Rental Prices & Practices: Would You Rent of Your Home?

With house prices in this country higher than ever in history of Canada, more and more people, especially young people, find themselves unable to afford a place to live. In Toronto, the average rent price of a one-bedroom unit is $2,023. In Vancouver, the average price for a one-bedroom is $2,280, with the highest rent prices in the country. The least expensive place in the country is over in Lloydminster, Alberta, with an average price of $744 for a one-bedroom. The average price all around for various cities across Canada is $1,504.?

No wonder most Canadians are struggling to afford these prices. From students to single parents, from minimum-wage earners to families, who can pay the rent and save for a down payment? High rental prices are making home ownership dream even more unattainable.?

That is where private landlords come in. It is a great idea for homeowners to carve out an extra space in the home and rent it out to tenants. If you think you have enough space and feel this may do a trick for you, it is important to understand what the renting process involves.

First, you need to consider the existing zoning laws, federal or provincial laws as well as tenant and landlord rights and responsibilities. A landlord-tenant agreement is a contract, which is regulated under contract law, and involves informed consent, purpose, compliance, contractual capacity, and more. In Ontario, landlords are required to follow the standard lease template for residential units. The Ontario Residential Tenancies Act delivers this standard through an easy-to-understand document that clearly defines rent due dates, what the rent includes (air conditioning, heating), and rules, and includes a section on rights of the tenant and landlord (when can landlord enter unit, who is responsible for maintenance). Zoning laws also need to be considered, especially if you build a secondary area on your property. If you use your basement will there be a separate exit? Is there enough parking on your property off the road? Did it pass inspections during renovation? Also, in many areas landlords are required to obtain a residential rental license which ensures the safety of tenants. These laws are largely dependent on where in Canada you are, and it is critical that you understand your obligations.?

There are pros and cons to private rental practice. For example, the need to screen potential tenants. It may be a tedious process, but it is advisable that you run a background and credit checks on who you allow into your home. There is a residential rental application form for Ontario available for guide screening. Proper screening could save landlords from having to deal with situations involving opportunistic scammers.?

A clear advantage is the extra income coming to the landlord which may assist with paying off a mortgage. In order to attract quality tenants, landlords often renovate their rental spaces which also increases the value of their properties. Let’s remember that the landlord also bears responsibility of the necessary repairs. While this could be seen as a downside, with proper budgeting renting out a part of your home can still be a very lucrative undertaking.?

What happens if you decide to sell your house? It depends. While a separated unit in listed home may be attractive to some buyers, others won’t be thrilled with the prospect of dealing with tenants or potential wear and tear due to high usage of amenities. That said, many do realise that renting out benefits the landlord by the way of potential tax deductions. TurboTax states that you can claim a deduction on property taxes proportionate to the rental space. They also say you can deduct expenses such as heat, water, hydro, and home insurance. They say you can “claim a portion of the interest that relates to rental as a tax deduction.”

Private rentals availability can potentially help drive down the overall rental prices, and drive large corporate landlords to offer better rental conditions.

Furthermore, there is much more that goes into creating a proper rental space and building a successful rental practice. A lot of it is about landlord’s commitment to provide a suitable and welcoming home for the future tenants. When you invite a tenant into your home, you become responsible for their living space. That is a serious undertaking.??