How Does a Fixed-Term Differ From a Month-to-Month Lease?

A fixed-term lease has a set end date, offering stability, while a month-to-month lease continues indefinitely, providing flexibility but carrying a higher risk of turnover.

Fixed-Term Leases
A fixed-term lease typically runs for six months to one year with a clear start and end date. During this time, the rent and terms remain unchanged. For landlords, this provides steady income and reduces the risk of turnover. Tenants benefit from stability, knowing their housing is secure for the duration of the agreement.

When a fixed-term lease ends, it does not automatically terminate. Unless either party gives notice, it usually rolls into a month-to-month arrangement under the same terms, unless a new fixed-term lease is signed.

Month-to-Month Leases
A month-to-month lease has no set end date and continues indefinitely. It offers flexibility for both landlords and tenants. In Ontario, landlords are required to provide 60 days’ notice to terminate a month-to-month lease, while tenants must provide 30 days’ notice.

This flexibility can benefit tenants who may need to relocate or landlords who want the ability to adjust rent more frequently (subject to Ontario’s Rent Increase Guideline) or reclaim the property for personal use. However, it comes with risks: higher turnover, more administrative work, and potential income disruptions.

Choosing the Right Lease Type
The choice depends on your rental strategy. Fixed-term leases are best for stability and predictable income. Month-to-month leases provide adaptability but require landlords to accept more frequent changes in occupancy.

The Fox Marin Team helps Toronto landlords align lease structures with their goals, striking a balance between stability and flexibility to protect investments and mitigate risk.

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