We regularly work with landlord clients here on the team, both to help them buy income properties that cashflow well, and also to help them rent properties to quality tenants.

We’ve seen an increasingly pro-tenant approach being taken in a number of municipalities in Ontario and in mid-November 2024, the Toronto City Council officially adopted a Rental Renovation Licence Bylaw.  It goes into effect next week, on July 31, 2025, so it’s about to get much harder – and more expensive – to evict a tenant to renovate the property.

Let’s talk about the specifics.

What’s it supposed to do?

The bylaw targets “bad-faith renovictions”, where landlords evict tenants under the pretense of renovations to re-rent at higher rates.  It is modelled on the City of Hamilton’s similar renoviction law and is designed to fill gaps in Ontario’s Residential Tenancies Act by providing municipal oversight and enforcement.

So, what do landlords have to do?

If a landlord serves notice to a tenant that they are evicting them to renovate the property, a number of new steps have to take place.  Here’s the broad strokes.

  1. Apply for a Rental Renovation Licence within seven (7) days of issuing an N13 eviction notice.
  2. Obtain a building permit for the work you intend to do on the unit.
  3. Pay a Licence fee of $700 per unit and you’ll receive the licence, which is valid for 12 months.
  4. Submit a report from a qualified professional such as a licensed engineer or architect confirming that tenant displacement is necessary for safety or feasibility.
  5. Post a Tenant Information Notice at the unit, informing tenants of the licence application and their rights.

Is that it?

If you were thinking that doesn’t sound so bad, we’re just getting started.  Landlords also now have to do the following.

  1. Provide a Moving Allowance of $1,500 for studios or one-bedroom units and $2,500 for two-or-more‑bedroom units.
  2. Offer Accommodation or Rent‑Gap Payments to the tenants. This means, that if the tenants wish to return post-renovation, landlords must offer temporary, comparable housing at similar rent, or provide monthly rent-gap payments, covering the difference between their current rent and average post‑2015 market rents.
  3. If the tenant is choosing not to return after the renovation is complete, the landlord has to provide Severance Compensation, which is a a lump-sum payment equal to three months of rent-gap compensation.

If the tenant does choose to return, the tenants retain their rights under the RTA to return at the same rent after renovations, which now becomes enforceable under municipal bylaw.

Ouch.  What if landlords don’t follow the new rules?

There are significant fines for violations, including:

  • Up to $100,000 for non-compliance with licence-related obligations.
  • Daily fines up to $10,000 for continued breaches.
  • Additional penalties based on economic advantage gained from non-compliance, such as a special fine equal to the “unfair” profit made.

Enforcement will be carried out by City staff, with about 14 new positions assigned to licensing, inspections, and enforcement—as part of a broader municipal oversight effort.

While it is a laudable attempt to protect tenants against unscrupulous landlords, we’re deeply concerned about the impact it will have on well-meaning landlords who were considering upgrading their properties.  With such significant costs added on to ever increasing construction costs, will Toronto see its rental stock fall into disrepair as landlords choose to wait until a tenant leaves of their own accord?

If you’re a landlord and wondering if now is the time to change your strategy, we’d be happy to talk to you about what options make sense for you.  Get in touch with us to start the conversation!