Understanding Lease Agreements in Ontario

In Ontario, the relationship between property owners and renters is strictly governed by the Residential Tenancies Act (RTA). Whether you are renting out an investment property or signing a lease for a new apartment, understanding the provincial rules around lease agreements is essential to protect your rights and avoid costly disputes.

Here is a breakdown of how residential lease agreements work in Ontario and what both parties need to know.

The Mandatory Ontario Standard Lease

Since April 30, 2018, most residential landlords in Ontario have been legally required to use the government-mandated “Ontario Standard Lease” form. This comprehensive template ensures that basic tenant protections are included right from the start.

• Who Must Use It: The standard lease applies to most private residential rentals, including apartments, single-family houses, condos, and basement suites.
• Tenant Rights Regarding the Lease: If a landlord fails to provide the standard lease, a tenant can request it in writing. If the landlord does not provide a copy within 21 calendar days of the request, the tenant is legally permitted to withhold one month’s rent.
• Structure: The lease contains 17 distinct sections covering everything from contact information and rent amounts to maintenance rules and subletting.

Key Components of a Legal Lease

When filling out or signing the standard lease, pay close attention to these vital sections:

• Rent and Utilities (Sections 4, 5, & 6): The document must clearly break down the total lawful rent. It should separate the base rent from any additional charges (like parking or storage) and clearly state which utilities (heat, electricity, water) are included in the price and which are the tenant’s responsibility.
• Deposits (Sections 8 & 9): Landlords can legally collect a rent deposit, but it cannot exceed the amount of one month’s rent (or one week’s rent for weekly tenancies). This deposit can only be applied to the last month of the tenancy before the tenant moves out. Landlords must also pay the tenant annual interest on this deposit. A refundable key deposit for the actual replacement cost of keys is also permitted.
• Tenant Insurance (Section 11): A landlord can require a tenant to carry liability insurance, which covers accidental damage to the property. However, a landlord cannot legally force a tenant to purchase contents insurance to protect the tenant’s own personal belongings.

5 Common (and Illegal) Lease Clauses

Landlords often try to add custom rules to their agreements. However, if a clause contradicts the Residential Tenancies Act, it is completely void and unenforceable—even if both the landlord and tenant have signed the contract.

1. “No Pets” Allowed: Under the RTA, general “no-pet” clauses have no legal effect. A tenant cannot be evicted simply for owning a pet unless the animal causes severe allergic reactions, dangerous safety issues, or unreasonable noise and damage.
2. No Guests Restrictions: Tenants have a fundamental right to have guests. Any lease clause attempting to ban overnight guests or require tenants to register their visitors is void.
3. Damage or Pet Deposits: Security deposits, damage deposits, and pet deposits are strictly illegal to charge in Ontario.
4. Mandatory Post-Dated Cheques: While landlords and tenants can agree to use post-dated cheques or automatic bank withdrawals, a landlord cannot legally require a tenant to pay rent using these methods.
5. Automatic Rent Increases: Leases cannot feature clauses that trigger an automatic annual rent increase. Rent can only be raised with a proper 90-day written notice.

Rent Increases and Recent Legislation

When discussing lease agreements, it is crucial to understand the rules surrounding rent control:

• The 2026 Guideline: Rent can generally only be increased once every 12 months. For 2026, the provincial rent increase guideline is capped at 2.1%.
• The Exemption: Units that were first occupied for residential purposes after November 15, 2018, are exempt from this rent control guideline, allowing landlords to raise the rent to market rates once a 12-month period has passed.
• Recent RTA Changes: The legal landscape is actively evolving. In late 2025, the Province of Ontario passed Bill 60, which introduced significant amendments to the RTA designed to speed up proceedings at the Landlord and Tenant Board (LTB) and streamline the eviction process.

What Happens When the Lease Ends?

One of the biggest misconceptions in Ontario real estate is that a tenancy ends when the initial fixed-term lease expires.

In reality, a fixed-term lease automatically converts into a month-to-month tenancy under the exact same rules, terms, and rent amount. Your landlord cannot force you to sign a new lease, require you to move out, or charge a “lease renewal fee” simply because the original term has concluded.