*This post was created in collaboration with Alpine Credits
If you have an extra room in your home, you may have considered renting it out to collect a little extra income. But before you do, you may be asking yourself, “What are the rules for renting a room in my house in Ontario?”
It’s a valid question, after all, you want to make sure you comply with any laws in the province or city you live in before drafting up a lease agreement. Here, we’ll answer this question and clear up other queries you may have before opening up your home to a renter.
Can You Legally Rent A Room In Your House In Ontario?
Yes, you’re legally allowed to rent a room in your home in Ontario. How renters are to be treated under the law depends on whether or not they share common spaces, like a kitchen and bathroom.
If a person rents a room in your home and is required to share the kitchen and bathroom with you (the landlord), then the individual renting from you is not considered a “tenant”, but rather a roommate or boarder.
In this case, the person renting the room in your home is not recognized by the Ontario Tenant Protection Act and doesn’t have the same protections that tenants do. Instead, the individual would fall under contract law with you, the landlord.
Renting A Self-Contained Room
In Ontario, a room rental falls under the Residential Tenancies Act if the tenant is not required to share the kitchen and bathroom. So, if you’re renting out your basement, for instance, which has its own separate kitchen and bathroom, then the rules of the Residential Tenancies Act apply.
Rules For Renting A Basement Suite In Ontario
A basement suite is a self-contained unit in a home must have its own separate entrance, bedroom(s), kitchen, and bathroom(s). This is just one example of a second unit in a home. A self-contained unit can also be located above a garage or in another structure on the same property.
The rules and regulations surrounding a self-contained basement suite are different from renting a room in your home. Unlike renting a private room, a basement suite must meet the following requirements:
- The unit must meet applicable zoning requirements, including parking, entrances and exits, and unit size.
- The necessary building permits must be obtained before constructing the unit.
- The unit must comply with the local building code to ensure the second unit is safe and legal.
- Building inspections must be performed during construction to check various aspects of the project, including framing, insulation, electrical and plumbing, and interior finishes.
If you’re considering renting a room in your home to someone who will be sharing common spaces with you, there are important questions that you should first answer.
Do You Need A Rental Agreement?
In a situation that involves someone renting a room in a home and sharing common spaces with the owner or others in the home, the rules under the Residential Tenancies Act do not apply.
However, it’s in the best interests of both the renter and the landlord to have a written contract in place that includes details about the arrangement. Having a contract will ensure that all parties understand the house rules and can help mitigate conflicts that may arise.
Like a typical lease agreement, a contract between a person renting a room in a home and the owner should include the following information:
- The landlord’s full name
- The renter’s full name
- The rental property address
- The dates that the contract begins and ends
- The rental amount
- The frequency and method of rent payments
- What utilities are included in the rent
- What furniture may or may not be included
- Responsibilities for both landlord and renter, such as:
- Cleanliness
- Use of laundry facilities
- Use of kitchen and bathroom
- Quiet hours
- Access to various parts of the home, including outdoor spaces
- Amount of notice required for the renter to move out or for the landlord to evict
- The signatures of both parties and the date of signing
Are There Any Requirements You Must Meet To Rent A Room In Your House In Ontario?
There aren’t many rules when it comes to renting a room in your home, as long as you’re not running a “rooming house” with more than one tenant. If you were, you’d be considered to be running a business, in which case you’d be required to follow the rules under the Residential Tenancies Act.
However, renting a room in your home and sharing the kitchen and bathroom with the individual has far fewer regulations. Little information is available in terms of what a private room in a house must include since other parts of the home are shared with the renter.
Is Insurance Required?
Under the Residential Tenancies Act, tenant insurance is not required. However, as the owner of the property, you have the right to include an insurance policy as one of the conditions in the lease agreement.
What Happens In A Disagreement Between The Renter And Landlord?
If there is a disagreement between the renter and the landlord, neither party can resolve the issue through the Landlord and Tenant Board. Instead, any issues, including non-payment of rent, may have to be dealt with through the Ontario Small Claims Court.
What Are The Tax Implications Of Renting A Room In Your House In Ontario?
Rental income is taxable, including rent collected from someone renting a room in your home. As such, you’ll need to report that income when you file your taxes. More specifically, you should report that income for the year you receive it.
When reporting the income on your income taxes, remember that you can only claim expenses related to the room you’re renting out. To report any income and expenses form renting a room in Ontario, you’ll need to file Form T776, Statement of Real Estate Rentals with the Canada Revenue Agency (CRA).
How To Evict Someone Renting A Room In Your House In Ontario
Unless a written contract exists that details how an eviction may take place, the landlord may evict the renter at any time without notice. That’s because renters who share a kitchen and bathroom with the owner don’t have a legal right to live in the home without the owner’s consent.
So, if the renter doesn’t pay rent, causes damage to the property, or is a nuisance to others in the home, the homeowner is within their rights to evict the renter anytime or as per the written contract.
Benefits And Drawbacks Of Renting A Room In Ontario
If you’re thinking of renting a room in your home, be sure to weigh the pros and cons before doing so.
Pros
The perks of renting a room in your home include the following:
- Collect monthly rent. One of the biggest benefits of renting a room in your home is the rental income. You can use the money to supplement your income and pay the mortgage or cover other household expenses.
- Utilize unused space. If there are rooms in your home that are vacant or unused, having a renter occupy the space can make good use of the room while allowing you to collect extra money every month.
- Flexibility. Unlike renting a self-contained suite, renting a room may offer you more flexibility, since this type of arrangement isn’t governed by the Residential Tenancies Act. This may be especially convenient if there’s ever a need to evict your renter, in which case you may have fewer roadblocks.
- Help others find affordable housing. Rent has inflated in many cities across Ontario. Renting a room is a cheaper alternative to renting a whole unit for many Ontarians. In this case, you could be helping out a fellow Canadian with an affordable place to live.
Cons
There are some notable downsides to renting a room in your home:
- Less privacy. Since you’ll be sharing other spaces in your home with the renter, you’ll have to sacrifice some level of privacy in your own home.
- Tax implications. You’ll need to report your rental income when you file your taxes. This could increase your taxable income, which means you could pay more income taxes.
- Possible complications. Plenty of issues can arise when renting out a space in your home. They may fail to pay rent on time, become a nuisance in the home, or aren’t taking care of the property. Or worse, there could be safety issues, depending on the person, especially if you don’t thoroughly screen prospective renters.
Where Can You Get Advice On Renting a Room in Ontario?
Renting out a private room in your home can be a bit of a murky issue, legally speaking. Given this, you may want to consult with a lawyer who is experienced in the field of landlord and tenancy laws, particularly when it comes to private room rentals.
If you can’t afford a lawyer, you may be able to get legal advice from the following resources:
- Pro Bono Ontario, which offers a free legal advice hotline. You can reach them at 1-855-255-7256.
- JusticeNet, which offers reduced fees for legal assistance to those who don’t qualify for legal aid because their income is too high, but they’re unable to afford standard lawyer fees.
- Ontario Legal Information Centre, which offers legal information and referrals to legal professionals.
Final Thoughts
Renting out a private room in your home may be a great way to earn a little extra income while putting some used space to good use. It’s also a more flexible alternative to renting an entire self-contained unit. But there are still some potential issues that you’ll want to consider before inviting a renter into your home, including tax implications and privacy issues.
