When a rental lease approaches the end of a term, both the tenant and landlord are left with two options: renew the lease or begin a month-to-month agreement. The former offers security for both tenant and landlord while the latter offers flexibility. Get to know your options and decide which works best for you and you’ll be sure to minimize stress in a hot rental market.
Related Read: 5 Tips for Getting Ahead in the Toronto Rental Market
Month to month agreement
In Ontario, if the tenant and landlord haven’t come to any sort of agreement at the end of the lease, both parties will automatically enter into a month-to-month agreement. It is possible, of course, for both parties to intentionally enter into this type of agreement. For the tenant who’s not sure of their next steps, the monthly agreement will offer flexibility as they consider their options. Under such an agreement, the tenant must provide a sixty days’ notice before moving out. If you are looking to purchase your own property or aren’t quite sure if you plan to stay in the city long-term, the monthly agreement may be the ideal option.
As in the case of a fixed-term lease, the landlord can only terminate the tenancy with a sixty-day notice for a reason allowed under the Residential Tenancies Act, for example, should they wish to rent the unit out to a family member.
The monthly agreement puts the tenant in the position to pay a premium for short-term rental, if the landlord chooses to increase the rent. For instance, a recent media story revealed 200% rent increases in Toronto condos that were being rented out. As a month-to-month tenant, you must be prepared for this risk.
While a monthly agreement will offer the tenant flexibility, a lease agreement can offer the security of calling a place home for an extended period of time (depending on the length of your lease), and you won’t have to worry about a rent increase until the lease end. For those who know they want to be renters for the next year, a lease agreement could be the ideal option.
While a lease agreement can work for some, it’s not for those who don’t intend to stay until the end of the lease. By entering into the lease agreement, the tenant is responsible for paying the rent until the end of the lease. If you’re looking to purchase a property prior to the lease end, you’ll be responsible for the rent whether you’re in the apartment or not.
If you have a lease agreement approaching the end of its term and are open to committing to the apartment long-term, renewing the lease may be the best option. If you’re not quite sure what the future holds for you – whether it be a property purchase, work-related move or other factors – a monthly agreement or even a short-term lease may be the safer option.