A Revealing Comparison of Provincial Rental Regulations
Being a landlord can be a very lucrative form of real estate investing. A successful and profitable buy and hold investment strategy requires that the rental income needs to at least cover all operating and financing expenses related to that property. If there is a mortgage involved, ideally the strategy should have a positive cash flow AND a positive net income.
3 Simple Generalized Possible Scenarios (all things being equal)
- If the rental rates are increasing at a higher rate than the operating and financing expense increases, there is a high probability of a continued and growing positive cash flow and net income.
- If the rental rates are increasing at the same rate as the operating expenses there is a high probability of a continued positive cash flow and net income.
- If the operating costs are increasing at a higher rate than the rental income there is a high probability that the property will have a negative cash flow and even a negative net loss, even if it started off in a positive position for cash flow and net income.
Rental regulations can and do play a major role in these potential desired outcomes. This is a key point to understand and consider when purchasing properties for a buy and hold strategy. Knowing tenants’ and landlords’ rights is a critical component to a successful relationship between both parties and for the overall success of the property. To protect the rights of both parties, I highly recommend always using the provincially prescribed tenancy or rental agreement.
This is a longer article as it is important to compare the different provinces and territories under the same lens for each. Now that we have the basic understanding covered, here’s a high-level look at the different rental regulations from province to province and territory, starting on the east coast. There are several components to compare, but the three components being used for comparison here are:
- How much can a landlord increase the rent
- How often can a landlord increase the rent
- What are the conditions for terminating a tenancy
Renting Real Estate in Atlantic Canada
Newfoundland & Labrador
Landlords can increase the rents once every 12 months provided that the tenant is renting the property week to week or month to month.
There is no restriction on the amount of rental increase a landlord may implement. This means that the rents are free to move up or down as the market dictates.
If the tenant is renting for a fixed term, the rent cannot be increased during the term of the rental agreement. Landlords must provide at least 8 weeks of notice before a rent increase, if the property is rented on a week-to-week basis. If the property is being rented on a month-to-month basis, landlords must give at least 6 months’ notice before a rent increase.
Notice to terminate tenancy varies based upon the type of tenancy and reasons for the termination and these variations and other key information is contained in this link https://www.gov.nl.ca/dgsnl/landlord/
Prince Edward Island
Landlords can only increase the rents once every 12 months, provided the month-to-month tenants have received the rent increase notice a minimum 3 months prior to it taking effect.
The island regulatory body called The Island Regulatory and Appeals Commission only permits the rent to be increased by a set amount each year. For 2023, a 5.2% increase may be applied for rental units including unheated premises, premises heated with sources other than furnace oil, and for a mobile home site located in a mobile home park and a 10.8% increase may be applied to rental units that are heated with furnace oil. There is an appeals process for rent increase request outside the limitations set forth.
Notice to terminate tenancy for a fixed term lease or a month-to-month tenancy, cannot be provided less that one month of the effective date of the termination.
One other key point to note as a landlord is that if you are not a resident of PEI (residing a minimum 183 days on island) the property taxes are 50% more than a resident.
Get all the rental regulations here: https://www.princeedwardisland.ca/en/legislation/rental-of-residential-property-act
Nova Scotia
Like other provinces, landlords can only raise the rent once per year, and cannot raise it during the first 12 months of the tenancy. If the tenancy is on a yearly or monthly lease, the landlord must provide the tenant at least four months of notice ahead of a rent increase. For a fixed-term lease, the lease agreement will dictate how much notice is needed ahead of a rent increase.
There are some new regulations specifying the amount that the rent can be increased. Starting February 1, 2022, a rent cap is in place until December 31, 2023. Rent can only increase up to 2% each year, for existing tenants. The rent cap applies to tenants who have a residential lease, including tenants who have a fixed-term tenancy (lease) and are signing a lease for an additional fixed-term in the same rental unit.
There are also new regulations regarding renovictions in Nova Scotia with which landlords should familiarize themselves. Also there are some specific processes and circumstances to terminate a tenancy depending on circumstances worth reading
Here is the link to the Nova Scotia rental regulations: https://novascotia.ca/just/regulations/regs/rtgenrl.htm
New Brunswick
In New Brunswick, for week-to-week and month-to-month tenancies, at least two months’ notice is required. For year-to-year tenancies, at least three months of notice is required.
