With a rising cost of living and a competitive rental market in Ontario, some landlords may be thinking about increasing the rent they charge. But exactly how much can a landlord increase rent in Ontario and are there any exceptions to the rules? We have the answers for you.
It’s no secret that the cost of living has increased greatly in recent times and, with rising interest rates, many landlords might find the mortgage payments on their investment properties increasing soon, if they haven’t already. In order to avoid negative cash flow, rent increases might be the best option, but it is important to be aware of the rules governing these.
For the majority of residential rental properties in Ontario, the rent can be increased 12 months after the beginning of the tenancy or 12 months after the last rent increase, which means a landlord is limited to a maximum of one rent increase per year for a specific property.
When a landlord chooses to increase rent for a tenant, there are certain rules that must be followed. Firstly, the tenant must be given written notice of the increase in rent at least 90 days prior to the date it comes into effect. The Landlord and Tenant Board has forms for rent increases which are important to use to ensure that your rent increase meets legal requirements.
For most rental properties (including rented houses, apartments, basement apartments, and condos, mobile homes, care homes, and land lease communities) the government sets a rent increase guideline each year that is calculated based on the Ontario Consumer Price Index. That guideline was halted during the early stages of covid but has been reinstated now and, for 2023, the government guideline allows landlords to increase rent by 2.5%. This increase effects all properties covered by the Residential Tenancies Act.
It is important to note that, according to the law in Ontario, a tenant has up to 12 months after the first amount was charged to dispute the increase if they believe that the proper notice was not provided or that the rent has been increased by an improper amount. The dispute must be submitted to the Landlord and Tenant Board, which will then rule on the case.
There are exceptions to the rent increase rules. New buildings, new additions to buildings and new basement apartments that were first occupied after 15th November 2018 are completely exempt from rent control, meaning larger increases are permitted. In care homes, while the rent part of a payment is governed by the increase guidelines, other payments (for example, for food and services) are not and can be increased by greater amounts.
For properties that are subject to rent increase guidelines, there is an option for the landlord to apply to the Landlord and Tenant Board to obtain permission to raise rent by more than the guideline amount. The landlord must submit a form called L5: Application for an Above Guideline Increase. The Landlord and Tenant Board has a guide for completing this form which outlines cases where it a landlord is allowed to apply for an above-guidelines rent increase. These are:
When applying for an above-guidelines increase, you must complete this form and list the approved reasons why the increase is required, providing details of payments made, among other things. The LTB will then rule on the application and deem whether the requested increase is approved.
This has been just a short summary of rent increases in Ontario. There are various exemptions or details that have not been covered. Our experienced staff know these rules thoroughly thanks to their decades of experience in the property management industry. If you would like to take the hassle out of worrying about rent increases, talk to us today to see what property management services we can offer you.