Renting or buying in St. John's: an honest comparison

For rent, the best local benchmark is CMHC's Rental Market Survey. In October 2025, average rent in the St. John's census metropolitan area was $1,215, with $1,064 for a one-bedroom and $1,348 for a two-bedroom, and apartment vacancy was 2.1%. CMHC rental market statistics, St. John's That survey covers purpose-built apartments. A basement apartment or rented condo is a different pool and can price differently.

For buying, the inputs are published. Minimum down payment is 5% of the first $500,000 and 10% of the portion above that to $1.5 million, and 20% at $1.5 million or more. Financial Consumer Agency of Canada: down payment Below 20% down you normally need mortgage loan insurance, with premiums from 0.6% to 4.5%.

Here is a worked example on a $400,000 purchase with 5% down. Each figure is computed from a published rate or marked as a placeholder.

Sources: CMHC improvement premium schedule, City of St. John's 2026 tax rates

The payment assumes a 5.00% contract rate, monthly payments and a 25 year amortization with semi-annual compounding. It is an illustration, not a rate offer.

The same household renting a two-bedroom near that average:

The comparison is not quite $3,128 against $1,530, because part of the mortgage payment is not a cost. It repays principal, increasing what you own.

In the first year, $8,209.32 of the $27,582.03 paid goes to principal, about $684 a month. Subtract it and the true cost of owning is about $2,444 a month, so the gap against renting is about $914.

That reframing is the point. The extra $914 buys equity, control and protection from rent increases, and whether it is worth it depends on how long you stay.

Three cautions. The maintenance reserve is a rule of thumb: higher for an older house with a near end-of-life roof and furnace, lower for a new house under warranty. Insurance varies with the property and coverage, so get a quote. Property tax is based on assessed value, not sale price.

When you rent, the landlord carries costs you do not itemise. When you buy, they land on you. The most underestimated:

• Property tax. At the 2026 rate of 9.1 mills with water and sewer, a $400,000 assessment is $3,640 a year before water. City of St. John's
• Insurance. Home insurance covers the building and your liability. It is not tenant insurance, and not optional with a mortgage.
• Maintenance and repairs. Gutters, caulking, a sump pump, a deck board. Small and relentless, then large and urgent.
• Replacement reserve. Roofs, furnaces, tanks, windows and driveways wear out. A homeowner who does not save for them borrows from the future.
• Condominium fees, if you buy a condo, and closing and selling costs, which the home buying costs guide sets out.
• Utilities that were included in rent. Heat and electricity become yours, and in this climate that is a real number. Ask the seller for twelve months of bills.

The Residential Tenancies Act, 2018 governs tenancies here, and the rules change how you should plan.

Types. Week to week, month to month, or a fixed term of at least six months. A term longer than 12 months is treated as a fixed term of 12. Residential Tenancies Act, 2018, s.8

Rent increases. No increase during a fixed term, none in the first 12 months of a week-to-week or month-to-month tenancy, and no more than once in a 12 month period. Notice must be written: at least eight weeks week to week, and at least six months month to month or on a fixed term. s.16 A verbal notice is not sufficient. Government of Newfoundland and Labrador: Landlord and Tenant FAQ

Security deposits. No more than three-quarters of one month's rent on a monthly or fixed term tenancy, or two weeks' rent week to week. It must be held in trust, earn interest, and be returned within 10 days of your vacating unless the landlord has a claim. s.14

Notice you give. At least seven days before the end of a rental period week to week, one month month to month, and two months before the end of the term on a fixed term. s.18(1)

Notice a landlord gives. At least four weeks before the end of a rental period week to week, three months month to month, and three months before the end of the term on a fixed term. s.18(2)

This surprises renters from other provinces. Here a landlord can end a month-to-month tenancy with three months' written notice, and the Act does not require a reason: there is no separate "landlord's own use" provision. If you plan to stay for years, weigh a fixed term against a month-to-month, knowing a fixed term is not automatic renewal.

