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You can choose to purchase the property you live in, or you can choose to rent it. Renting is where you pay the property owner, known as the landlord, a monthly fee in exchange for the right to live on the property.

Rental payments differ greatly depending on where you live in Canada. In general, rental payments are much higher in large cities like Toronto or Vancouver than they are in smaller cities like Saskatoon or Red Deer. This article will teach you how much you should spend on rent, what affects the cost of rent, other costs to consider when renting, and how to pay rent.

Check out the differences between renting and buying a home.

How Much Should You Spend on Rent?

The general rule is that your debt-to-income ratio should ideally be no more than 36% of your monthly gross income, but can go as high as 43%. Of that, housing costs should be no more than 30% of your monthly gross income. This cost includes utilities, rent, and municipal services. For example, if you have a monthly gross income of $5,000, your housing costs should be no more than $1,500 (5,000X30%).That would leave you with $300 – $650 for other debts. 

Check out how you should budget your income

Average Cost of Rent in Canada 

1 Bedroom2 Bedrooms
Canada$1,358$1,723
Montreal – QC$1,420 $1,860
Quebec City – QC$928$1,201
Gatineau – QC$1,227$1,518
Vancouver – BC$1,855$2,635
Richmond – BC$1,730 $2,082
Burnaby – BC$1,676$2,186
Victoria – BC $1,537$2,059
New Westminster – BC$1,511$1,852
Surrey – BC$1,403$1,744
Toronto – ON$1,832$2,416
Ottawa – ON$1,565$1,993
Mississauga – ON$1,816$2,112
Etobicoke – ON$1,786$2,224
York – ON$1,726$2,216
North York – ON$1,721$2,103
Vaughan – ON$1,667$2,032
Scarborough – ON$1,628$1,901
Hamilton – ON$1,485$2,111
Brampton – ON$1,535$1,818
Calgary – AB$1,178$1,470
LIoydminster – AB$742$896
Edmonton – AB$1,027$1,262
Red Deer – AB$930$1,000
Grand Prairie – AB$985$1,154
Lethbridge – AB$950$1,106
Regina – SK$925$1,140
Saskatoon – SK$892$1,075
St. John’s – NL$883$1,125
Winnipeg – MB$1,152$1,432
Halifax – NS$1,459$1,987

What Affects The Cost of Rent in Canada? 

Several factors affect the cost of rent in Canada: 

  • Housing Affordability – The higher the cost of housing, the higher a property will cost to rent. A landlord will want to charge more for what is considered to be more valuable property.
  • Interest Rate – The higher mortgage interest rates are, the higher a property will cost to rent. A landlord will need to charge more to cover the property’s mortgage payments.
  • Supply and Demand – The more properties that are available to rent, the lower the cost of rent. The fewer properties that are available to rent, the higher the cost of rent.
  • Overall Market – Depending on the area you live in, the condition of the economy can affect rental prices. As seen with the Covid-19 pandemic, rental prices in the downtown areas have decreased as more people fled to the suburbs or outskirts of the city. 

Other Costs to Consider When Renting

Besides everyday living expenses like food and entertainment, you need to consider: 

  • Tenant’s InsuranceTenant’s insurance is a good option if you live in an apartment or rent your home from someone else. You should have enough insurance to cover the cost of replacing everything in your home. It can also pay for any loss from or damage to where you live.
  • Security Deposit – Some landlords require you to pay a security deposit before moving in. A security deposit is an upfront payment renters need to make to cover expenses like cleaning, repairs and even unpaid after they move out. It is usually equal to one month’s rent but varies across Canada.
  • Utilities – You must pay utilities every month, such as electricity, heating, water, and internet, and cable.
  • Outfitting Your Place – There are several living costs you must pay when you move in. Your residence requires furniture, lights, bedding, and other things you need to live comfortably.

Check out the most common mistakes renters make.

How do You Pay Rent in Canada?

You are responsible for paying rent when it’s due. A rental payment is how much the landlord is charging you to stay on the premises for one month. Landlords can choose to be paid by cash, cheque, or bank transfer.

Learn more about your rights and responsibilities as a tenant.

Each province and territory treats late payments differently. Although penalties for late payments are up to the discretion of the landlord, landlords can generally impose a reasonable financial penalty, offer a grace period of up to 3 days, or provide a notice to terminate the rental agreement.

Can Your Rent Payments Help You Build Credit?

Generally, rent payments are not reported to the credit bureaus. However, if you’re looking for a way to have your rent payments reported to the credit bureau in Canada, consider using a third-party platform like Plastiq. With these platforms, you simply make a payment to them with your credit card and then they’ll send your landlord a cheque or a direct deposit.

Since the payment is made through your credit card, it can help you build your credit. However, it can also negatively affect your credit if you don’t pay your balance on time or in full.

FeePayment Options
Plastiq0.99 – 3.99%Visa, Mastercard, Amex, Union Pay
Rent Moola1%-2.85%Visa, Mastercard, Amex, Discover, Diners Club 

Renting in Canada FAQs

Do rent payments help build your credit score?

Usually, rent payments do not help you to build your credit score. But, landlords that are a part of the Landlord Credit Bureau report your on-time rent payments to credit bureaus, which help to improve your credit and help grow a healthy credit history.

Do I need tenant’s insurance if I’m renting?

Tenant’s insurance isn’t mandatory if you’re renting, but some rental companies require you to have proof of tenant’s insurance before they will rent you somewhere to live. Tenant’s insurance is important because it can pay for damage caused to where you’re renting, any damage or loss of your possessions, any personal property stolen from your vehicle, living expenses if you’re temporarily unable to live where you rent, and any injury to visitors.

Which city is the cheapest to live in?

Based on the January 2021 Rentals.ca Rent Report, the cheapest major city in Canada to live in is Lloydminster, Alberta. A one-bedroom apartment costs an average of $742 to rent, while a two-bedroom apartment costs an average of $896 to rent.

Bottom Line

Renting involves paying your landlord every month in exchange for them letting you live on their property. Rental payments are different across Canada, but generally, you should pay no more than 30% of your gross income on rent. Several factors, including housing affordability and the overall real estate market, can affect how much your rental payment is. Besides rent, there are other costs to consider, such as tenant’s insurance. As long as you budget properly, live within your means, and pay your rent on time, you should have no trouble renting property anywhere in Canada.

Matthew Taylor avatar on Loans Canada
Matthew Taylor

Matthew joined the Loans Canada writing team in 2021 while was finishing up a Bachelor's degree at the University of Saskatchewan. It was there that he discovered his love of writing. His work has appeared in several publications, including the Canadian Student Review and NewEngineer.com. In his spare time, Matthew enjoys reading, geocaching, and spending time with his family and pets.

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