Background
Ontario’s Commercial Tenancies Act (CTA) outlines the relationship, rights and obligations between commercial landlords and tenants.
You should be aware that a signed commercial lease agreement with your landlord or tenant may take precedence over the CTA.
Resolving conflicts
The provincial government does not get involved in commercial landlord and tenant disagreements. You should get legal advice to help you understand how the CTA applies to your specific situation.
Legal disputes between commercial landlords and tenants about money or personal property under$35,000 can be brought before Small Claims Court. Otherwise, a claim must be brought before the Superior Court of Justice.
- Learn how to file a civil case in the Superior Court of Justice online.
- Learn how to file a case in Small Claims Court.
The Law Society Referral Service can help landlords and tenants find a lawyer who will provide free consultation of up to30minutes.
If there is a question about whether the tenancy is residential or commercial, a landlord or tenant can apply to the Landlord and Tenant Board (LTB) for a determination about whether the Residential Tenancies Act applies to their situation.
Learn more about residential tenancy rights.
Commercial lease agreements
If you rent a space for your business you may choose to enter into a commercial lease agreement with the landlord. A lease is a written contract that helps make sure both the landlord and tenant know what their rental rights and responsibilities are.
There is no standard commercial lease because businesses are different, but there are some things which most commercial leases should cover such as:
- the rent amount, including rules for rent increases and notice requirements
- the deposit amount
- insurance requirements
- repair and maintenance obligations
- rules about how to renew or end the lease
- the length and type of tenancy (month-to-month or fixed-term)
- other business details that have been negotiated between the landlord and the tenant
Since every commercial lease is different, think carefully about the space and services needed for your business and make sure they are covered. For example, if you need to renovate a commercial space for a restaurant, make sure the lease outlines who will pay for the improvements.
It can also be helpful to speak with a lawyer about how to negotiate and draw up a lease that meets your needs.
Ending a tenancy
Month-to-month tenancy
In a “month-to-month” tenancy, either the tenant or the landlord must give written notice at least one-month in advance. The last day of the tenancy would be the last day of the month.
For example, if you plan to end your lease on November30, you must give your landlord written notice no later than October31.
Fixed-term lease
No notice is needed to end a fixed-term lease. The tenant must be out of the rental space on the date outlined in the lease. If the tenant and the landlord would like to continue with the tenancy agreement, they should take steps to renew or amend the lease before it expires.
If a tenant wants to terminate their fixed-term lease early, they must pay the rent for the remaining term of the lease agreement unless there is a clause in the lease allowing the tenant to end the lease early.
Tenants can sublet or assign the lease unless it is prohibited by the lease.
If a fixed-term tenant continues to occupy the rental premises after the landlord has requested they move out, they may be subject to a penalty of two months' rent for every month they remain on the premises, plus applicable costs.
In addition to imposing a financial penalty, the landlord may also apply to the Ontario Superior Court of Justice to obtain a writ of possession (eviction order).
Rules in the lease
A commercial lease can also have rules about ending a tenancy. These rules must be followed, even if they are different from the CTA. For example, tenants must pay the rent for the length of the lease agreement unless they negotiated rules that allow them to end their tenancy early.
Breaches of the lease
A lease may say that a tenant can be evicted for not following certain rules in the lease. The landlord must give the tenant:
- notice of the breach
- a reasonable period of time to remedy the breach
If the tenant does not remedy the breach, the landlord may change the locks.
Late or unpaid rent
When a tenant has failed to pay the rent on time, the landlord has two options available under the CTA. A landlord can change the locks and end the tenancy or seize and sell the tenant’s property to cover unpaid rent. They can’t do both.
Temporary eviction rules during COVID-19
We temporarily banned evictions for tenants who were approved for the Canada Emergency Rent Subsidy (CERS). This ban ended on April 22, 2022.
A tenant who was approved to receive CERS, and had provided their landlord proof of approval, was protected from eviction for a12-week period from the date of approval.
If a tenant reapplied for a new CERS payment, the12-week ban was effectively restarted from the date of the new CERS approval. Tenants had to provide their landlord proof of each new approval.
The last possible date a CERS-approved tenant could be protected from evictions was April22,2022.
Option 1: Change the locks and end a tenancy
A landlord may change the locks of the unit and evict on the16th day after the day rent was due. For example, if rent was due January1, the landlord may change the locks on January17. The landlord does not have to notify the tenant that the locks will be changed.
After the locks are changed, landlords should allow tenants reasonable access to the rental unit to remove their property.
A landlord may hire a private bailiff to carry out an eviction. Bailiffs are governed by the Bailiffs Act and are licensed by the Ministry of Government and Consumer Services (MGCS).
Landlords should not force their way into the rental unit.
Both landlords and tenants should get legal advice on their specific situations.
