Rent increases can be a contentious issue for both landlords and tenants in Ontario. As a tenant, sudden and unreasonable rent hikes can cause financial strain and uncertainty. At the same time, as a landlord, failing to earn a fair return on investment can jeopardize the viability of a rental property. Fortunately, Ontario’s rent increase guidelines offer a solution, protecting tenants against arbitrary rent increases while allowing landlords to increase rent reasonably and fairly.
In this article, we’ll explore what you need to know about Ontario’s rent increase guidelines, including how much rent can be increased each year. When can rent increases occur, and what exemptions and penalties exist for landlords who violate these guidelines? Whether you’re a tenant or landlord in Ontario, understanding the province’s rent increase guidelines is essential for ensuring a fair and harmonious relationship between both parties.
Rent increase guidelines in Ontario
Rent increase guidelines are regulations set by the government of Ontario to protect tenants from incidental and unjustified rent increases. These guidelines outline the maximum percentage by which rent can be increased each year and apply to most residential rental properties in the province, including apartments, condos, and single-family homes.
The rent increase guidelines in Ontario are based on the inflation rate and are announced annually by the government. The guidelines increase applies to all tenants, regardless of whether they have a lease or are month-to-month tenants.
Ontario’s 2023 Maximum Rent Increase
Ontario landlords increase tenants’ rent by a maximum of 1.2% if they give at least 90 days’ notice before the increase, in 2022. However, beginning January 1st,2023, landlords can raise rent prices to 2.5% for existing tenancies. This announcement comes after a freeze on rent increases in 2021 due to the COVID-19 pandemic, similar to what was seen in other Canadian provinces. While the 2.5% increase is higher than in previous years, it is below the inflation rate of 5.3% at the time of the announcement. Since policy changes in 2017, allowable rent increases have been linked to inflation, so this year’s maximum increase in Ontario differs from the established patterns.
When can rent be increased?
Under the Ontario rent increase guideline, landlords must give tenants at least 90 days’ notice before increasing the rent. The statement must be in writing and include the new rental amount and the date the increase will take effect.
In addition, rent increases are not permitted during the first year of a tenant’s lease. The first rent increase can only occur at the end of the first 12-month period. However, if the tenant has a month-to-month tenancy, the first rent increase can happen 12 months after their residency.
It’s worth noting that landlords can raise rent to the maximum allowed amount. They are not obliged to. Additionally, tenants have the right to dispute any rent increase that exceeds the guideline amount. By understanding their rights and responsibilities, landlords and tenants can maintain a fair and reasonable rental market in Ontario.
Exceptions to the rent increase policies
There are a few extensions to the rent increase guidelines in Ontario. For instance, if the residential tenancies act does not cover rental units in care homes, retirement homes, or social housing projects.
Similarly, if a landlord carries out substantial renovations or repairs that benefit the tenant, they may be allowed to increase the rent beyond the guidelines amount. However, the landlord and tenant board before increasing the rent beyond the guidelines.
What happens if the landlord increases rent beyond the guidelines
If a landlord increases rent beyond the guideline, tenants can file a complaint with the landlord and tenant board. The board has the power to investigate and resolve disputes between landlords and tenants and can order landlords to refund any excess rent charged.
In addition, landlords who violate the rent increase guidelines may face financial penalties or legal actions. Landlords are expected to follow the rules and regulations set by the Ontario government to protect tenants from unreasonable rent increases.
FAQs
- Can landlords increase rent every month?
No, landlords in Ontario must adhere to rent increase guidelines that limit the percentage by which rent can be increased each year.
- Can tenants dispute rent increases?
Yes, tenants can dispute any rent increase that exceeds the guideline amount by filing a complaint with the landlord and tenant board.
- Can landlords increase the rent during a tenant’s lease term?
Landlords cannot increase the rent during the first year of a tenant’s lease but can increase rent at the end of the first 12-month period.
- Can landlords increase rent beyond the guideline for amenities?
No, landlords can only increase rent beyond the guideline if they carry out substantial renovations or repairs that benefit the tenant and obtain approval from the landlord and tenant board.
- How to report illegal rent increases in Ontario?
To get your cashback, you can use the LTB available at tribunalsontario.ca/ltb. Remember, you need to apply within a year of the initial illegal rent charge by your landlord. The T1 Guided Pathway provided by CLEO can assist you in filling out the necessary forms for your application.
