Downsizing From House to Apartment in Toronto: What Renting Means Under Ontario Rules

The short answer

Downsizing from house to apartment does not have to mean buying a condo. Some Toronto owners sell the family house and rent instead, at least for a few years. Once you rent, Ontario’s Residential Tenancies Act decides what the landlord can charge, what goes in the lease and when the tenancy can end.

The rules a long-time owner most needs to know are short. Most landlords must use Ontario’s standard lease. A rent deposit is capped at one month’s rent and can only pay your last month. Rent can rise once every 12 months with 90 days’ written notice, by no more than the yearly guideline in most units. Newer units are the big exception: a unit first occupied for residential purposes after November 15, 2018 is exempt from the guideline.

This post explains how those rules work for a downsizer. It is general information, not legal or financial advice. For tenancy questions the Landlord and Tenant Board (LTB) and a community legal clinic can help. An accountant or financial adviser can tell you how renting fits your own plans.

Downsizing from house to apartment: owning versus renting

A house in Toronto comes with its own bills: property tax, insurance, repairs and the work of running it. A condo you buy swaps some of that for a monthly fee and still ties up your equity. A rental swaps all of it for rent. Our Toronto downsizing guide covers buying a condo, a townhouse or a bungalow. This post covers the rental side.

	Buying a condo apartment	Renting an apartment
Main monthly cost	Condo fee, property tax, utilities and insurance	Rent, plus any utilities not included
Land transfer tax	Ontario tax, plus Toronto’s municipal tax on property in the City of Toronto	None
Building repairs	Paid through the condo fee and any special assessment	The landlord must keep the property in a good state of repair
Cost increases	Set by the condo board’s budget	Capped by the guideline in most units, uncapped in units first occupied after November 15, 2018
Leaving	Sell the unit	At least 60 days’ written notice
Your equity	Stays in the unit	Stays with you after the house sells

Our post comparing condo vs retirement residence cost in Toronto explains the bills of owning a condo and how retirement home rent is set. If you plan to buy later, our post on whether to sell first or buy first when downsizing looks at selling, renting for a while and buying once you know where you want to be.

The standard lease: what you will sign

Ontario says landlords of most private residential rental units must use the standard lease for all new leases. It has been required for most tenancy agreements signed on or after April 30, 2018. It does not apply to care homes, most social and supportive housing, co-operative housing and a few other special tenancies.

Some lease terms have no effect at all. Ontario says a term that tries to take away a right or responsibility under the Act is void and cannot be enforced. The examples it gives include terms that:

• ban pets, although a condo landlord can require you to follow condo rules that may prohibit certain pets
• ban guests, roommates or other occupants
• charge deposits or fees the Act does not allow, such as damage or pet deposits
• make you pay for repairs that are the landlord’s responsibility

If the apartment is in a condo, the lease should say so and you also agree to follow the condominium declaration, bylaws and rules the landlord gives you. The lease can require you to carry liability insurance. Contents insurance is up to you.

If you were entitled to a standard lease and did not get one, ask the landlord for it in writing. Ontario says they must give it to you within 21 calendar days, otherwise you can withhold one month’s rent.

Rent deposits and paying the rent

A long-time owner may expect a damage deposit. Ontario does not allow one. The LTB’s guide to the Act says a landlord can collect a rent deposit on or before the start of the tenancy, capped at one month’s rent where rent is paid monthly.

• It only pays the last month. The deposit can only be used as rent for the last month before you move out, not for repairs.
• It earns interest. The landlord must pay interest on it every year, at the same rate as the rent increase guideline.
• It can grow with the rent. When the rent goes up, the landlord can ask you to top the deposit up by the same amount.

The landlord and tenant can agree on post-dated cheques or automatic payments, but the LTB says a landlord cannot require either. The landlord must give you a receipt for rent or a deposit if you ask, at no charge.

Rent increase rules and the 2018 exemption

This is the rule that matters most for budgeting. Ontario allows rent to go up once at least 12 months have passed since the tenancy began or since the last increase. The landlord must give written notice on the LTB’s form at least 90 days before the increase takes effect.

