Starting July 31, 2025, Toronto landlords must follow a new Rental Renovation Licence process if they want to evict a tenant to renovate a unit. This rule applies on top of the provincial Residential Tenancies Act (RTA) and includes extra steps, stricter documentation, and new compensation requirements — especially if you’re planning to re-rent the unit afterward.
If you’re a landlord in Toronto thinking about doing a major renovation on your tenanted unit, here’s everything you need to know to stay compliant and avoid fines.
Disclaimer: This is general information and not legal advice. Always consult the Residential Tenancies Act or a licensed legal professional before taking action. Rules and interpretations can change depending on your situation.
When Do You Need a Rental Renovation Licence?
You need a Rental Renovation Licence if:
- You want to evict a tenant using Form N13 to do major renovations or repairs
- You plan to re-rent the unit after renovations are complete
- The work is invasive, requiring vacant possession (e.g. plumbing, structural, HVAC, electrical)
If you’re doing light work (e.g. painting, flooring) that doesn’t require the tenant to leave, this process does not apply.
Step-by-Step Guide: How to Legally Renovate a Tenanted Unit in Toronto
Here’s what a landlord must do:
1. Prepare Your Renovation Plan: You’ll need details like scope of work, drawings, contractor info, and estimated timelines.
2. Apply for a Toronto Building Permit (if required): Even though Form N13 doesn’t require a permit to serve notice, the City needs one to process the licence.
3. Serve the Tenant an N13 Notice (Provincial requirement): You still need to follow the RTA rules. The tenant gets 120 days’ notice with the right to return.
4. Apply for the Rental Renovation Licence: Submit through Toronto’s online portal within seven (7) days of serving the N13 Notice. Your application must include:
- A copy of the N13 notice
- Building permit(s)
- Report from a qualified professional (architect or engineer) confirming vacant possession is required
- The $700 application fee per unit (waived for multi-tenant operators)
If you miss that window, you risk fines starting at $1,000, and the City could refuse your application entirely.
5. Pay All Required Compensation (see below): Proof of compensation must be submitted to the City before your licence is approved.
6. Start Renovation After You Receive Your Licence: Make sure to keep records. The City may inspect to confirm work is actually happening.
7. Offer the Unit Back After Completion (if applicable): If the tenant wanted to return and you don’t offer it back, you can lose rent control and face penalties.
Compensation Rules: What Landlords Must Pay
If Tenant is Returning:
- With N13: 1 Month’s Rent (buildings less than 5 units) or 3 Months’ Rent (5+ unit buildings)
- Moving Allowance: $1,500 (1-bed) or $2,500 (2-bed or larger)
- Rent-Gap Compensation: You must pay the difference between tenant’s existing rent and CMHC market rent while they’re displaced (unless you give them a temporary comparable unit)
If Tenant is Not Returning:
- With N13: 1 Month’s Rent (buildings less than 5 units) or 3 Months’ Rent (5+ unit buildings)
- Moving Allowance: $1,500 (1-bed) or $2,500 (2-bed or larger)
- Severance: 3 Months of Rent-Gap based on CMHC data
Example
Let’s say you own a legal triplex. Your tenant lives in a 2-bedroom unit, paying $1,800/month. CMHC says the average market rent in that area is $2,400/month, so your rent gap is $600/month. The tenant has decided not to return so you’ll owe your tenant:
- $1,800 (RTA)
- $2,500 (moving allowance)
- $1,800 (3 months × $600 rent-gap)
Total = $6,100
FAQs: Evicting Tenants for Renovations in Toronto
Can I evict for demolition or converting the unit?
Yes — but the unit must be fully demolished or converted to a non-residential use (like turning it into an office). If the unit still exists after the work, it’s likely a renovation, and tenants have a right to return.
Do I have to let the tenant move back in after the renovation?
Yes. If it’s a renovation (not a full demolition), tenants have the right of first refusal. That means they get first dibs on moving back in — and at the same rent they were paying before.
What if the new unit is smaller or larger after renovations?
Doesn’t matter. The rent stays the same if the tenant chooses to return. The law doesn’t prorate rent based on size or layout changes. It protects the tenancy, not the square footage.
Can I increase the rent when they return?
No, unless:
- You go through the LTB to apply for an above-guideline rent increase
- Or the tenant voluntarily agrees to a new lease at a higher rent (which they’re not required to do)
What happens if I give an N13 notice, but the work doesn’t qualify?
Your application can be dismissed, and the tenant doesn’t have to leave. Also, if you gave them compensation (1 month’s rent), they may be ordered to pay it back.
What happens if I don’t get the licence or skip steps?
If you miss the 7-day application deadline or don’t apply for the licence at all, you face:
- A $1,000 fine for late application,
- Up to $10,000 per day in ongoing fines for continuing violations,
- Total fines can reach $100,000 or more under the City bylaw,
- Separate penalties up to $35,000 under the Residential Tenancies Act (RTA),
- Being ordered to pay tenant damages or reinstatement by the Landlord and Tenant Board.
Bottom Line for Toronto Landlords
If you’re planning a renovation that needs a tenant to move out, you need to budget more than just reno costs. The Rental Renovation Licence is now mandatory, and compensation isn’t optional — it’s enforced by both the City and the province.
Learn more and get help by visiting the City’s official guide here.
Want To Invest In Toronto Multiplexes?
That’s where we come in. We’re a Toronto-based real estate brokerage that specializes in investment properties. From finding and analyzing deals to helping with renovations and leasing, we guide you through the entire process.
Here’s what it looks like when you work with Elevate:
- Strategy Call: We get clear on your goals and walk you through how to invest smart in Toronto. Straight talk, no fluff.
- Property Search & Purchase: We find the right property that fits your plan — whether it’s turnkey or value-add.
- Renovation Guidance: Need renos? We’ve got trusted contractors, and we’ll coach you through the process so you don’t get burned.
- Leasing & Management: Want help renting it out or managing it long-term? Our team’s got that covered too.
Want to see what’s possible for you? Book a strategy session with us here.
What Toronto Real Estate Investment Is Right For You?
Check out our complete Toronto real estate investment guide for all the details and real-life examples. If you’re ready to dive in, just book a call with us!
