Energy Efficiency Upgrades for Rental Properties in Ontario: A Landlord's Guide

The best energy efficiency upgrades for rental properties in Ontario depend mostly on who pays the utility bills. When the landlord pays for heat, upgrades like air sealing, attic insulation, efficient heating and smart controls lower your operating costs directly. When tenants pay, the stronger business case is usually upgrades that reduce maintenance calls, improve comfort, add cooling and help keep good tenants longer.

This guide helps owners of houses, duplexes, triplexes and small multi-unit buildings decide what to upgrade, how tenancy rules affect the work, and where rebates and financing fit.

The split-incentive problem

In rental housing, the person who pays for an upgrade is often not the person who saves on the bill. This "split incentive" explains why rentals tend to lag on efficiency.

Who pays heat and hydro	Who benefits from efficiency	Strongest upgrades
Landlord pays all utilities	Landlord, directly	Air sealing, insulation, efficient heating, water heater, thermostats, LED lighting
Tenant pays all utilities	Tenant on bills; landlord through comfort, retention and fewer complaints	Durable equipment, heat pumps adding cooling, windows at end of life
Mixed (e.g., landlord pays heat, tenant pays hydro)	Split	Focus on whichever utility the landlord pays

Even when tenants pay, high bills affect your business: they lead to complaints, turnover and vacancies, and tenants increasingly compare energy costs between units.

Ontario rules that affect energy upgrades

Vital services and heat. Under the Residential Tenancies Act, 2006, landlords must maintain the rental unit in good repair and must not interfere with vital services, including heat. Many municipalities have property standards by-laws that set minimum indoor temperatures. For example, the City of Toronto requires landlords to maintain at least 21 °C from 15 September to 1 June. Check your municipality's by-law.

Entry and notice. Landlords must give tenants proper written notice before entering a unit for work such as insulation or equipment installation, except in emergencies. Plan work schedules with tenants, especially for projects that disrupt heat or hot water.

Utility responsibility. Who pays for utilities is set in the lease. Landlords generally cannot shift utility costs to existing tenants without their agreement, and there are specific rules around installing suite meters in existing tenancies. Get advice before changing billing arrangements.

Rent increases for capital work. Ontario's Landlord and Tenant Board has a process for above-guideline rent increases for eligible capital expenditures, subject to rules and tenant rights to respond. Whether a specific energy project qualifies depends on the facts; seek legal or paralegal advice.

Rented equipment. Many Ontario rentals have rented water heaters, furnaces or air conditioners. Review contracts before replacing equipment; buyouts and removal fees apply. Since 1 March 2018, unsolicited door-to-door contracts for these products are banned in Ontario. See our water heater rentals guide.

Note: This guide is general information, not legal advice. Confirm current tenancy rules on ontario.ca (opens in a new tab) or with a lawyer or licensed paralegal.

Which energy efficiency upgrades for rental properties pay back?

Costs and savings are rough 2026 estimates for a typical Ontario house or small multi-unit property.

Upgrade	Typical cost (estimate)	Benefit	Best when
Air sealing (attic, rim joists, penetrations)	$500–$2,500	Lower heating cost, fewer drafts and cold-room complaints	Landlord pays heat
Attic insulation to R-50–R-60	$2,000–$5,000	Lower heating and cooling, fewer ice dams	Existing insulation is R-12–R-20
Smart or programmable thermostats	$150–$400 each	5–10% gas heating savings with sensible setbacks	Landlord pays heat; tenants agree to settings that meet by-law minimums
Ductless heat pump per unit	$4,500–$8,000 per single-zone	Adds efficient cooling and heating; tenant appeal	Units lack AC; electric baseboard heat
Ducted cold-climate heat pump	$12,000–$25,000	Heating and cooling in one system	Furnace and AC near end of life
Heat pump water heater	Varies; compare to rental	Lower water heating cost	Replacing an owned electric tank
LED common-area lighting with sensors	Low	Quick payback	Landlord pays common hydro
Low-flow showerheads and aerators	Low	Lower water and water-heating cost	Landlord pays water or hot water

Air sealing and attic insulation typically pay back fastest when the landlord pays heat, and also reduce tenant complaints about cold rooms. In units with electric baseboard heat, ductless heat pumps can cut heating energy significantly and add air conditioning, which many tenants now expect. See our ductless mini-splits guide.

Tip: For heat pumps in multi-unit buildings, plan outdoor unit locations, noise, condensate drainage and snow clearance with tenants and neighbours in mind.

Rebates and programs for rental properties

Home Renovation Savings Program (HRS). According to Save on Energy, HRS eligibility covers owner-occupied, low-rise residential homes occupied at least six months a year. A rental property you do not live in generally does not qualify. If you live in one unit of a duplex or triplex, eligibility may differ; confirm on saveonenergy.ca (opens in a new tab) before starting work.

Income-qualified programs. Tenants who qualify may be eligible for the Energy Affordability Program or Enbridge's Home Winterproofing Program. These usually require the property owner's consent for work on the building. Supporting a tenant's application can bring free upgrades to your property. See our income-qualified programs guide.

Multi-residential programs. Save on Energy and Enbridge Gas have offered separate incentives for larger multi-residential buildings. Check current offerings directly with them.

Financing. Municipal property tax loans, where available, may have their own rules for rental properties. Compare options in our guide to financing home energy upgrades.

Planning upgrades around tenancies

1. Review leases to confirm who pays each utility.
2. Gather data: request utility history for landlord-paid accounts and ask tenants about comfort problems.
3. Get a home energy assessment or contractor assessment to prioritize measures.
4. Time disruptive work between tenancies where possible.
5. Give proper written notice for entry and explain the benefits to tenants.
6. Use licensed trades: TSSA-registered contractors for gas work, ESA permits for electrical work, and contractors with ODP certification for refrigerant handling.
7. Keep records of permits, warranties and equipment for future buyers, insurers and the Landlord and Tenant Board if needed.

Use our home energy checkup to rank likely priorities for a specific property.

Frequently asked questions

Can I make tenants pay for hydro after I install a heat pump?

Not unilaterally for existing tenants. Utility responsibilities set in a lease generally cannot be changed without the tenant's agreement. New leases can be structured differently.

Can I control the thermostat in a rental unit?

Landlords who pay for heat sometimes use controls with limits, but the unit must still meet heating requirements in the lease and municipal by-laws, and tenants must be able to keep the unit at the required temperature.

Does a heat pump add value to a rental property?

It can improve tenant appeal by adding efficient air conditioning, and it replaces two systems with one. Whether it pays back depends on who pays utilities, existing equipment age and rental market conditions.

Is it worth replacing windows in a rental?

Rarely on energy savings alone. Replace windows when they are failing, leaking or causing condensation and comfort problems, and focus first on air sealing and insulation.