Short-Term vs Long-Term Rentals in Ontario

If you own a rental property in Ontario, one of your biggest decisions is how to rent it: short-term, like a furnished stay booked by the night or week, or long-term, with a tenant on a lease. Each model has very different income potential, legal obligations, and day-to-day workload. Here's an honest comparison to help you choose.

Key takeaways

• Short-term rentals can earn more per night but carry higher costs, more turnover, and far more hands-on work.
• Long-term tenancies offer stable, predictable income and fall under the Residential Tenancies Act and the Landlord and Tenant Board.
• Many Ontario municipalities license and restrict short-term rentals — often to a host's principal residence — so check local rules first.
• Long-term rent is governed by Ontario's rent increase guideline (2.1% for 2026 on most older units); short-term pricing is not.
• Rental income is taxable under both models, and you can deduct eligible expenses.

What's the difference?

A long-term rental is a residential tenancy: a tenant signs a lease (usually the mandatory Ontario Standard Lease) and the relationship is governed by the Residential Tenancies Act (RTA), with disputes handled by the Landlord and Tenant Board (LTB). A short-term rental is a furnished, often fully-serviced stay booked for nights or weeks — closer to running a small hospitality business than a tenancy, and typically not covered by the RTA.

That legal distinction drives almost every other difference between the two models, from how you price the unit to how much work it takes to run.

Income and costs

Short-term rentals advertise a higher headline rate per night, but the real comparison is net income after costs and vacancy. Short-term units sit empty between bookings, need furnishing, cleaning, supplies, and platform fees, and demand far more of your time. Long-term tenancies trade a lower monthly rate for steady, predictable cash flow with minimal turnover.

The rules are different

Long-term tenancies sit firmly inside Ontario's tenancy framework. Rent on most units first occupied on or before November 15, 2018 can rise only once every 12 months by the provincial guideline — 2.1% for 2026 — with 90 days' written notice. Ending a tenancy must go through the LTB; there are no self-help evictions. Our pillar guide on becoming a landlord in Ontario walks through these obligations.

Check your municipality first

Short-term rentals are regulated city by city. Many Ontario municipalities require a licence and restrict short-term renting to the host's principal residence, with caps on nights per year. Before you list, confirm what your local bylaws allow — the penalties for non-compliance can be steep.

Taxes apply either way

Whichever model you choose, the income is taxable. You report rental income on your tax return and can deduct eligible expenses such as maintenance, insurance, property tax, and a share of utilities. Short-term operations can involve additional considerations because they look more like a business. For the full picture, see our guide to taxes on rental income in Canada.

The hidden costs people forget

The headline numbers rarely tell the whole story. Short-term rentals carry costs that quietly erode the premium: replacing worn furniture and linens, restocking supplies, professional cleaning between every guest, higher insurance, and the time you spend on messaging, check-ins, and reviews. Long-term tenancies have their own less obvious costs — occasional vacancy between tenants, periodic maintenance, and the discipline of following Ontario's rent and notice rules to the letter.

Compare net, not gross

Always model your annual net income — gross rent minus every operating cost and realistic vacancy — before deciding. A short-term unit that looks lucrative per night can underperform a steady long-term lease once cleaning, supplies, and empty nights are subtracted.

Which should you choose?

If you want maximum income and don't mind running what is effectively a small business — with cleaning, guest communication, and municipal licensing — short-term can pay off where local rules allow it. If you value stability, low effort, and predictable returns, a long-term tenancy is usually the safer choice. Run the numbers on rent before deciding with our guide on setting the right rent price, and weigh the trade-offs in is being a landlord worth it.

There's no universally right answer — only the right answer for your property, your local rules, and how involved you want to be. Run a realistic, year-long net-income comparison for both models, confirm what your municipality permits, and factor in your own time as a real cost. Many landlords find that a steady long-term tenancy delivers most of the return with a fraction of the effort, while the right downtown or near-campus unit can make short-term worthwhile. Whichever you choose, treat it as a deliberate business decision rather than a default.

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