What to know
- Under Ontario’s Residential Tenancies Act, landlords can only require first and last month’s rent upfront, but they can legally accept additional months if the tenant “voluntarily” offers them.
- Newcomers, international students, self-employed workers and tenants with weaker credit are often the ones pressured to offer multiple months in advance to secure housing.
- Tenants who feel pressured can file a T1 application with the Landlord and Tenant Board or seek compensation later — but many choose not to.
Moving to a new rental home can be quite costly, between cleaners, movers, key deposits, and, of course, rent. When your landlord requests multiple months of rent in advance, it can really make a dent on your savings account.
As damaging as it may be, it has become increasingly common to see tenants in Ontario being asked to pay for multiple months in advance.
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Now Toronto spoke with Advocacy Centre for Tenants in Ontario (ACTO) Director of Advocacy and Legal Services Douglas Kwan, and King Realty Co. Real-Estate Agent Amaka Obiora to find out if landlords are allowed to do that.
Can landlords charge you multiple months of rent in advance?
Technically, no.
As Kwan and Obiora explain, the Ontario Residential Tenancies Act states that landlords are not allowed to charge more than the first and last months of rent in advance under a new tenancy agreement.
But that doesn’t mean it doesn’t happen.
In 2014, the Ontario Superior Court of Justice ruled it was OK for the landlord to accept a $90,000 rent deposit made voluntarily by the tenant in Corvers v. Bumbia, since it was not required in the application process.
According to Kwan, this decision opened the door for other tenancy agreements to include the extra months of rent as long as they were voluntarily offered by the tenants, and not requirements. Since then, many tenants have felt pressured into offering the extra payment in order to secure a place to live.
“They’re not going to put it in the clauses and say, ‘Oh, you have to pay certain months [of] rent to be able to be approved for a specific property.’ But, the landlord’s agent would speak to the tenant agents and say, ‘Oh, well, are they able to do this? Are they able to do that?’ And just the way they phrase, that’s where we begin to see the [gray] lines,” Obiora says.
In these instances, Kwan says it is also common for the renter’s realtor to relay the pressure to offer more months upfront.
“Even though they shouldn’t be encouraging or asking the tenant to pay for more than [two] month’s rent, it happens, and usually what they say is, ‘It’s a tight market. You need to convince the landlord to rent to you. Paying more than one month’s rent as a deposit is one way to do that,’” he adds.
Why do tenants pay?
Certain tenants, especially newcomers, international students, self-employed workers, and those who don’t have a strong credit score, are mostly pressured into making bigger advance payments because they may not meet the income or credit criteria to strengthen their application.
For them, it is oftentimes viewed as “standard practice” to voluntarily offer more months, with many feeling like they won’t be able to find housing if they don’t do so.
“Sometimes even without suggesting it. I work with a lot of newcomers, a lot of new immigrants, and they already know, like, it’s standard practice across the board, because all of these are traditional means [for] landlords to vet tenancies,” Obiora says.
With several people across the province facing homelessness and difficulty finding housing overall, Kwan says many end up giving in to the pressure and putting up more money to secure a place to live.
“[When] you’re confronted with someone who is insisting on getting more than [two] months of rent. You know, people are struggling already, they will pay more than [two] month’s rent simply to secure that housing,” he says.
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Why are landlords asking?
Obiora explains that sometimes landlords might ask for extra months not because they are greedy, but to avoid any added risks, or in response to any signs that the applicant might not be able to make timely payments.
“A lot of the landlords in Ontario, they’re not big corporations. A lot of them are individuals. And one tenant missing their rent can impact their finances very, very significantly, because they have to pay the mortgage anyway, right? So, it’s important to see both sides,” she points out.
In this case, she says adding elements to strengthen their application might help to increase the tenant’s chances of getting approved and to help landlords not “feel like they have to demand for those things.”
What can tenants do?
Since it’s not against the law for landlords to accept extra months of rent made voluntarily in Ontario, the options are limited for tenants who are dealing with this pressure.
According to Kwan, there are two things they can do: accept it and seek compensation or file a complaint right away.
“If they can afford it, what I’ve seen is sometimes renters paying the amount up front, then they move in, and then they seek some compensation for the landlord preaching their responsibilities after the fact,” he says.
“For those tenants who aren’t able to pay that amount, they could certainly take the same approach, which is filing a T1 application at the Landlord and Tenant Board.”
However, the expert says it is common for many to not file any sort of complaints, as doing so could take time and distract them from their housing search.
“Oftentimes they’re just too busy to find housing rather than thinking about taking a prospective landlord to the tribunal and getting some compensation out of it. They’re usually thinking about, ‘Where am I going to find housing next?’” he says.
When the job market is tough, Obiora says it might sometimes be easier on the tenant to offer some extra months if they can, which could put them ahead of other offers.
However, the realtor says it is important for tenants to know their rights, and understand that if they cannot or are not willing, it might just take a bit longer to find a place in a competitive market.
“I’ve known from experience it might help with their application, but I always make sure that they are aware of their rights. They don’t have to. However, you may spend six months just finding a place,” she says.
To avoid situations like these, Obiora recommends tenants keep their credit scores in check, and provide any documentation that can prove they are financially consistent.
