Toronto’s New Renoviction By-law: What Investors Must Know

Effective July 31, 2025, Toronto has rolled out its Rental Renovation Licence By-law, a new regulatory framework designed to curb “renovictions” — tenant evictions under the guise of renovations. While the measure is being celebrated as a major victory for renters, it also creates new layers of compliance, cost, and accountability for landlords and real estate investors.

For investors in Toronto’s rental market, understanding how this by-law works is critical. It doesn’t just reshape landlord-tenant relations — it affects cash flow, timelines, and ultimately, investment strategy.

What Is a Renoviction?

Renovictions occur when landlords issue an N13 notice, a notice to end tenancy for renovations or repairs but use it as a tool to sidestep rent controls and re-list units at higher market rates.

Over the past decade, renovictions surged in Toronto. Between 2017 and 2022, filings of N13 notices rose nearly 300%, often resulting in the permanent loss of affordable rental stock. Tenants who left rarely returned, either because the units were never renovated as claimed or because rents were priced well above their previous levels.

The city’s new by-law aims to stop this cycle, ensuring that when tenants are asked to vacate, it’s truly for necessary repairs — not profit-driven turnover.

Key Requirements Under the By-law

The Rental Renovation Licence By-law imposes a licensing process on landlords undertaking renovations that require tenant relocation. The rules apply across Toronto to all residential rental units, with limited exceptions (such as government housing, student residences, and shelters).

Landlords must now:

• Apply for a licence within 7 days of serving an N13 notice.

• Submit documentation including:

  • Building permits

  • A copy of the N13 notice

  • A professional report (engineer/architect) confirming vacant possession is necessary

• Pay a $700 non-refundable fee per unit (waived in certain multi-tenant scenarios).

• Provide tenant protection measures, including:

  • A Tenant Accommodation Plan with comparable temporary housing or

  • Rent-gap payments if tenants source their own housing

  • One-time moving expenses ($1,500 for studios/1-bedrooms; $2,500 for larger units)

• Respect the right of return: tenants can return post-renovation at their pre-renovation rent.

Penalties and Enforcement

The by-law carries significant teeth:

• $1,000 fine for failing to submit a licence application within 7 days

• Up to $10,000 per day for continuing violations

• Up to $100,000 per offence for unlawful evictions or failure to follow approved plans

While the City of Toronto has emphasized an “education-first” approach, repeated or willful violations are expected to trigger strict enforcement.

Investor Implications

For landlords and investors, the by-law introduces both compliance costs and operational risks.

• Extended timelines: Projects requiring vacant possession will now face licensing delays and potential tenant resistance.

• Added costs: Application fees, moving allowances, rent-gap payments, and potential temporary housing can meaningfully impact cash flow.

• Reduced flexibility: The “right of return” provision prevents landlords from re-listing units at market rates post-renovation, limiting upside potential.

• Higher enforcement risk: Investors relying on eviction-driven turnover must now reassess strategy, as penalties for non-compliance are steep.

At the same time, the by-law could stabilize the rental market by discouraging speculative eviction practices and preserving affordable housing stock — a long-term benefit for sustainable investment ecosystems.

Comparison Snapshot: Pre- and Post-By-law

Feature	Pre-By-law (Before July 31, 2025)	Post-By-law (After July 31, 2025)
N13 Process	Notice served, 120 days to vacate	Must apply for city licence within 7 days of notice
Proof of Renovation	Often minimal oversight	Engineer/architect report required
Tenant Compensation	Limited to statutory requirements	Moving allowance + rent-gap or housing plan
Right of Return	Often unenforced in practice	Enforceable at pre-renovation rent
Penalties	Provincial fines ($50k individual / $250k corporation)	Up to $100k per offence, plus daily fines

Balancing Perspectives

Tenant advocates hail the by-law as a “huge win”, noting early signs of reduced renoviction activity. They argue it addresses a core driver of displacement and homelessness in Toronto.

Critics, however, say the rules add red tape for landlords acting in good faith. Some warn that costs and delays could deter necessary renovations, further straining aging rental housing stock.

For investors, this tension is key: the regulatory landscape is tilting toward tenant protection, and strategies must adapt accordingly.

What Investors Should Do Now

1. Understand compliance requirements before serving an N13 notice.

2. Budget for additional costs, including licensing fees and tenant accommodations.

3. Plan timelines conservatively to account for licensing approvals.

4. Review financing assumptions — projected rent increases may not materialize under the “right of return” rule.

5. Seek legal guidance to ensure filings, documentation, and procedures align with both provincial and municipal law.

Toronto’s new renoviction by-law is more than a procedural change. It’s a shift in the balance of power between landlords and tenants. For investors, compliance is no longer optional, and strategies that relied on vacancy turnover for rent growth will need rethinking.

The upside? A clearer, more transparent process that, if followed, reduces risk of costly disputes and aligns with a rental market where stability is increasingly valued.

In a housing market under pressure, adaptability is key. Understanding — and respecting — the new rules is the first step to navigating Toronto’s evolving rental landscape.