Ontario Rent Increase Rules: Guideline, Notice and Exemptions

Rent increases are one of the most common sources of disputes between Ontario landlords and tenants. Both sides tend to ask the same questions: how much, how soon and whether the rules even apply to this unit.

This article covers the yearly guideline, the notice and timing rules, which units are exempt, how a landlord can go above the guideline, and what happens to a rent deposit when rent rises. Individual cases can turn on dates and facts, so a lawyer can confirm your situation.

The yearly guideline

The guideline sets the maximum a landlord can raise rent in a year without LTB approval for units covered by it. A guideline increase does not need LTB approval.

Check the year in which the increase takes effect when working out the percentage.

Timing and notice

Rent can generally be raised only if at least 12 months have passed since the tenant moved in or since the last increase. The landlord must give at least 90 days' written notice, on Form N1, N2 or N3.

• Written notice only; a text or a verbal comment is not the form the rules call for.
• At least 90 days before the increase takes effect.
• At least 12 months since move-in or the last increase.

If the notice is short on days or uses the wrong timing, it may not be valid. Keep the notice and the date you received it.

Which units are exempt from the guideline

New buildings, additions to existing buildings and most new basement apartments first occupied for residential use after November 15, 2018 are exempt from the guideline. Other exempt units are community housing units, long-term care homes, commercial properties and units where the rent is reset for a new tenant on turnover.

Exempt does not mean no rules. Units exempt from the guideline still need 90 days' written notice and the 12-month interval.

Whether a basement apartment or addition qualifies can depend on when it was first occupied and what was built, so confirm the details.

Going above the guideline

A landlord can apply to the LTB to raise rent above the guideline. Increases for capital expenditures or security services are capped at 3% above the guideline per year, and larger amounts can be spread over three years. Municipal tax increases have no cap.

A tenant and landlord can also agree in writing on Form N10 to an increase of up to 3% above the guideline. The tenant has five days after signing to withdraw in writing. Read an N10 carefully before signing, and keep a copy.

Rent deposits and rent increases

A landlord can collect only a rent deposit, which is a maximum of one month's rent for monthly tenancies or one week's rent for weekly tenancies. It can be applied only to the rent for the last period before the tenant moves out and cannot be used for repairs or damage.

If a rent increase notice is given, the landlord can ask for the deposit to rise by the same amount. The landlord must also pay interest on the deposit every year, at the rent increase guideline rate.

Landlords who charge fees the Act does not allow, such as a damage deposit, or do not pay annual interest on the deposit, may commit an offence, with maximum fines on conviction of $100,000 for an individual and $500,000 for a corporation.

What to do next

• Find the form number on the notice: N1, N2 or N3.
• Note the date you received the notice and check that it gives at least 90 days' written notice.
• Confirm 12 months have passed since move-in or the last increase.
• Check the percentage against the guideline for the year it takes effect.
• Ask whether the unit might be exempt, for example first occupied after November 15, 2018.
• Do not sign an N10 until you understand it, and remember you have five days to withdraw.
• If something looks wrong, get advice from a lawyer or legal clinic.

Frequently asked questions