When the property is sold. The rental agreement continues as if ownership had not changed, with an exception for foreclosure, and your deposit transfers to the new owner. NL landlord FAQ, s.14

Entry. Except in an emergency, a landlord cannot enter without consent unless written notice of the time was given at least 24 hours ahead, or, once a termination notice has been given, entry is at a reasonable time to show the unit after a reasonable effort to give four hours' notice. Statutory condition 5, s.10

Repairs and late fees. The landlord must keep the premises in good repair and fit for habitation, and a tenant may not withhold rent over maintenance; the route is a written request, then the Residential Tenancies Office. Statutory condition 1, government FAQ A late fee may be $5 for the first day and $2 for each additional day, to a maximum of $75.

Disputes. Either party can apply to the Director of Residential Tenancies, who can mediate, hear the matter and issue an order enforceable as a Supreme Court judgment. s.42, s.47

Rent-to-own is marketed to people who want to buy but cannot yet qualify. The arrangements vary enormously, and the variations are where risk sits.

A typical structure has two parts: a lease at above-market rent, with part of each payment credited toward a purchase price, and an option agreement giving you the right but not the obligation to buy at a price fixed now. There is usually an upfront option fee.

The risks, plainly:

• You may lose the option fee and the rent credits. Fail to complete within the window and most agreements forfeit both, which can be tens of thousands of dollars.
• The price is fixed at the start. You carry the risk the market falls; the seller carries the risk it rises. That second risk is why some of these deals are structured to be hard to complete.
• The rent premium is real money now, paid for a benefit you may never receive.
• You may not qualify at the end either. Approval depends on your income, credit and debts when you exercise the option.
• The tenancy protections may not apply. The province's FAQ states that the Residential Tenancies Act, 2018 "does not apply to arrangements where an attornment clause in a mortgage or other instrument (such as a rent to own agreement) creates a security interest (or equity) in the residential premises." Government of Newfoundland and Labrador The Act also excludes "an attornment clause in a mortgage or other instrument creating a security interest in residential premises." s.3(4)(k)

The arrangement meant to build your equity can be the thing that takes the tenancy outside the ordinary protections a renter has.

Questions to ask before signing anything:

• What happens to my option fee and rent credits if I cannot get financing?
• Who holds the option fee, and in what account?
• Is the purchase price fixed or indexed, and what is it?
• Which portion of each rent payment is credited, and how is that recorded?
• What is the deadline to exercise the option, and can it be extended?
• Who pays property tax, insurance and repairs meanwhile, and who is on title?
• What happens if the owner sells or defaults on their mortgage?
• Has a lawyer reviewed the option and the lease together?

If a seller will not answer in writing, that is your answer.

What the lender actually tests:

• Income, verified from pay stubs, a letter of employment, or tax returns if self-employed.
• Debt service ratios. CMHC's insured lending maximums are 39% gross and 44% total. CMHC Improvement
• The stress test. Federally regulated lenders must qualify you at the higher of 5.25% or your negotiated rate plus 2%. FCAC: preparing to get a mortgage, OSFI minimum qualifying rate
• Down payment source, normally your own funds. FCAC
• Credit history, with at least one borrower or guarantor at a minimum 600 score for CMHC-insured lending. CMHC Improvement

The stress test is the most common reason a buyer who "can afford the payment" still does not qualify. Run your numbers at the qualifying rate.

Renting is the better financial answer when:

• You will move within a few years. Buying and selling costs are paid up front and take years to recover.
• Your income is uncertain. A mortgage is fixed; rent has an exit.
• You would be at the top of your qualification, leaving nothing for a roof, a layoff or a rate change at renewal.
• You would have to buy something you do not want. Buying a house that does not fit, to stop renting, is how people sell at a loss.
• You need to repair credit or save a down payment. Renting while you do that is a plan, not a failure.

Buying wins when you intend to stay, your income is stable, you keep a reserve, and the full monthly cost fits comfortably.