Is Your Rental Exempt From Rent Control in Ontario?

Landlords and tenants of newer buildings often ask whether rent increase limits apply to their unit. The answer depends on the facts of the specific unit, so it is worth confirming with a lawyer, and some tenancy rules apply to rental units whatever the answer turns out to be.

This article does not try to settle that question for you, because the answer turns on your unit's history. It explains what to check, which rules apply whatever the date, and when to get advice.

Why the unit's history matters

Landlords and tenants often ask whether a particular unit sits outside the usual rent increase limits. How that applies depends on your situation, and a building can include older units and newer ones, so it is worth confirming with a lawyer rather than assuming. What you can do yourself is learn which tenancy rules apply to your unit whatever the answer, starting with the fact that the Act applies despite any agreement to the contrary.

Whether an exemption applies, and what the rules are for a given increase, should be confirmed against the current Act and the rent increase guideline for the year. A lawyer can confirm that for your unit.

Checks that apply whatever the date

• The RTA applies to rental units despite any agreement or waiver to the contrary, so a lease cannot simply contract out of it.
• Any lease term that conflicts with the Act is void.
• Where the occupant must share a bathroom or kitchen with the owner, or with the owner's spouse, child or parent who lives in the same building, the RTA does not apply, and a self-contained basement apartment does not fall under that exemption.
• For most private rentals, landlords must use the Ontario standard lease for new leases, and a tenant who asks in writing and does not receive it within 21 days may withhold one month's rent.

So a landlord saying a unit is exempt does not make it so, and a lease that says the same thing is not conclusive either.

Newly created units and paperwork

Many newer rentals are second units. Adding a second unit in a house requires a building permit from the local building department, and the electrical work needs a separate permit and an inspection by the Electrical Safety Authority. Planning Act s. 16(3) requires municipalities to adopt official plan policies that allow additional residential units, both in the main home and in another building on the same property.

Whether a rental unit needs a licence or registration depends on the local municipality's own by-law. Keep any permits, inspection reports and licences together, because a lawyer reviewing your situation will likely want to see them.

Sales, deposits and other rules that still apply

If the property is sold, the buyer takes it subject to the existing tenancy and its terms. A new owner cannot assume the tenancy begins again on a different footing.

To let a potential buyer view the unit, the landlord, or a registered broker or salesperson the landlord has authorized in writing, may enter with at least 24 hours' written notice. Entry must be between 8 a.m. and 8 p.m., and the notice must state the reason, date and time. Once the parties have agreed to end the tenancy, or a notice of termination has been given, the landlord may enter without written notice to show the unit to prospective tenants, between 8 a.m. and 8 p.m., after informing the tenant or making a reasonable effort to.

Other tenancy rules apply regardless of any rent control question. The only security deposit a landlord may collect is a rent deposit of no more than one rent period or one month's rent, whichever is less, and it earns annual interest at the rent increase guideline rate. A landlord and a lease may not require post-dated cheques or other negotiable instruments for rent.

A notice to end the tenancy does not end it by itself. If the tenant stays, the landlord must apply to the LTB, and only the Sheriff can enforce an eviction order. A landlord cannot remove the tenant or change the locks.

What to do next

• Find out when your unit was first occupied for residential purposes, and gather permits, occupancy records and the first lease if possible.
• Keep your lease, any rent increase notices and rent receipts together.
• Check whether your arrangement falls under the shared kitchen or bathroom exemption.
• Look up the current rent increase guideline and the current Act before you rely on any exemption.
• Get advice from a lawyer before giving or disputing an increase if the unit's history is unclear.

Frequently asked questions