Option 2: Seize and sell a tenant's property
Instead of evicting tenants, landlords may seize and sell a tenant’s property that is contained within the rented premises to cover unpaid rent. This process is called distress. To be clear, a landlord cannot evict and exercise distress at the same time.
Some types of tenant property cannot be seized, for example, property that is leased or co-owned.
Landlords may hire a bailiff to help them with the distress process.
Commercial tenants who disagree with their landlord’s actions may apply to the Superior Court of Justice.
Before landlords can sell seized property
Landlords are not required to give advance notice to tenants before they seize the tenant’s property unless their commercial lease agreement requires advanced notice.
Before landlords sell the seized property, they must:
- notify the tenant of the distress
- tell the tenant the amount required to pay off the rent arrears
- hold the seized property for five calendar days, not including the date the property was seized
If the tenant pays the rent arrears
If the tenant pays the rent arrears in full during the five-day period, the landlord cannot sell the tenant’s property.
If the tenant does not pay the rent arrears
If the tenant does not pay the rent arrears within the five-day period, the landlord must have the property appraised by two appraisers before they can sell it.
The proceeds from the sale of a tenant’s property must be applied to the rent arrears and the costs of the distress. Any amount left over must be paid to the tenant.
Sub-tenants who continue to pay the full rent cannot have their property seized if the head tenant failed to pay the rent to the landlord. If a sub-tenant’s property is seized, the landlord is required to return it.
Rent increases
The CTA does not regulate rent increases. Commercial tenancy agreements should specify the amount of rent charged and frequency of rent increases.
If there is no tenancy agreement, the landlord can increase the rent by any amount at any time.
Landlords should always consider giving a tenant a reasonable notice of a rent increase in writing.
Maintenance
The CTA does not set out responsibilities for maintenance.
Landlords and tenants should list these responsibilities in the lease agreement and seek legal advice if there is a disagreement over who is responsible for maintenance.
Storage units
The CTA does not cover storage units.
The Repair and Storage Liens Act regulates storage units and is administered by the Ministry of Government and Consumer Services.
FAQs
What is the commercial rent increase for 2023 Ontario? ›
Every year, the Province of Ontario sets the maximum amount that landlords can raise market rents for most Ontario renters without approval from the Landlord and Tenant Board. The rent increase guideline for 2023 is 2.5%. The guideline applies to rent increases between January 1, 2023 and December 31, 2023.
Is commercial rent regulated in Ontario? ›How Often Can a Landlord Increase Commercial Rent in Ontario? The Commercial Tenancies Act does not guide rent increases. Therefore, it's up to the parties to agree on the frequency and amount of commercial rent increases in Ontario (including when notice of a rental increase will be given to the tenant).
How is commercial rent calculated Ontario? ›A simple formula for commercial rent calculation used by everyone is the following: Rent = (Usable sq ft x usable sq ft rate each month) + (Common area x the rates per month for this type of area).
Can you live in a commercial property in Ontario? ›Living in a Commercial Property
First, you'll have to apply to your local planning office for rezoning to convert the commercial space to residential space. This can be easily approved depending on the property's location.
Rental rates in Ontario are expected to rise in 2023, driven by landlords facing higher operating costs due to rising insurance rates, property taxes, and maintenance expenses, according to the Canadian Federation of Apartment Associations (CFAA).
Is there a cap on commercial rent increases in Ontario? ›There is no limit to how much a tenant's commercial rent can increase in Ontario when their lease is up – Landlords can dictate any sized increases to rent. In neighbourhoods across Ontario, businesses are shutting down because of 20, 50, or even 100% rent increases.
What is maximum rent increase in Ontario? ›At present, Ontario landlords can increase tenants' rent by up to 1.2% so long as they give the proper notice at least 90 days before the increase. This number will stand until the end of 2022.
Can a landlord lock out a commercial tenant in Ontario? ›When a tenant has failed to pay the rent on time, the landlord has two options available under the CTA . A landlord can change the locks and end the tenancy or seize and sell the tenant's property to cover unpaid rent. They can't do both.
Can a landlord refuse to renew a commercial lease in Ontario? ›Your commercial landlord has no default legal requirement to renew or extend an existing lease. However, the landlord may be required to renew the lease if the lease agreement allows you to continue to your occupancy beyond the expiry of the current lease term.
Do you pay tax on commercial rent in Ontario? ›In general, commercial rents are taxable for GST/HST purposes, provided the landlord is not a small supplier as defined under the Excise Tax Act (ETA).
What is the tax rate for commercial rental income in Canada? ›
The federal rate is 38% and is applicable in all provinces. However, the provincial tax varies from province to province. The provincial tax on rental income in Ontario, for example, is 11.50%.
