How to Budget for Rental Property Maintenance in Ontario

Maintenance is the expense most small landlords underestimate. Rent deposits and monthly cash flow get plenty of attention — but the furnace that fails in February, the roof that starts leaking in April, the water heater that dies on a Saturday morning: these costs don't announce themselves in advance. If you haven't planned for them, they come straight out of pocket at the worst possible time.

Here's how to build a maintenance budget that reflects the actual cost of owning and maintaining a rental property in London, St. Thomas, or Strathroy.

The 1% Rule and Why It's a Starting Point, Not a Target

The most common rule of thumb in real estate is to budget 1% of the property's value per year for maintenance. On a $500,000 property, that's $5,000 per year.

In Ontario, and particularly in London and surrounding southwestern Ontario communities, this breaks down quickly as an all-in number. Property values have risen significantly over the past decade, which means the 1% rule now suggests much larger reserves than properties actually require — or conversely, older and cheaper properties need more than 1% to stay in good repair.

A more useful framework is to budget by unit age and size:

Property Age	Annual Maintenance Budget (per unit)
Under 10 years old	$1,500 – $2,500
10-25 years old	$2,500 – $4,000
25-40 years old	$4,000 – $6,000
Over 40 years old	$6,000 – $9,000+

These are rough ranges for southwestern Ontario. A well-maintained 1970s bungalow in St. Thomas with updated mechanicals might sit at the lower end of its bracket. A century home in Old East London with original windows, aging electrical, and a steam boiler sits at the upper end — or beyond it.

What's Included in "Maintenance"

For budgeting purposes, maintenance falls into three buckets:

Routine Maintenance

These are predictable, recurring expenses you can schedule in advance:

• HVAC filter changes and annual furnace servicing ($150-$250/year)
• Eavestrough cleaning, twice per year ($100-$200)
• Caulking and weatherstripping ($50-$150)
• Exterior touch-up painting ($300-$800)
• Lawn care and snow removal, if landlord-provided (varies widely)
• Pest prevention treatments in older buildings ($150-$300)
• Smoke and CO detector testing and battery replacement ($50-$100)

Routine maintenance is mostly small, but deferring it creates larger problems. A furnace that hasn't been serviced in 4 years is more likely to fail mid-winter. Clean eavestrough prevents ice dams and foundation water damage.

Reactive Repairs

These are the unplanned calls — the fridge stops working, the toilet runs constantly, a pipe sweats and leaks. In a typical year on a 1-2 unit property, you might see $800-$2,500 in reactive repairs. In a bad year, more.

Common repair costs in London/SW Ontario (as of 2026, expect 5-10% annual variation):

• Replace water heater (tank): $900-$1,400 installed
• Replace water heater (tankless): $2,800-$4,500 installed
• Furnace repair: $300-$800 for a service call and part
• Furnace replacement: $4,500-$7,000 for a mid-range unit installed
• Replace fridge or stove: $800-$1,500 per appliance
• Fix a leaking pipe (accessible location): $200-$500
• Re-caulk a shower: $150-$350
• Replace a toilet: $400-$700 installed
• Electrical panel issue (minor): $300-$600

Capital Repairs

Capital repairs are large-scale replacements — things that extend the property's useful life and generally cost $5,000 or more. These have different tax treatment than routine repairs (more on that below).

Examples and rough London/SW Ontario cost ranges:

• Roof replacement (1,000-1,500 sq ft): $8,000-$16,000
• Furnace and A/C replacement (combined): $8,000-$12,000
• Full kitchen renovation: $15,000-$35,000
• Bathroom renovation: $10,000-$22,000
• Window replacement (full house, 8-12 windows): $8,000-$18,000
• Foundation waterproofing: $8,000-$25,000 depending on scope
• New driveway or parking surface: $4,000-$12,000

Capital repairs aren't annual expenses — but they're predictable if you know your property's age and condition. A roof that's 18 years old in London will need replacement within the next 5 years. Budget accordingly.

