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Summary: For most homeowners in Canada, buying a hot water tank beats renting. Renting has low upfront cost and includes repairs, but the monthly fees add up: a 15-year lease can run about $4,877, roughly a 72% premium over buying outright. A rental also registers a Notice of Security Interest on your property's title, which has to be assigned or paid out when you sell.
A reliable hot water supply is easy to take for granted until you have to replace the tank, and then a real decision lands in front of you: rent or buy? It is a choice with both financial and legal consequences, including for whoever buys your home next. This guide, written with the team at Caboodl, walks through the types, the rent-versus-buy trade-off, the real costs, what to watch for in a rental contract, and what to do if you are already stuck in one.
What is a hot water tank, and what types are there?
A hot water tank (or water heater) is the appliance that heats and supplies your home's hot water. The main types are storage-tank heaters, tankless (on-demand) heaters, and newer, more energy-efficient heat-pump models. Each has its own trade-offs worth researching before you choose.
Beyond the type, you will weigh size and capacity, energy efficiency, fuel type (electric, natural gas, or propane), and maintenance needs. There is a lot to consider over and above rent versus buy, so a buyer's guide to water heaters is a good way to get oriented before you commit.
Should you rent or buy a hot water tank in Canada?
In general, we recommend buying rather than renting. Buying costs more upfront but is cheaper over the life of the unit, gives you full control over the make and model, and leaves nothing attached to your title when you sell. Renting makes sense mainly when you cannot buy or finance, the property is a rental or otherwise tax-deductible, or you expect to sell soon.
Here is how the two options compare on the factors that matter most:
Rent | Buy | |
Upfront cost | Low; minimal to install | High; full price of the unit |
Long-term cost | Higher; fees accumulate and usually exceed purchase | Lower; no recurring fees |
Repairs and maintenance | Included in the rental agreement | Your responsibility |
Choice of unit | Limited to the provider's stock | Any make or model you want |
Effect on title and resale | Registers a Notice of Security Interest; must be assigned or paid out on sale | None; you own it outright |
The rental upside is real for the right situation: low upfront cost and repairs handled for you. The downside is that contracts are usually open-ended, the long-run cost is higher, and the provider secures its interest against your home.
How much does renting vs buying a water heater cost?
Over a unit's life, renting is the most expensive path. The true cost of any option includes the purchase or rental price, monthly operating costs (gas and electricity), repairs and maintenance, buyout fees, and any interest if you financed. Renting layers an ongoing fee on top of all of that.
Consider a typical 50-gallon natural gas tank. If it lasts 15 years, the total cost under a lease is about $4,877, while the buy and finance costs are fixed and lower. Stretch it to 20 years and the lease climbs to roughly $5,840 — about a 72% premium over buying outright, and 50% more than financing. Two cost details to plan for either way:
Repairs (if you own). Simple fixes to the temperature-and-pressure (T&P) valve, dip tube, or sacrificial anode run about $200–$250; a new exhaust motor can be $600–$700. If you rent, the provider covers repairs from normal use.
Buyout (if you rent). Because rental contracts are usually open-ended, you pay out the unit's remaining value to cancel. An 11-year-old unit can carry an $845 buyout; even at 14 years, beyond most units' useful life, you may still owe about $237.
What should you watch for in a rental contract?
Rental contracts are dense and rarely consumer-favourable, so read them closely before signing. The terms vary by provider (whether Reliance, Enercare, or a smaller player), but a few clauses matter most and are easy to miss.
Term and termination. Most contracts are open-ended, expiring only when the unit dies. Ask for the buyout schedule so you know the cost to exit early.
Fees. Confirm the base monthly fee and whether it can rise (some allow inflationary increases), plus any maintenance or service charges.
Maintenance scope. Annual service is usually included, but a tank flush and sacrificial-anode check often are not, even though they extend the unit's life. Confirm what is covered and what is out of pocket.
Notice of Security Interest. Most rental companies register a Notice of Security Interest on your property's title to secure their interest, and they do it without notifying you. On a sale, the contract must be assigned to the buyer or paid out.
One billing wrinkle worth knowing: Enbridge historically let third parties bill water-heater rentals through its gas bill (the "Charges from Other Companies" line), so many homeowners did not realize they were renting at all. Enbridge ended that Open Billing Program effective December 21, 2023, with rental companies invoicing customers directly as of October 31, 2024.
What if you're already stuck with a rental?
You have two practical options: buy out the contract, or keep the unit and minimize costs until it needs replacing. A good time to buy out is often around years 11 to 13, when the buyout cost is close to a single year of rental payments, after which you keep using the unit without the monthly fee.
If you buy out, you are entitled to a copy of your agreement, so request it and check the company's numbers against the contract. If you feel you were misled when you signed, you may have legal recourse to exit, and the best move there is to consult a lawyer. Many homeowners only discover the security registered on their title when they go to sell, and feel pressured to pay whatever is demanded to clear it.
If you are selling a home with a rented water heater, strongly consider requiring the buyer to take over the rental as part of the Agreement of Purchase and Sale, so you are not forced to pay out the contract on closing. It is one more line item to weigh among the costs of selling your home. If you keep the unit, book the annual maintenance and insist on a regular tank flush (reference the owner's manual if the provider resists) to hold operating costs down.
Frequently asked questions
Is it better to rent or buy a hot water tank?
For most homeowners, buying is better. It costs more upfront but is cheaper over the unit's life, gives you control over the model, and leaves nothing on your title. Renting suits short-term owners, rental or tax-deductible properties, or anyone who cannot buy or finance.
What is a Notice of Security Interest on a hot water tank?
It is a registration a rental company places on your property's title to secure its interest in the rented unit, often without notifying you. When you sell, the rental contract must be assigned to the buyer or the unit paid out to clear the title.
Can you sell a house with a rented water heater?
Yes. You either pay out the rental contract before closing or require the buyer to assume it through the Agreement of Purchase and Sale. Addressing it in the agreement avoids a forced buyout on closing day.
How much does it cost to buy out a hot water tank rental?
It depends on the unit's age and the contract's buyout schedule. As an example, an 11-year-old unit might carry an $845 buyout, dropping to roughly $237 at 14 years. Always confirm the figure against your own agreement.
Who pays for repairs on a rented water heater?
The rental company covers repairs that result from normal use of the unit. If you own the heater instead, you pay for repairs yourself — roughly $200–$250 for simple fixes and $600–$700 for a new exhaust motor.
About the author
Joel Fox is a co-founder and COO at Ownright. He helps run the firm's day-to-day work on Ontario residential closings, refinances, and sales, and writes regularly to demystify the parts of a transaction that most homeowners only encounter once or twice in their lives.
At Ownright, we focus on Ontario real estate law, supporting you through your purchase, sale, refinance, or ownership change — including the hot water tank rental transfers that come up on closings. You can start your closing online or get in touch with any questions.
Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.
