Owning rental property in Toronto can be a great investment, but many landlords make costly mistakes that lead to financial losses, legal troubles, and unhappy tenants. Whether you’re new to property management or a seasoned landlord, avoiding these common errors will help you maximize your rental income and stay compliant with regulations.
1. Not Screening Tenants Properly
Skipping a thorough screening process can result in late rent, property damage, and eviction headaches.
How to Avoid It: Implement a thorough tenant screening process that includes credit checks, employment verification, previous landlord references, and a review of their rental history.
2. Ignoring Ontario’s Rental Laws
Ontario’s Residential Tenancies Act (RTA) regulates rent increases, evictions, and tenant rights. Ignoring these laws can lead to fines and legal issues.
How to Avoid It: Stay updated on landlord-tenant regulations and consult legal professionals if needed.
3. Neglecting Regular Property Maintenance
In Toronto, landlords must ensure their properties meet the Property Standards By-law (Municipal Code Chapter 629). Delaying repairs frustrates tenants and can lead to bylaw violations. Poor maintenance is one of the top three reasons tenants move out!
How to Avoid It: Conduct regular inspections and address maintenance issues promptly. Keeping up with repairs not only ensures tenant satisfaction but also preserves your property’s value. Partnering with a property management company can help streamline maintenance.
4. Improper Handling of Rent Increases
In Ontario, landlords must follow annual rent increase guidelines set by the province. Increasing rent beyond the allowable limit without proper notice can result in disputes and financial penalties.
How to Avoid It: Stay informed about the latest Ontario Rent Increase Guidelines. Provide tenants with the required 90-day written notice before implementing any increase.
5. Skipping a Written Lease Agreement
Verbal rental agreements often lead to miscommunication and disputes. To prevent this, Ontario introduced a mandatory standard lease agreement on April 30, 2018, ensuring clarity and transparency between landlords and tenants.
How to Avoid It: Always use Ontario’s standard lease template, available from the Ministry of Municipal Affairs and Housing.
6. Underestimating the Importance of Tenant Relations
Poor landlord-tenant communication often results in avoidable conflicts. Many landlords take a hands-off approach, which can lead to misunderstandings and increased tenant turnover.
How to Avoid It: Foster a good relationship with your tenants by being responsive, transparent, and professional. Address concerns promptly and maintain open communication.
7. Not Budgeting for Unexpected Expenses
Unexpected repairs, legal fees, and prolonged vacancies can significantly impact a landlord’s cash flow. In fact, these challenges add up quickly—40% of small landlords struggle financially due to unforeseen expenses (CMHC).
How to Avoid It: Set aside at least 5-10% of your rental income for emergency expenses. Having a financial buffer will help cover unforeseen repairs or months without rental income.
8. Self-Managing Without the Right Experience
Managing rental properties requires time, knowledge, and effort. Many landlords attempt to self-manage without understanding tenant laws, maintenance needs, or rent collection best practices.
How to Avoid It: If you don’t have the time or expertise to manage your rental property effectively, hiring a professional property management company can be a smart solution. They take care of tenant screening, rent collection, and property maintenance, ensuring everything runs smoothly while you focus on maximizing your investment.
9. Asking for Illegal Repairs Deposit
Some landlords try to request additional deposits from tenants to cover potential repairs; however, this practice is illegal in Ontario. Under the Residential Tenancies Act, landlords are only permitted to collect last month’s rent as a deposit—security deposits for damages are strictly prohibited!
How to Avoid It: Clearly outline tenant responsibilities for property care in the lease. Conduct move-in inspections and document the unit’s condition with photos.
Conclusion
Avoiding these common landlord mistakes will help you run a smooth and profitable rental business in Toronto. Stay informed about Ontario’s landlord-tenant laws, maintain good tenant relationships, and ensure proper property maintenance to secure long-term success.