Capital vs. Repair: The Tax Distinction

How you categorize an expense matters at tax time. The Canada Revenue Agency distinguishes between:

Current expenses (repairs) — fully deductible in the year they're incurred. These restore something to its original condition without materially improving it. Fixing a leaking pipe, repainting a room, replacing a broken window with the same type of window.

Capital expenditures — not fully deductible in the year of the expense. Instead, they're added to the Undepreciated Capital Cost (UCC) of the property and depreciated over time through Capital Cost Allowance (CCA). Replacing the entire roof, adding a new bathroom, replacing the furnace with a more efficient model.

The distinction isn't always clean. Replacing a window with an identical window is a repair. Replacing all the windows with triple-pane high-efficiency units might be considered a capital improvement.

When in doubt, keep detailed invoices that describe exactly what was done. Talk to your accountant before filing. Our post on rental property tax deductions in Ontario covers the deductible categories in detail.

How to Size Your Emergency Reserve

Your maintenance budget and your emergency reserve are separate things. The budget covers expected costs; the reserve covers the unexpected.

A functional emergency reserve for a single rental unit in Ontario is $5,000-$8,000. For a property with 2-4 units, $10,000-$18,000. This covers:

• A furnace failure with emergency service premium
• A burst pipe with water damage cleanup
• An appliance replacement that can't wait
• A roofing emergency after a storm

If your reserve drops below $3,000 per unit, rebuild it before taking distributions from the rental income. A landlord without a reserve is one bad winter away from either borrowing money at a bad rate or having a tenant without heat.

Keep the reserve liquid — a high-interest savings account works. Don't invest it.

The Seasonal Maintenance Calendar

Spreading maintenance across the year reduces large one-month surprises and keeps the property in better condition. Here's a practical calendar for southwestern Ontario:

Spring (April-May)

• Inspect roof for winter damage, replace missing or damaged shingles
• Clear and flush eavestrough after ice melts
• Check foundation grading for water pooling near the building
• Test A/C before summer demand peaks
• Inspect exterior caulking and replenish as needed
• Walk the property after frost heave for cracked walkways or settling

Summer (June-August)

• Schedule HVAC service while technicians are less busy (book early — fall is peak)
• Exterior painting and wood repair while weather cooperates
• Trim vegetation away from the building (prevents moisture and pest entry)
• Test smoke and CO detectors
• Inspect and treat for wasps, hornets if building has eaves or overhangs

Fall (September-October)

• Service furnace before first cold snap (this is when everyone books — get ahead of it)
• Bleed radiators if the property has a hot-water baseboard system
• Clear eavestrough of fallen leaves before they freeze
• Insulate exposed pipes in unheated spaces
• Check weatherstripping on all exterior doors and windows
• Service snow removal equipment before November

Winter (November-March)

• Monitor for ice dams on rooflines with poor insulation
• Keep the property at minimum 15°C if vacant (higher if pipes are exposed)
• Respond to heat complaints within the same day — see your maintenance obligations under Ontario law
• After significant snowfall, inspect roof load on flat or low-pitch roofs

Tracking and Reporting Maintenance Costs

Track every maintenance expense in a simple spreadsheet or property management software with:

• Date of the repair
• Description of work done
• Contractor or vendor name
• Cost
• Whether it was routine, reactive, or capital

This record has two purposes: tax filing and LTB protection. If a tenant files a T6 maintenance complaint, your repair log is your evidence. If CRA audits your rental income, your records support your deductions. Our post on landlord record-keeping in Ontario outlines what to keep and for how long.

The Bottom Line

Most small landlords in London and southwestern Ontario spend between $2,500 and $5,000 per unit per year on maintenance, depending on property age and condition. The landlords who avoid financial stress are the ones who plan for it in advance — a funded reserve, a seasonal maintenance calendar, and a clear understanding of what's a repair versus a capital item. The landlords who struggle are the ones treating maintenance as a surprise every time it happens.

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Prospera Properties manages rentals in London, St. Thomas, and Strathroy, Ontario. Get a free rental analysis or call (519) 697-1227.