Updated on February 12, 2020
Ontario Rent Increase Guideline (the “Guideline”)
The Guideline is 2.2% for 2020. If you need the guidelines for the previous years, you may find them on the Ontario government website.
Currently, the following residential complexes are not subject to the Guideline:
- rental units first occupied for residential purposes after November 15, 2018,
- vacant residential units,
- social housing units, and
- nursing homes.
If a residential unit is used for commercial purposes, this Guideline does not apply either.
Rental units first occupied for residential purposes after November 15, 2018
Those rental units include:
- units in new buildings,
- units in old buildings that have not ever occupied for residential purposes on or before November 15, 2018,
- new parts to existing buildings, and
- new basement apartments.
Rent Increase Procedure
The procedure varies depending on which of the following circumstances applies:
- Subject to the Guideline, the increase is below the Guideline,
- Subject to the Guideline, the increase is above the Guideline
- The increase exempted from the Guideline,
- The increase based on a mutual agreement between the landlord and tenant, and
- Increase of a unit in a care home.
Subject to the Guideline, the increase is below the Guideline
In those cases, the landlord shall give the tenant a Notice of Rent Increase (N1 Notice) and ensure the notice period is at least 90 days.
If the N1 notice is complete, and the tenant receives it, the new rent will become effective after the notice period. Tenant’s consent will not be necessary, and the LTB will not be involved in this procedure.
Additionally, increase in rent can only be done either
- After 12 months since the tenant moved in, or
- After 12 months since the previous increase.
Subject to the Guideline, the increase is above the Guideline
If the landlord wishes to increase the rent beyond the Guideline without the consent of the tenant, the landlord shall get approval from the LTB.
To initiate this LTB procedure, the landlord shall file an Application for a Rent Increase Above the Guideline Order (L5 Application) with the LTB. The LTB will determine whether the increase is necessary and legitimate. The landlord is not required to provide any notice to the tenant prior to filing this application.
There is a limitation period for filing an L5 application which is within 90 days before the effective date of the first intended increased rent.
Increase exempted from the Guideline
The landlord shall give the tenant a Notice of Rent Increase Unit Partially Exempt (N2 Notice) and ensure the notice is at least 90 days.
Increase based on a mutual agreement between the landlord and tenant
If the rental unit is subject to the Guideline, and both the landlord and tenant agree to a rent increase that is above the Guideline, they should complete an Agreement to Increase the Rent above the Guideline (Form N10).
However, if the tenant later found that the landlord was in bad faith when the N10 was signed, the tenant has a right to file an application (T4) with LTB for a return of the increased rent. If the tenant wins the case, the N10 becomes void.
Additionally, only certain reasons may secure an increase beyond the guideline. Section 126 of the Residential Tenancies Act, 2006, provides the situations when a landlord can do so:
- There is an extraordinary increase in the municipal taxes and charges related to the rental complex or building,
- The landlord needs to carry out a significant renovation, repair, replacement or a new addition to the rental complex or building, or
- There is an extraordinary increase in the costs of security for the rental complex or the building.
Increase in rent of a unit in a care home
The landlord shall give the tenant a Notice to Increase the Rent and/or Charges for Care Services and Meals (N3 Notice).
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