There is no limit to rent increases, but there are some rules to note. Landlords must give at least three months of notice before a rent increase for long-term tenancies, where premises have been occupied by the same tenant for five consecutive years or more. Also, landlords must increase the rent of each unit in the same building by the same percentage or increase the rent to the same amount as comparable units in the area. To add further complications, tenants have 15 days following the receipt of a Notice of Rent Increase to request assistance from the Residential Tenancies Tribunal to request a revision of the notice.
Lastly, despite several overtures over the years by the provincial government to lower property taxes on landlords, as a landlord you are paying twice the property tax as an owner-occupier whether you are a resident or not in New Brunswick. This can be expensive and can make a property difficult to cash flow positive.
Here is the link to the rental regulations in New Brunswick: https://www2.gnb.ca/content/gnb/en/corporate/promo/renting-in-new-brunswick.html
Renting Real Estate in Central Canada
Quebec
Quebec has a strict residential tenancy act, and it is very important to understand and successfully navigate the rights of all involved. In Quebec, the standard lease agreement MUST be purchased, it is considered a binding contract, and a landlord is entitled to receive documentation that supports the tenant’s financial and rental declarations made on the rental application.
In Quebec, landlords can raise the rents once every 12 months. If the tenant is on a week-to-week, or a month-to month, tenancy, then the landlord must provide one to two months’ notice prior to a rent increase. For fixed term leases that are less than one year the advance notice must be one to 2 months’ notice or 3 to 6 months’ notice if the lease is more than 12 months. In Quebec, there are formulae for determining the rent increase amounts that incorporate increased expenses such as property taxes, energy costs, insurance rates, repairs, and upgrades to the unit. Here is the tricky part; both landlord and tenant must agree otherwise it needs to go in front of a tribunal.
Notice of rent increases is determined by the length of the lease. If the fixed lease is 12 months or more, the written notice must be provided to the tenant between 3 to 6 months prior to the existing lease ending. If the fixed term is less than 12 months, then the written notice must be with 1 to 2 month prior to the end of the existing lease. If it is an undeterminable i.e., month-to-month tenancy then the tenant must receive a 1 to 2 months’ written notice prior to the change.
Notices to end tenancies are also interesting, as there are specific reasons for ending a tenancy such as subdividing, substantially enlarging, demolishing, or a change of use, but there are certain tenancy rights as well that could override such terminations.
One final thing that I have noticed over the years in Quebec is that many places are rented without appliances and the tenants have their own appliances.
Here is the website for Quebec regulations: https://www.tal.gouv.qc.ca/en
Ontario
Ontario in the past had some of the strictest rent legislation and to a degree, still does. As a result the situation can have some significant effects on landlords. Ontario has set guidelines each year as to the percentage amount that a rent can be increased and it is set in advance each year. Also, rent cannot be increased for 12 months after the last rent increase or until 12 months since tenancy began. For 2023 the rent increase has been set at 2.5%.
In cases where the landlord must give notice to end a tenancy, the landlord must use the prescribed form and give the notice to each tenant before the termination date (the day the tenancy will end). The length of advance notice depends on the reason for ending the tenancy. There are some very specific rules around renovictions in Ontario with which any landlord and tenant should familiarize themselves.
Landlords must give you the equivalent of one month’s rent or offer you another unit if they want to use the unit themselves, want to use the unit for their family, or are selling the property and the purchaser will be using the unit themselves.
Link to the housing regulations in Ontario: https://www.ontario.ca/page/home-and-community#rental-housing
Renting Real Estate on The Prairies
Manitoba
Like in other provinces, landlords can only increase the rent once every 12 months on existing tenants and the landlords must provide at least 3 months’ written notice to the tenants prior to the rent increase.
Again, like several other provinces, the amount of the allowable rent increase is a percentage and is determined by provincial guidelines. This guideline is the average annual change in the Manitoba Consumer Price Index. For 2022 and 2023 the permitted rent increase is zero for each year. Hmmm, I am not sure how they arrived at zero when the Manitoba provincial dashboard show the CPI is currently at 8.1%.
There is a facility to raise the rents about the guideline increase. If a landlord wants to raise the rent above the annual rent increase guideline, they must receive approval from the Residential Tenancies Branch.
The landlord is required to provide the tenant with a renewal of the agreement 3 months prior to the end of the tenancy term if it is a fixed-term tenancy. If the landlord does not offer a renewal and the tenant chooses to stay in the unit, the agreement will automatically renew for another fixed-term period.
