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For Landlords: Year Lease vs Month to Month?

by Rhenti on


Signing a tenant to a year lease vs month to month affects not only the kind of relationship you have with that tenant but also your rental operation as a whole.

Time commitments, profitability, notice periods, challenges, types of people you attract; all of these areas, and more, change depending on the type of agreement you’re signing.

We’re breaking down these changes to help you choose the right lease for you.


What are your leasing options in Ontario?

In Ontario, the most common residential leasing options are month-to-month and year-long lease agreements. There’s also week-to-week and even day-to-day, but these are less common.

A month-to-month lease has tenants committing to a one-month stay. After this month, they can choose to renew their tenancy for another month. These agreements don’t have set end dates. 

A 1-year lease is a fixed-term contract that has tenants committing to a year-long stay. After this year, they typically switch to a month-to-month lease. 

The amount of notice tenants must give before ending their tenancy also differs between these two types of leases. See below for specifics: 


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Read the Residential Tenancy Act, the document governing all renting in Ontario, to learn more about navigating different kinds of leases within the province. 


Comparing month-to-month leases to 1-year leases 

Before we can accurately compare the two types of leases, we first need to come up with criteria to compare that’s useful to landlords. 


We came up with the following:

  • Flexibility in Management
  • Rent Adjustment
  • Stability & Predictability
  • Turnover Costs & Effort
  • Tenant Attraction
  • Challenges with Vacancies

Here’s a look at how the two leasing options compare in these areas:


Month-to-Month Lease

1-Year Lease

Flexibility in Management

High flexibility in tenant management, including easier lease termination.

Less flexibility, especially in dealing with problematic tenants.

Rent Adjustment

Ability to adjust rent more frequently within legal limits.

Restrictions on rent increases during the fixed lease term.

Stability & Predictability

Less stability and predictability in rental income due to potential high turnover.

Greater stability and predictability in rental income for the lease duration.

Turnover Costs & Effort

Higher turnover rates can lead to increased marketing and maintenance costs.

Reduced turnover costs and effort due to longer tenant commitments.

Tenant Attraction

May attract tenants seeking short-term or flexible living situations.

Attracts tenants seeking long-term housing stability.

Challenges with Vacancies

Potential challenge of having a vacancy during off-peak rental periods.

Less concern over vacancies, but challenges in terminating the lease early.

Which one is best for you?

The best way to gauge which lease is best for you is to look at the table above and see which points stand out to you. 

That said, generally speaking, here’s who each option suits best:

  • Month-to-Month Lease: Your property is in a high-demand area where tenant turnover is less of a concern and market rates fluctuate often. You also prefer managing your property with more hands-on involvement and appreciate the flexibility to adjust terms or sell the property on short notice.
  • 1-Year Lease: Your property is in a stable or less volatile market, where finding reliable tenants quickly might be challenging. You also prefer a more hands-off approach to property management, seeking steady income without the need to frequently adjust rental terms or deal with vacancies.

    Tip: Regardless of which option you go with, the start of any new successful lease starts with a thorough tenant screening process. 

An easier way to sign your next least

Hopefully, this makes choosing the right kind of lease easier. When you come to a decision, the next step is actually signing a tenant.

We got you covered there, too. Built for mid-size residential rental owners, owner-operators, and property managers, Rhenti lists your property, collects applications, assesses candidates, and helps you sign the perfect tenant—all in one platform.

Try Rhenti today.