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Raising the Rent In Ontario – Everything You Need to Know

Posted on September 17th 2019 by Lalovich

This one is for all you landlords or aspiring landlords out there.  Raising the rent on a residential tenancy in Ontario is a pretty technical process compared to many other jurisdictions.  Today we will touch on what, when, how and why so you don’t make any costly mistakes along the way.

How Much Am I Allowed to Raise the Rent?

In Ontario in 2019 you are allowed to raise the rent 1.8%.  In 2020 the rate will be 2.2%.

Where does this rate come from?

The rent increase guideline is based on the Ontario Consumer Price Index (CPI), which is calculated monthly by Statistics Canada.  The 2019 guideline is calculated by averaging the percentage increase in the Ontario Consumer Price Index during the 12 months from June 2017 to May 2018.  By law, the rent increase guideline cannot be more than 2.5 per cent, even if the CPI increase is higher.

How Often am I allowed to raise the rent?

In most cases, the rent for a unit can be increased 12 months after a tenant first moved in or 12 months since the tenant’s last rent increase.

How Much Notice Do I Need to Give a Tenant Regarding the Increase?

A tenant must be served a notice of a rent increase with a Landlord and Tenant Board approved form at least 90 days before the rent increase is to take effect.

Is There A Special Form I Must Use For Notice?  

You must use a form called an N1: Notice of Rent Increase.  You can find the form at this link.

The allowed increase rate is so small.  Why should I even bother?  

Your expenses are increasing usually in line with the inflation (CPI) rate, so if you aren’t increasing the rent, on a real return basis your rents will be decreasing.  Also if you don’t or delay, you’ll missing out on some valuable compounding of your rent increases.  This is especially important in multiunit buildings where if you are not doing these increases, the cash flow of the building will be going down and therefore the value of the building too based on that cash flow.  

Are there exceptions to these rules?  

Yes there are exceptions for certain situations where the landlord can apply to the Landlord Tenant Board to increase the rent more due to higher costs or capital expenditures.  There are also some types of rental units that are exempt from these increase guidelines. 

You can read more about this on the Ontario landlord tenant board website: www.sjto.gov.on.ca/ltb. Increasing the rent is an important topic and this guide should help you avoid any issues. 

If you ever have any questions regarding residential tenancies don’t hesitate to reach out to us.