New Risks for Landlords Under Ontario’s Drug Activity Law: Industry Groups Raise Concerns

Ontario has passed legislation that could reshape the risk landscape for property owners across the province. In spring 2025, the government introduced Bill 10, the Protect Ontario Through Safer Streets and Stronger Communities Act, 2025. The wide-ranging bill covered a variety of public safety measures, but one section stands out for its potential impact on the housing market and landlords. Schedule 8, the Measures Respecting Premises with Illegal Drug Activity Act, 2025, has led to industry groups expressing opposition.

Bill 10 has received Royal Assent. The legislation emphasizes safer communities and stronger tools for law enforcement; however, it also creates a new set of obligations and liabilities for landlords. Many property owners may not yet realize that they could be held responsible if their units are used for certain drug-related offences, even if they themselves are not directly involved. The law introduces penalties, enforcement powers that reach into private rental housing, and a level of uncertainty.

What Schedule 8 Does

Schedule 8 creates a stand-alone statute that targets properties tied to drug-related crime. Its core provision makes it illegal for a landlord to knowingly permit their premises to be used for a “prescribed offence.” These offences will be designated in forthcoming regulations, but the expectation is that they will include serious violations under the Controlled Drugs and Substances Act and related cannabis offences.

The law also grants police new powers to vacate properties linked to drug offences. Courts can impose significant fines and imprisonment, and enforcement costs may be recoverable from those convicted. In practice, that means an owner whose tenant engages in illegal activity could face not only reputational damage and operational disruption, but also direct legal and financial penalties.

Penalties and Exposure

The scale of liability under Schedule 8 is notable. Individuals convicted of permitting illegal activity can face fines between $10,000 and $250,000, and up to two years less a day in jail. Corporations can be fined as much as $1 million on a first conviction, with higher penalties for repeat offences.

The legislation does include a possible defence. Landlords may argue that they took reasonable measures to prevent the offence, but this raises practical questions about what is considered reasonable. This uncertainty leaves property owners in a position where proactive measures may be necessary, but there is no official roadmap to what will satisfy the law.

Why Industry Groups Are Concerned

The real estate sector has voiced opposition. The Toronto Regional Real Estate Board (TRREB), Ontario Real Estate Association (OREA), and Ottawa Real Estate Board (OREB) submitted a joint letter to the Solicitor General in late September, outlining their concerns.

They argue that the law places overbroad liability on landlords, exposing them to penalties for tenant behaviour they cannot realistically control. The lack of clarity over what counts as a “prescribed offence” only deepens the risk, since landlords cannot yet know the full range of activities that could trigger liability.

Smaller landlords are seen as particularly vulnerable, since they often lack the resources to implement extensive compliance systems or pursue lengthy legal remedies if their property is targeted. Critics also warn that the legislation could discourage people from renting out units, worsening Ontario’s already strained housing supply.

Another point of concern is due process. Police have authority under the law to shut down or restrict access to properties where drug offences are alleged. While there are provisions for court review and bond posting, landlords fear that properties could be disrupted or devalued long before any charges are proven.

What Comes Next

Although the statute is now in force, many of its most important details will be filled in by regulation. The government will decide which specific offences qualify as “prescribed,” and may also define who is excluded from being considered a landlord under the Act. Until those regulations are published, property owners are operating under uncertainty, but the liability framework already exists.

Implications for Landlords and Investors

The practical effect is that owning rental property in Ontario now carries an additional layer of legal exposure. Landlords will need to consider potential additional requirements for tenant screening, lease terms, and how they respond to suspected misconduct. Documented efforts to investigate complaints, enforce lease clauses, and cooperate with authorities may become essential to demonstrating reasonable measures.

Beyond individual compliance, there are broader market implications. Insurance costs and risk assessments for income properties may shift as underwriters account for the possibility of large statutory penalties. Investors evaluating properties in certain neighbourhoods may also factor in the risk of enforcement disruption. In a province already struggling with affordability and supply, the possibility that some owners may withdraw from the rental market is a real concern.

As regulations are rolled out and the first cases emerge, landlords will need to stay closely informed.