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Ontario Landlords! Are you ready to rent out your property? Here’s what you need to know first.

As a landlord in Ontario, you’re probably eager to start earning rental income, but before you hand over the keys, there’s one crucial question you need to ask: “Do I need a license to rent out my property?”

While many landlords assume they don’t need one, the reality is that some municipalities in Ontario require a rental license in specific situations, and failing to comply could lead to costly fines and penalties.

This blog will discuss some Municipalities that have these requirements and what steps you can take to stay on the right side of the law.

• City of Toronto

Effective March 31, 2024, all multi-tenant house operators in the City of Toronto require a license. According to the requirements, a multi-tenant house is a building with four or more rooms, inhabited or intended to be inhabited by people who do not live together as a single housekeeping unit.

Under the new rules, all operators need a license and are required to develop property maintenance plans, including processes for tenant service requests, pest management and waste management and collection.

For more information, please visit the following link: Multi-Tenant House Owners & Operators – City of Toronto

• City of Oshawa

In the City of Oshawa, residential rental properties located around Durham College and Ontario Tech University must have a license. This requirement does not apply to a Rental Unit that is occupied by at least one owner of the Rental Unit as their sole residence and in which no more than two (2) Bedrooms are occupied by Tenants.

For more information, please visit the following link: Residential Rental Housing – City of Oshawa

Below is a map showing the areas where a license is required:

• City of Brampton

On January 1, 2024, the City of Brampton initially launched its Residential Rental Licensing (RLL) Pilot Program. However, the launch faced significant pushback and protests from residents. In response to this feedback, the city made some changes and relaunched the program on March 28, 2024.

The program has been launched for an initial 2-year period, during which it will be evaluated. According to the requirements, a license is needed for the following: 

1. Rental properties that are operating in Wards 1, 3, 4, 5, and 7 during the two-year pilot program
2. Properties that are renting four (4) or less units
3. Owners of rental housing units
4. Operators of rental housing units
5. Dwelling units used or intended to be used for a Rental Housing Unit

For more information, please visit the following link: City of Brampton | Residential Rental Licensing Pilot Relaunch | Residential Rental Licensing Pilot Relaunch

Below is a map showing the areas where a license is required:

In addition to the above, other municipalities that have such requirements in place are the City of Toronto, City of London, City of Waterloo, etc.

Now that we understand a license may be required to lease a residential property, how can you ensure compliance, especially when purchasing a new property?

Here are some best practices that Buyers or their Real Estate Agents can follow to avoid violations:

• Determine if the property is being used as a rental by the Seller.
• Determine if the property will be used as rental following closing.
• Determine if a residential rental license is required.
• If a license is required, check with the Seller’s agent if a license is available. Some Municipalities have online database of properties that are inspected and have licenses.
• If a license is available, check with the Municipality if the license is transferable to the Buyer.
• For licenses that are transferable, recommend clients to complete the transfer process. For non-transferable licenses, recommend clients to apply for a license following closing.

As mentioned above, failure to comply with residential rental licensing requirements can lead to fines and penalties imposed by the Municipality. Therefore, it’s essential to ensure you are not in violation of these regulations. We’re here to help! If you have any questions or concerns about the topics discussed in this blog or need assistance with real estate transactions, please don’t hesitate to contact our office at (905) 270-6660 or via email at info@kormans.ca.

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Yashkaran Singh is an Associate Lawyer at Kormans LLP. You can reach Yashkaran here: ysingh@kormans.ca.

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