How much is GST on commercial rent in Ontario? ›Contact Maralynne at 416-947-5089 or mmonteith@weirfoulds.com. the following is a summary of the ontario hSt transitional rules affecting commercial leases. GSt (5%) will continue to apply as usual to non-residential leases subject to available exemptions.
What is commercial law in Ontario? ›Commercial law is that branch of private law concerned primarily with the supply of goods or services by merchants and other businesses for profit.
What rights do commercial tenants have in Ontario? ›Tenants must pay their rent on the due date agreed on in the lease with the landlord. Tenants cannot hold back rent because a landlord has failed to fulfill their obligations as outlined in the lease. Tenants must fulfill their obligations as outlined by the lease agreement.
How many units is considered commercial property Ontario? ›If you are looking to buy a multi-unit residential apartment building with more than 5 units... Call Today! Apartment buildings or really any type of property that has more than 5 units is considered a commercial property. The reason for this is because you are really buying a business at this point.
Why is rent so expensive in Ontario? ›The most contributing factors are the rising need for adaptability and the shortage of cheap homes. The rent increase is particularly true in the two most expensive markets, Vancouver and Toronto, where the annual rent rise has increased by over 24% in each province of Canada.
How much is rent in Canada in US dollars? ›| Canada Cost of Living vs US - Rent | Canada (CAD) | US (CAD) |
|---|---|---|
| Rent for one bedroom (inside city center) | 1,639.49 | 1,692.62 |
| Rent for one bedroom (outside city center) | 1,391.47 | 1,375.63 |
| Rent for three bedrooms (inside city center) | 2,704.62 | 3,028.40 |
| Rent for three bedrooms (outside city center) | 2,333.51 | 2,255.89 |
According to various sources, including TD Economics, the Canadian housing market will rebound in 2024. After home prices go down in 2023 by about 5%, they are expected to bounce back in 2024. In simple words, it means home prices will not continue to go down in 2024.
What is the most a landlord can raise rent? ›Landlords cannot raise rent annually more than 5% plus inflation according to the regional Consumer Price Index, for a maximum increase of 10% each year.
How do I evict a commercial tenant in Ontario? ›If the required notice is not specified in the lease, the Commercial Tenancies Act (Ontario) requires 15 days' notice for rental breaches. For other breaches, even if the lease says no notice is required, give reasonable notice and time to cure before trying to terminate the lease.
What is triple net lease Canada? ›
7. Triple net lease (NNN) A type of commercial real estate lease under which you typically pay the base rent, plus property taxes, building insurance and utilities, as well as other operating and maintenance costs. The landlord assumes no costs, other than those for structural repairs.
What properties are exempt from rent control in Ontario? ›New Buildings, built and first occupied after November 15, 2018 are exempt from Rent Control. If the property was built and occupied after this date, landlords can raise rent whenever and by how much ever they want. It's important to note that this only applies to periodic tenancies.
How much notice do you need to give your landlord in Ontario? ›You must give your landlord at least 30 days' notice. If you have a daily or weekly tenancy, you must give the landlord at least 28 days' notice.
When did rent control end in Ontario? ›This provision had been the subject of a complaint to the Ontario Ombudsman and was removed from the new Act. The Tenant Protection Act was repealed and replaced by the Residential Tenancies Act, which received royal assent on June 22, 2006 and was proclaimed into law on January 31, 2007.
What happens when a landlord sells a commercial property in Ontario? ›If the landlord sells the property before the end of lease then he or she must ensure that the buyer agrees to continue the existing rental agreement. The buyer, as a new landlord, must then comply with the agreement and cannot unlawfully force the tenant out before the end of the lease.
Is the commercial eviction ban extended in Ontario? ›Currently, the ban on evictions applies until April 30, 2022 at the latest. No landlord may exercise an eviction order to any tenant approved to receive CERS. Tenants who produce proof of CERS approval are protected for up to 12 weeks following approval.
Can a tenant run a business from a rental property in Ontario? ›(1) A landlord may give a tenant notice of termination of the tenancy if the tenant or another occupant of the rental unit commits an illegal act or carries on an illegal trade, business or occupation or permits a person to do so in the rental unit or the residential complex.
How long can a tenant stay after the lease expires Ontario? ›In Ontario, when a residential lease expires, and there is no new lease, the tenancy automatically becomes a month-to-month tenancy.
What happens at the end of a commercial lease? ›From a tenant perspective, physical premises could be vital for the business, but situations can change. But there are two options for the tenant when their lease expires. Option 1 – remain in the property and negotiate a new lease. Option 2 – vacate the property and give possession back to the landlord.
Can a landlord end a month-to-month lease Ontario? ›A landlord can end a tenancy only for the reasons allowed by the Act. In most cases, the first step is for the landlord to give the tenant a notice in writing that they want the tenant to move out. The proper forms a landlord must use for giving a notice to end the tenancy are available from the Board.
