ontario?

Not for a standard long-term rental. There’s no provincial or Toronto-wide rental licence for an ordinary landlord renting a house, condo, or basement apartment on a regular lease. Toronto’s RentSafeTO program only applies to apartment buildings with three or more storeys and ten or more units, and the City’s separate short-term rental registration only applies to listings under 28 days, like Airbnb. A single-landlord long-term rental falls outside both. What you do need before renting is landlord insurance, since a standard homeowner policy generally won’t cover a tenant-related claim, and most mortgage lenders require it as a condition of the loan.

What are my main legal obligations once a tenant moves in?

Under the Residential Tenancies Act, you have to keep the unit in a good state of repair and meeting health, safety, and maintenance standards for the full tenancy, you can only enter with at least 24 hours’ written notice for a stated reason, generally between 8 a.m. and 8 p.m., and the only deposit you can legally collect is a rent deposit capped at one rent period, applied to the final period and never treated as a damage deposit. Ontario doesn’t allow a separate security deposit at all. Our guide to eviction and tenant rights in Ontario covers what happens if any of this breaks down and a tenancy needs to end.

What am I allowed to ask when screening a tenant?

You can request income information, credit checks, credit references, and rental history, but only with the applicant’s consent and applied consistently to every applicant, never used to screen someone out based on a protected ground under the Ontario Human Rights Code, like family status or receipt of social assistance. A blanket income cutoff, such as refusing anyone under a fixed income-to-rent ratio, has specifically been found discriminatory. A blanket “no pets” policy in your lease is separately void under the Residential Tenancies Act in almost every case, though a specific animal causing a genuine safety, damage, or allergy problem can still be addressed directly under the Act.

When can I first raise the rent on a tenant?

Not within the first 12 months of a tenancy, and after that, only once every 12 months, with 90 days’ written notice on the correct form. How much you can raise it without applying to the Landlord and Tenant Board is capped by the province’s rent increase guideline, a percentage set annually that changes every year and depends on when the building was first occupied. Our guide to Ontario’s rent increase guideline covers the current figure and how it’s calculated, since restating a specific percentage here would be out of date within the year.

Do I have to pay tax on rental income?

Yes, rental income is taxable and has to be reported on your return regardless of how the tenant pays you. You can typically deduct eligible expenses against it, including mortgage interest, property tax, insurance, repairs, and a portion of utilities. Our guide to Airbnb and short-term rental income tax in Canada covers the CRA mechanics of what’s taxable and deductible in full detail; the core rules there apply the same way to long-term rental income, though the specific compliance-linked deduction rule that guide describes targets short-term listings and doesn’t apply to a standard lease.

What if a tenancy doesn’t work out?

It depends on what’s actually gone wrong. Ending a tenancy for cause runs through the process our eviction and tenant rights guide covers. A genuine renovation that needs the unit vacant runs through the N13 process and Toronto’s own renovation licence bylaw, covered in our renoviction guide, along with what protects a tenant from a bad-faith version of the same notice. A tenant behind on rent can apply to the Toronto Rent Bank directly for help rather than facing an eviction application first. And if you’re the one struggling to cover the mortgage on a rental property, that’s worth raising with a mortgage professional or a real estate lawyer early, before it turns into a bigger problem.