In most units the increase cannot be more than the rent increase guideline without the LTB’s approval. Ontario publishes the figures:

Year	Rent increase guideline
2024	2.5%
2025	2.5%
2026	2.1%
2027	1.9%

Ontario says the guideline is capped at 2.5%. It applies to most rented houses, apartments and condos covered by the Act.

Units first occupied after November 15, 2018

The guideline does not apply to new buildings, additions to existing buildings and most new basement apartments that were first occupied for residential purposes after November 15, 2018. The landlord still has to wait 12 months and give 90 days’ notice, but the LTB says there is no limit on the size of the increase.

Any condo tower or purpose-built rental first occupied after that date falls on that side of the line. Before you sign, ask whether the unit is exempt. Ontario suggests landlords show an exemption as an additional term in section 15 of the lease. You can also contact the LTB to find out whether a unit is exempt. If you plan to rent for many years, an uncapped rent is the risk to plan around.

Who can end the tenancy and how

A lease ending does not mean you have to leave. Ontario’s guide to the standard lease says that if no new agreement is signed, you can stay on as a monthly tenant under the same terms.

When you decide to leave

You give the landlord written notice on the LTB’s Form N9. The LTB’s guide says a monthly or fixed-term tenant must give at least 60 days’ notice. On a fixed-term lease the termination date cannot be before the last day of the term. You and the landlord can also agree to end the tenancy early, preferably in writing.

When the landlord ends it

A landlord can only end a tenancy for the reasons the Act allows. Without an LTB order you do not have to move out, even after receiving a notice. Two “no fault” reasons matter if you rent from an individual owner, which is common with condo units:

• Landlord’s own use. The landlord, an immediate family member or their caregiver wants to move in. For N12 notices served on or after September 21, 2026, the LTB says a landlord who gives at least 120 days’ notice, ending on the last day of a rental period or fixed term, does not have to pay compensation. With less notice, the landlord must pay one month’s rent or offer another unit you accept.
• Purchaser’s own use. The owner has agreed to sell and the buyer or their family wants to move in. The LTB says this reason only applies in buildings with three or fewer units or in condominium units.

Ontario says the LTB can order a landlord who gave notice in bad faith to pay a former tenant up to 12 months of the last rent charged, the rent difference in the new home for up to a year and reasonable moving and storage costs. None of that makes it easy to move again, so ask the landlord about their plans before you sign.

Checking a Toronto rental building

The City of Toronto runs RentSafeTO, a bylaw enforcement program for apartment buildings with three or more storeys and 10 or more units. It does not cover condo buildings, townhomes or units in a private home. For a building it does cover, you can look up its evaluation results on the City’s interactive map and search for active fire, bylaw and public health violations.

Under the Act, the landlord must keep the property in a good state of repair and must not shut off vital services, including heat from September 1 to June 15. The landlord can enter with 24 hours’ written notice between 8 a.m. and 8 p.m. for reasons such as repairs or showing the unit to a buyer.

Selling the house before you rent

The rental is only half of the move. The sale of your house decides how much you have to live on. The CRA says that if the house was solely your principal residence for every year you owned it, you do not pay tax on the gain. You still have to report the sale. Our post on selling a house in Ontario and taxes explains the exemption and the forms. Our post on Toronto downsizing costs lists the costs of selling and moving.

Timing is simpler than when buying. You can line up the start of the lease with the closing date of the sale, so you move once and avoid carrying two homes. Our sellers’ guide covers pricing and preparation and a free home valuation gives you a figure to plan with.

What to do next

1. Work out what the sale of your house is likely to leave you after costs.
2. Ask an accountant or financial adviser how rent fits your income over the years you plan to rent.
3. For each unit you see, ask whether it was first occupied after November 15, 2018.
4. Ask whether the landlord is an individual owner and whether they plan to sell or move in.
5. Read the standard lease, including any additional terms in section 15, before you sign.
6. Match the lease start date to your closing date.

Our home selling services help Toronto owners sell the family house and plan the move that follows. If you are weighing a rental against buying, contact us and we will talk it through.