Rent-to-Income Ratio

Rent as a share of an applicant's income. In Ontario, using it as a cut-off is illegal outside subsidized housing.

The rent-to-income ratio is monthly rent expressed as a percentage of an applicant's monthly income. If rent is $1,500 and income is $5,000 a month, the ratio is 30%. Many landlords have used it as a quick affordability test. The Ontario Human Rights Commission notes a common guideline of rent being no more than 25 to 35% of income.

In Ontario, using a ratio as a cut-off runs into human-rights law. The Commission says that, unless you are providing subsidized housing, it is illegal to apply a rent-to-income ratio such as a 30% cut-off rule. In the leading case, Kearney v. Bramalea, a Board of Inquiry found that rent-to-income ratios and minimum income cut-offs breached the Human Rights Code. It found they did not predict whether a tenant would default. The Ontario Superior Court upheld the finding that using them as the sole basis for refusing applicants was indirect discrimination.

Income is not off limits. Under Ontario Regulation 290/98, a landlord may request income information only if they also request other screening information. The landlord must then consider income together with all the other information obtained, such as rental history, references and credit checks. The Commission says income can be considered on its own only when no other information is available. Income information should be limited to confirming the person has enough income to pay the rent.

In practice, a ratio can be one signal among several in Ontario, but it cannot be the gate that decides an application. Other provinces have their own human-rights codes and tribunal decisions, so check the rules where the unit is.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.