How much is commercial property tax in Ontario? ›
| Description | City Tax Rate | Total Tax Rate |
|---|---|---|
| Commercial General | 1.191313% | 2.080186% |
| Residual Commercial Band 1 | 1.108988% | 1.957358% |
| Residual Commercial Band 2 | 1.191313% | 2.102662% |
| Industrial | 1.179468% | 2.065346% |
In general, the answer is “no.” Rent payments don't qualify as a tax deduction for anyone in Canada.
What is the tax on rental income in Ontario? ›The tax rate on rental income in Canada is the same as your marginal tax rate (the tax rate you pay on your next dollar of income), since your net rental income would be in addition to your other sources of income (such as your salary, business income and investment income).
How to avoid capital gains tax on rental property Canada? ›- Sell Your Real Estate Property At The Right Time For You. ...
- Contribute To Your RRSP. ...
- Contribute To Your TFSA. ...
- Use Your Capital Losses. ...
- Capital Gain Reserve. ...
- Transfer Ownership Of The Property. ...
- Make Your Real Estate Property Into An Incorporated Business.
In most cases, you are earning an income from your property if you rent space and provide basic services only. Basic services include heat, light, parking and laundry facilities. If you provide additional services to tenants, such as cleaning, security and meals, you may be carrying on a business.
Is rental income considered investment income Canada? ›Passive rental income is included in the calculation of aggregate investment income, and taxed at a combined rate in British Columbia of 50.67%.
What is the HST on commercial property in Ontario? ›Harmonized sales tax ("HST") of 13% is imposed upon every taxable supply (i.e., sale) of property or services in Ontario, including commercial real estate.
Do you pay property tax on leased land in Ontario? ›no tax is payable on the tender or submission for registration of a conveyance that is a lease of land, the transfer of the interest of a lessee under a lease of land, or a notice of any kind in writing signifying the existence of a lease of land or of a transfer of the interest of a lessee under a lease of land if the ...
What is HST in Ontario? ›The Harmonized Sales Tax HST is 13% in Ontario. Ontario provides relief on the 8% provincial portion of the HST on specific items through a point of sale rebate.
What does commercial mean legally? ›COMMERCIAL Definition & Legal Meaning
Relating to or connected with trade and traffic or commerce in general.
What is commercial law full? ›
Commercial law, also known as mercantile law or trade law, is the body of law that applies to the rights, relations, and conduct of persons and business engaged in commerce, merchandising, trade, and sales. It is often considered to be a branch of civil law and deals with issues of both private law and public law.
What is commercial law based on? ›Commercial law is centered around the sale and distribution of goods and financing of specific transactions. It is governed by the Uniform Commercial Code (UCC), an example set of laws concerning the sales of goods, leases of negotiable instruments, and secured transactions.
Can you live in a commercial property Ontario? ›As such, you are governed by Ontario's Commercial Tenancies Act, which generally provides fewer rights than a residential tenant would have. However, even if local zoning laws consider the premises commercial, a tenant may still be considered a residential tenant if the premises are mainly used as a home.
What is the rent increase for 2023 in Ontario? ›The rent increase guideline for 2023 is 2.5%.
The guideline is based on the Ontario Consumer Price Index, a measure of inflation calculated monthly by Statistics Canada that reflects economic conditions over a 12-month period (June to May).
- Provide a notice terminating the tenancy giving the reasons;
- Apply to the Landlord and Tenant Board for an order to evict a tenant; and.
- Present evidence at the hearing as to why a tenant is being evicted.
At present, Ontario landlords can increase tenants' rent by up to 1.2% so long as they give the proper notice at least 90 days before the increase. This number will stand until the end of 2022.
Is Ontario putting a cap on rent increases for 2023 to help keep your landlord in check? ›For 2023, in Ontario, a landlord can increase the rent by a maximum of 2.5 per cent without needing approval from the landlord and tenant board, the province says. That's the highest rent increase guideline in almost a decade.
What is the new rent increase in Ontario? ›The Government of Ontario passed legislation to freeze rents at 2020 levels and will not increase in 2021 for the majority of rented units covered under the Residential Tenancies Act.
What is the rent increase for Ontario this year? ›The Province has set the 2023 Rent Increase Guideline at 2.5%. Landlords are reminded that rent increases may take effect on January 1, 2023 provided there has not been an increase in the last 12 months or the tenant not moved in the last 12 months.
How many times can a landlord raise rent in Ontario? ›Rules of rent increases
For the majority of residential rental properties in Ontario, the rent can be increased 12 months after the beginning of the tenancy or 12 months after the last rent increase, which means a landlord is limited to a maximum of one rent increase per year for a specific property.
What's the most a landlord can increase rent? ›
Landlords cannot raise rent annually more than 5% plus inflation according to the regional Consumer Price Index, for a maximum increase of 10% each year.