Landlords must use the prescribed form when giving a tenant a notice of termination. But what is interesting is the length of time for the written notice is dependent on the vacancy rate of the Manitoban city in which the eviction is happening. Here are the thresholds if the vacancy rate is 3% or greater, the written notice provided by the landlord to the tenant must be a minimum of 3 months, 2.0% – 2.9% it is 4 months if it is less than 2% the written required is a minimum of 5 months.
Link to Manitoba’s Rental Tenancy Branch https://www.gov.mb.ca/cca/rtb/
Saskatchewan
In Saskatchewan, there is no cap on how much a landlord can raise the rent but rent increases can be tricky if you don’t know the rules. For instance, a landlord may raise the rent at the end of a fixed-term lease and must provide at least two months’ notice of the rent increase, but no rent increases are allowed unless both the tenant and landlord agree to a rent increase and if the increase is in effect at the start of the tenancy.
For periodic tenancy agreements, notices to increase rent must be given in writing using the Notice of Rent Increase Form and landlords must give at least 1 year of notice ahead of a rent increase unless they are members of the Saskatchewan Landlord Association or the Network of Non-Profit Housing Providers of Saskatchewan.
A landlord can evict a tenant who is in violation of some part of the lease, but they must give the tenants one month’s notice (1 week for week-to-week tenancies), except when the rent or utilities are overdue by 15 days or more, in which case there are grounds for immediate termination.
In a fixed-term tenancy agreement, a landlord does not have to renew the lease, and so they are not required to give the tenant any notice. However, the landlord should give the tenant at least 2 months’ notice if the landlord plans to renew a fixed-term lease. If it is a month-to-month tenancy, then the requirement is a written 1 months’ notice on the prescribed form.
Link to Saskatchewan regulations: https://www.saskatchewan.ca/business/housing-development-construction-and-property-management/landlords-and-rental-properties
Alberta
Alberta is probably the least restrictive province for permitting its real estate markets to operate freely.
There is no limit to what a landlord can increase the rent to a tenant, but in the same token the rents also decrease as the rental market dictates due to this free operating market.
However there are rules as to when landlords can increase rents. For fixed term leases, landlords can raise rents only after the end of the first year of tenancy and can increase the rents only once every 12 months on the existing tenants. The requirement is 3 full tenancy months’ written notice for a month-to-month tenancy. For a rental property with fixed term tenancy there is no requirement under the Alberta Residential Tenancies Act for the rental property landlord to give written notice of a rent increase. It is just good business practice to give the tenant advance notice to ensure a good landlord reputation.
Landlords must provide tenants proper notice to end tenancy under normal circumstance. For annual fixed term leases, a minimum of 90 days written notice prior to the end of the existing lease is required. For a month-to-month tenancy, 3 full tenancy months is required. However under eviction circumstances, shorter notices are acceptable.
Alberta Resource link: https://www.alberta.ca/landlords-tenants.aspx
Renting Real Estate on The West Coast
British Columbia
British Columbia’s rental tenancy regulations have gone through several changes in recent years. There were two components to rent increases in BC; a portion connected to the rate of inflation and an annual rent increase portion set by the government. The portion connected to inflation was eliminated by the provincial government in 2018. For 2023, the allowable rent increase has been set at 2%. If a landlord does not increase the rent each year in accordance with the allowable amount, the landlord cannot apply the cumulative amounts for a previous year and the current year’s increases.
Rent increases are only permitted once every 12 months. The landlord must provide the tenant a 3 month’s written notice, using the prescribed form, for a rent increase whether the tenant is on a fixed term lease or a month-to-month tenancy. This is very important to understand as it means from the first day of the month, not part way through, and then 3 full months.
In BC, evictions and notices to end tenancy are dealt with in specific ways depending on the circumstances. For simplicity’s sake, there are a few key points to understand. To end a tenancy for cause such as damage, disturbance to other residents, repeated non-payment, etc., there is a one month’s written notice that can be served to the tenant. If the landlord wants to sell, move back in, or have a close family member move in the property, two months’ written notice must be provided. Again the notice must start the first day of the upcoming month, not retroactively. If there is major construction to the property four months’ written notice must be provided again with the same starting point rules.
Effective July 1, 2021, under new legislation, if a landlord wants to end a tenancy for extensive renovations or repairs; they need to apply for an Order of Possession from the Residential Tenancy Branch. It suffices to say that landlords refer to the government website to get the latest information on tenancy.
