Renting your first apartment or house

From: Financial Consumer Agency of Canada

What to consider before you rent

Before you move out on your own consider the costs. You may want to rent an apartment a house or even a room. These are called rental units. Wherever you live, your basic expenses will be more than just the cost of rent. Knowing the costs of renting ahead of time will help you prepare a realistic budget.

Renting vs. buying

Instead of renting, you may be considering buying a home. Deciding whether to rent or buy a home depends on your needs and financial circumstances.

If you choose to rent, you may not have to pay for:

  • real estate agent fees
  • property taxes
  • home maintenance costs
  • utilities such as water if included in the rent

For more information, see the Canada Mortgage and Housing Corporation (CMHC) guide on maintenance and repairs.

Some other advantages of renting include:

  • there is no long-term commitment
  • if something breaks, and you aren’t responsible, a superintendent or landlord will usually arrange to replace or repair it
  • renting may be cheaper than buying a home

Use the Affordability Calculator to compare your options based on your monthly expenses.

Check your credit report

Your credit report may affect your options when you decide to move out on your own. Some landlords may check your credit report to be confident you’ll pay the rent on time.

If you have no credit history, or have had credit trouble, a landlord may ask you for a guarantor. A guarantor is usually a parent or guardian with a good credit history. The guarantor agrees to pay for you if you’re unable to pay your rent.

Get more information on credit reports and scores.

Rent within your budget

Spending too much on rent may make it difficult to cover your other expenses or save for future plans.

In general, your rent payment and household-related expenses should not be higher than 35% of your gross household income. Your gross household income is all income you receive before taxes and deductions. For example, if your gross pay is $4,000 a month, limit your housing costs to $1,400 a month.

While you get ready to move, stay organized, stay on track and stay on budget.

Use the Budget Planner to plan your household budget.

What you should know about rental agreements

A rental agreement, or lease, is a contract between a landlord and a tenant. The landlord grants the tenant the right to occupy a rental unit. In return the tenant commits to paying rent. The contract may also include other terms and rules. When you sign a rental agreement, you’re agreeing to respect those terms and rules.

A written rental agreement is an official record of what you and the landlord agree to. If there’s a dispute later, the rental agreement helps to settle it.

If you have a guarantor, the landlord will have them sign an agreement that describes their responsibilities.

Your rental agreement will include:

  • the landlord’s and tenant’s names, addresses and contact information
  • the length of time you agree to stay in the rental unit
  • the monthly rent amount
  • the date you must pay rent
  • the services covered by the monthly payment, such as electricity or parking
  • any separate charges
  • the conditions for the termination of a rental agreement
  • when the landlord can increase the rent and by how much
  • the security deposit amount and any conditions
  • the rules that the landlord requires all tenants to follow

Security deposits

Your landlord may ask you to pay a security deposit before you rent a unit. This is also known as last month’s rent. Generally, the security deposit can’t be higher than the cost of one month’s rent.

In some provinces, you’re required to do an inspection before you move into the rental unit. This ensures that you won’t be held responsible for damage that already exists. The inspection should be done with your landlord. Document and photograph any visible damage.

Use the CMHC’s Initial Inspection Worksheet.

Leave the rental unit in the same condition as when you moved in. The landlord will typically use your deposit to pay for the last month you live in your rental unit. If you don’t, the landlord may use the deposit to cover potential damages.

There are some exceptions:

  • Quebec: landlords can’t ask for last month’s rent or any other money aside from the first month’s rent
  • Ontario: landlords can’t use last month’s rent to repair damages to the rental unit

Visit CMHC’s Lease and Rental Agreements guide for rules on renting.

Subletting your apartment or house

If you need to move before your rental agreement expires, you may choose to sublet your rental unit. To sublet your rental unit, you need to find someone who will live there. They have to pay rent and follow the requirements set out in your rental agreement. You also need permission from your landlord.

If the person you’re subletting to doesn’t pay the rent or causes damage to the rental unit, you’re responsible.

Living with a roommate

To reduce your expenses, consider sharing the cost of rent, utilities and other expenses with one or more roommates.

If you decide to live with someone else, discuss your living arrangements and shared financial responsibilities.

For example, figure out the following:

  • how you’ll divide rent
  • how you’ll divide the security deposit
  • if you’ll share bills and expenses or pay for them separately
  • what each of you will buy for the rental unit

Make sure you understand what you’re responsible for.

If 2 or more tenants sign the same rental agreement, each is equally responsible for payments and damages. If each of you sign separate rental agreements, you’re only responsible for what’s in your own written agreement.

If your name alone is on the utility bills, you must pay them on time. Missing a payment for your rent or utilities could hurt your credit score.

Tenant and landlord rights and responsibilities vary across the country.

Check the provincial and territorial laws that apply to you.

Costs of renting

Before you rent, consider all the costs.

Utilities and telecommunications

You may need to pay fees to set up new accounts with utility, cable, internet, or telephone companies. You may also need to pay security deposits on these accounts.

Moving expenses

You may need to add these upfront moving costs to your budget:

  • truck rental
  • movers
  • moving boxes and other supplies
  • time off work

Get some moving advice.

Renter’s insurance

If you rent, consider getting tenant’s, or renter’s insurance.

Consider getting enough insurance to cover the value of:

  • damage to, or loss of, your possessions
  • personal property stolen from your car
  • accidental damage you cause to any part of the rental unit
  • injury caused to visitors

Learn about different types of home insurance policies and the coverage they offer.

Outfitting your place

If you’re moving out for the first time, you may need to buy:

  • furniture
  • dishes
  • kitchen utensils
  • small appliances
  • bedding
  • towels
  • cleaning supplies

Ongoing costs of living on your own

Depending on what your rental agreement or lease covers, you may also need to pay for:

  • parking
  • utilities such as hydro and heat
  • telecommunications including internet, cable, telephone
  • laundry
  • snow removal
  • lawn maintenance

Protect yourself from rental frauds and scams

Watch out for rental scams. In general, if a deal sounds too good to be true, it probably is.

Warning signs of rental scams include:

  • the monthly rent is much less than the current market rate
  • you’re asked to leave a deposit without any formal rental agreement or lease in place
  • you’re asked to send a security deposit to a landlord outside the country
  • you’re offered a rental unit, but no one does a background check on you
  • when you ask about the rental unit, you get an email that sends you to a website asking for personal or financial information
  • ads that show pictures of the outside of the rental unit only, or pictures that don’t match the actual property

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