Area of Law: Landlord and Tenant
Answer # 435
Rent increases and maximum rentRegion: Ontario Answer # 435
In 2020, landlords could only increase residential rents by 2.2%.
Rent freeze in 2021
There is currently a rent freeze for the year of 2021 in Ontario. The Government of Ontario has passed legislation to freeze rent according to 2020 rent levels. Therefore, rents will not increase in 2021 for many of the rented units covered under the Residential Tenancies Act.
The rent freeze will apply to most tenants living in the following settings:
- Rented houses, apartments and condos (including units occupied for the first time for residential purposes after November 15, 2018)
- Basement apartments
- Care homes (including retirement homes)
- Mobile home parks
- Land lease communities
- Rent-geared-to-income units and market rent units in community housing
- Affordable housing units created through various federally and/or provincially funded programs
This rent freeze will terminate on December 31, 2021 but landlords can give 90 days’ notice beforehand for a rent increase that takes effect in 2022.
Exceptions to the 2021 rent freeze:
- Above guideline increases approved by the Landlord and Tenant Board before October 1, 2020 may be applied to 2021 rents. New guideline increases may still be approved by the Landlord and Tenant Board and can still be applied to 2021 rents if they are for costs related to eligible capital repairs and security services, but not if they are for extraordinary increases in municipal taxes and charges.
- Tenants and landlords can still agree on rent increases in exchange for an extra service or facility (such as air conditioning or parking).
How are rent increases determined?
The amount of rent tenants can be charged depends on a number of factors. Generally, under the Residential Tenancies Act, a tenant’s rent can only be increased once every 12 months provided the landlord has given 90 days written notice. The amount of the increase depends on whether the tenant is paying the maximum rent allowed for the unit as set out in the Ontario rent increase guidelines. Also, landlords may apply to the province’s Landlord and Tenant Board for an increase above the annual limit. For example, the increase may be justified to cover a rise in municipal taxes.
Rental Fairness Act, 2017
On May 18, 2017, the Rental Fairness Act, 2017 was passed making a number of amendments to the Residential Tenancies Act regarding rent increases and maximum rent. The changes are retroactive as of April 20, 2017 and include:
- rent control applies to all private units, including those first occupied on or after November 1, 1991 (under previous legislation, there was no limit on how much a landlord could increase the rent on units first occupied on or after November 1, 1991) This does not apply to new housing units – see below *
- annual rent increases for existing tenants can be no higher than the rate of inflation
- rent increases are capped at 2.5 per cent, even if the rate of inflation is higher
- above-guideline increases are prohibited in buildings where elevator work orders have not been completed
Any notices of rent increase that are given on or after April 20, 2017, must be capped at the rent increase guideline. Notices given before April 20, 2017 are not affected by the new legislation.
When can a landlord raise the rent above the guidelines?
A landlord can make an application to the Board to approve a rent increase above the guideline if:
- a landlord’s costs for municipal taxes or utilities (heat, water and electricity combined) have increased by more than the Ontario guideline plus 50%,
- a landlord’s operating costs related to security services increased, or
- the landlord had eligible capital expenditures, meaning extraordinary or significant renovations, repairs, replacements or new additions to the building or to individual units.
There is no limit on how much a landlord can increase the rent each year in some other situations as well. Specifically, regarding:
- Vacant residential units
- Social housing units
- Nursing homes, and
- Commercial property
* New rules for new rental units occupied for first time
Rent control rules do not apply to new housing units that have been occupied for residential purposes for the first time after November 15, 2018. This applies to units that are newly built, additions to existing buildings, and new basement apartments.
Current tenants with tenancy agreements or leases entered into on or before November 15, 2018 will continue to be subject to the rent control rules.
If a landlord charges illegal rent, the tenant may be able to get a rebate by applying to the Landlord and Tenant Board. This includes cases where the landlord charges more than the maximum amount, or raises the rent more than once every 12 months. To apply for a rebate, the tenant will need to fill out forms requesting a hearing and file them with the Board office together with a small application fee. Tenants who need assistance making an application should contact a local legal clinic.
For additional information about maximum rent and rent increases in Ontario, visit ontario.ca.
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