Link to BC resource: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies
Renting Real Estate in The North
Yukon
In the Yukon, rent increases can only begin after a full year of the tenancy for the existing tenant. Three months’ written notice must be provided to the tenant before any rent increase, and landlords can only increase the rent once every 12 months. Week-to-week, month-to-month, and annual leases are permitted in the Yukon. Written rental agreements should be signed in all cases.
Yukon has tied residential rent increases to inflation, which stays in effect till January 31, 2023 and is set by the authorities and is currently pegged at 3.3%. At this point of writing, there is no information as to how it will be handled after January 31, 2023.
Like Alberta there is no required notice to end tenancy on a fixed term tenancy in in the Yukon, but it is definitely good business practice to give the tenant advance notice to ensure a good landlord reputation. A periodic tenancy agreement does not state a specific end date for the tenancy. Instead, it clearly identifies whether the tenancy is on a weekly, monthly, yearly, or other periodic basis. The time frame for a notice to end a periodic tenancy depends on the length of the periodic tenancy; month-to-month requires two full months’ written notice, while a yearly tenancy requires three full months’ written notice.
Link to Yukon resources: https://yukon.ca/en/housing-and-property/landlords-and-tenants-responsibilities/forms-landlords-and-tenants
Northwest Territories
Tenancy agreements can be periodic, meaning week-to-week or month-to-month, or they can a fixed term, which is when the tenancy ends on a specific date and pre-determined date. There is the option of a written rental agreement, but it is not required. A written rental agreement is ideal, but the law does not demand it.
In the Northwest Territories, landlords cannot raise rents in the first 12 months of tenancy. Landlords must give at least three months’ notice ahead of a rent increase. Like Alberta and a few other provinces, there is no limit on the amount which a landlord can increase a rent.
To end a tenancy, the notice to terminate the rental agreement must be put in writing with the name of the premises being rented as well as the date the agreement is set to expire with a signature. If the tenancy is month-to-month, then the written notice must be provided on last day of the month with 30 days prior notification to the termination date. The same requirement for notice is also applicable to a term tenancy (different to a fixed term tenancy.)
Link to NWT rental info: https://www.justice.gov.nt.ca/en/browse/property-and-land/
Nunavut
Nunavut also has periodic (week-to-week or month-to-month) leases, as well as fixed term (tenancy ends on a specified date). Like the Northwest Territories, a lease agreement can be written, verbal or even implied. A written tenancy agreement is ideal, but it is not required by law. There is no cap on the amount of the rent increase.
Landlord can only increase the rent on a rental property once every 12 months, whether an existing or new tenant to the premises. The landlord must provide a minimum of three months written notice of the increase. On the day before the increase is set to go into effect, a tenant who receives a proper notice of a rent increase may treat the notice as a termination of the lease agreement. Tenants that wish to terminate the agreement must inform the landlord in writing, notifying them of their decision to move.
Landlords can only terminate a tenancy for specific reasons as per the legislation and cannot terminate simply because the fixed term lease has expired. When a fixed term type tenancy turns into a month-to-month term, the landlord is not able to force a tenant to sign another lease or agree to another fixed term agreement. A notice of termination from the landlord or tenant has to follow these requirements:
- The notice has to be put in writing and signed by landlord or tenant (whoever gives the notice)
- The notice has to identify the rental property specifically
- The notice has to state the date when the tenancy is set to end
- The notice must state the specific reason for the termination
An addition a landlord who has given notice of termination must also apply to the rental officer for an order to terminate the tenancy provided with specific details pertaining to the termination. There doesn’t seem to be any length of time provided as to the advanced timing by a landlord to serve a tenant termination notice. That is most likely as there needs to be an application submitted as noted above.
Nunavut’s housing and rental regulations: https://nu-rto.ca/index.php/legislation
Alberta has the Best Conditions to be a Landlord
Now that you have the basics of key similarities and differences in the housing rental environments from province to province to territory, there are clearly many of the regions that are more favourable to tenants than landlords and a few that are more relaxed and permit the business of providing rental housing to operate in a healthy manner. To be a successful landlord in Canada, it is imperative that you understand the various acts, regulations, rights and responsibilities of both the landlord and the tenant.
Based upon my research over the years and the provincial and municipal regulations, I am most bullish on Alberta, as the one province that rises to the top when it comes to being a landlord, then followed by Saskatchewan. There are other regions that would be interesting, but further investigation to things like GDP, job and population growth trends and other key drivers of that economy.
If you are considering investing in rental property and want to ensure it provides a healthy return, then let’s talk.
