Becoming a landlord in Ontario is one of the most common ways Hamilton homeowners build long-term wealth through real estate — whether that means renting out a basement suite, converting a property to a duplex, or purchasing an investment property outright. The rental income can be meaningful. So can the mistakes made by landlords who enter the arrangement without understanding the rules that govern it.

Ontario’s landlord-tenant relationship is heavily regulated under the Residential Tenancies Act (RTA), and the rules consistently favour tenants in situations of dispute. That is not a reason to avoid becoming a landlord — it is a reason to go in informed. Here is what you need to understand before you rent out your first property in Hamilton.

Understand the Residential Tenancies Act Before You Start

The Residential Tenancies Act is the provincial legislation that governs almost all residential rental arrangements in Ontario. It covers everything from lease agreements and rent increases to eviction procedures and maintenance obligations. As a landlord, you are bound by it whether you have read it or not — and ignorance of its provisions is not a defence at the Landlord and Tenant Board.

A few foundational things to know from the outset. First, most standard lease agreements in Ontario must use the provincial standard lease form — a prescribed document introduced by the provincial government that both parties sign. If a tenant requests the standard lease and you do not provide it within 21 days, they have the right to withhold one month’s rent. Using your own custom lease agreement does not override the RTA’s provisions — the Act’s rules apply regardless of what the lease says.

Second, the RTA applies to most residential rentals in Ontario, but there are exemptions. If you are renting out a room in your own home and share a kitchen or bathroom with the tenant, different rules may apply. If you are renting a condominium unit, the Condominium Act also comes into play alongside the RTA. Understanding which rules govern your specific situation before you begin is worth a conversation with a real estate lawyer.

Setting Rent and Understanding Rent Increase Rules

When you first rent out a unit, you can set the initial rent at whatever amount you and the tenant agree to — there is no cap on initial rent in Ontario for most properties. The market determines what tenants will pay, and in Hamilton’s current rental market that means doing your homework on comparable units in the same neighbourhood and property type before you set your number.

Once a tenancy is established, rent increases are regulated. You can only increase the rent once every 12 months, and only after giving the tenant at least 90 days written notice using the proper form. The allowable increase is tied to the provincial rent increase guideline, which is set annually by the Ontario government based on the Consumer Price Index. For 2025 the guideline is 2.5%.

There is an important exemption to rent increase controls that landlords should understand: units that were first occupied for residential purposes on or after November 15, 2018 are exempt from rent increase guidelines. If your rental property is a newly built home, condo, or addition that first became available for rent after that date, you are not subject to the annual guideline — you can increase rent by any amount with proper notice. This exemption has significant implications for investors purchasing new construction specifically as rental properties.

Security Deposits — What You Can and Cannot Collect

This is one of the most commonly misunderstood areas of Ontario landlord-tenant law, and getting it wrong can create immediate legal exposure.

Under the RTA, landlords in Ontario cannot collect a security deposit. You cannot require a tenant to pay a lump sum upfront as protection against damage, unpaid rent, or any other eventuality beyond what the Act specifically permits.

What you can collect is a last month’s rent deposit — an amount equal to one month’s rent, collected at the beginning of the tenancy. This deposit can only be applied to the last month of the tenancy, not to repairs or cleaning after the tenant leaves. It must also be kept in a trust account, and the tenant is entitled to interest on it annually at the rent increase guideline rate.

Pet deposits, key deposits beyond a reasonable amount, and any other charges beyond first and last month’s rent are not permitted under the RTA. Collecting them does not make them enforceable — a tenant can challenge improper charges at the Landlord and Tenant Board and recover them.

Tenant Screening — Your Most Important Decision

The single most consequential decision you make as a landlord is who you choose as a tenant. Once a tenancy is established in Ontario, removing a tenant who is not paying rent, damaging the property, or causing problems is a time-consuming and often frustrating process through the Landlord and Tenant Board. Prevention through careful screening is significantly better than the cure.

You are entitled to request a rental application, employment verification, references from previous landlords, and a credit check — with the applicant’s consent — before offering a tenancy. Ontario’s Human Rights Code prohibits discrimination in tenant selection on protected grounds including race, sex, family status, disability, and source of income, among others. You cannot refuse a tenant because they receive social assistance, for example, or because they have children. Screening must be based on financial reliability and rental history, not on protected characteristics.

Taking references seriously matters. A previous landlord reference is more predictive of future behaviour than a credit score alone. Ask specifically whether rent was paid on time, whether the unit was kept in reasonable condition, and whether the landlord would rent to this person again.

Your Obligations as a Landlord

Becoming a landlord comes with legal obligations that run alongside your rights. Under the RTA, you are required to maintain the rental unit and the building in a good state of repair and fit for habitation — regardless of the age of the building or what the lease says. If a tenant reports a maintenance issue and you do not address it within a reasonable time, they can file a complaint with the Landlord and Tenant Board and may be awarded a rent abatement.

You must also respect your tenant’s right to quiet enjoyment — meaning you cannot enter the unit without proper notice except in an emergency. The standard notice requirement is 24 hours written notice, specifying the reason for entry and the time window. Entering without notice, even for repairs, is a violation of the tenant’s rights under the RTA.

Eviction is a last resort in Ontario and requires specific legal grounds — non-payment of rent, damage to the property, illegal activity, or the landlord’s own use of the unit, among others. Each ground has its own process, form, and timeline. Self-help evictions — changing the locks, removing the tenant’s belongings, or shutting off utilities — are illegal under the RTA regardless of the circumstances and can result in significant penalties.

If you are considering purchasing a Hamilton property as a rental or converting part of your existing home to a rental unit and want to understand how it fits into your broader real estate strategy, reach out directly.

Call or text: 905-730-2747