Renting out your property in Ontario comes with certain rules.
Anyone looking to buy a tenanted property or planning to needs to understand landlord-tenant laws in Ontario.
One of the key factors to consider as a landlord is that there are rules for rent increases—and they can be a bit complex to navigate. The Residential Tenancies Act (RTA) is the landlord’s handbook, but we’re here to help with some basic guidelines.
Here are 7 things you need to know in 2024 about raising rent as a landlord in Ontario.
1. Timing for Increases
In most cases, the rent for a residential unit can be increased if at least 12 months have passed since the:
- last rent increase, or
- date the tenancy began
In other words, you have to wait a year—or 12 months—between increases.
If a new tenant moves in, you can raise the rent above what the previous tenant paid at move-in date. Then you must wait a year after the date of move-in to activate another increase. Landlords are also not allowed to increase the rent more than once every 12 months.
2. Government-Established Rent Increase
The Ontario government establishes a maximum rent increase each year. For 2024, the rent increase guideline was set at 2.5%, the same as the year before. The purpose of the cap is to prevent significant rent increases.
This guideline is calculated using the Ontario Consumer Price Index, a Statistics Canada tool that measures inflation and economic conditions over a year. For the rent control guideline, data is used from June to May for the cap of the following year.
3. Notice of An Increase
As a landlord, you must give a tenant written notice of a rent increase in the proper form at least 90 days before it takes effect. These forms can be found online through the Landlord and Tenant Board.
4. The Guideline Covers These Properties
The government’s rent increase guideline applies to most private residential rental units, such as:
- rented houses, apartments, basement apartments and condos
- care homes
- mobile homes
- land lease communities
5. The Guideline Does Not Apply to These Properties
Here’s what’s not covered by the rent increase guideline:
- rental units when you get a new tenant—when there’s a turnover, you agree to the rent amount with the new tenant
- community housing units
- long-term care homes
- commercial properties
6. Another Important Exception to Rent Control
Another exception for landlords to consider is that a certain type of property does not face rent control.
New buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018 are exempt from rent control. Some conditions apply, so ensure you read section 6.1 of the RTA in full.
In other words, you could raise the rent by any amount, as long as you don’t have a rental agreement with the tenant that says otherwise. You can still only raise the rent once every 12 months. This applies to the housing mentioned that no one lived in on or before November 15, 2018.
This is an important exception for landlords to consider. This law was enacted by the Ford Government in 2018 to promote construction and housing availability in Ontario. It means that if you have a new building that was built and first occupied after November 15, 2018, you’re exempt from rent control.
Tip for Landlords:
Keep good records in case there is a dispute about the age of your buildings and/or additions. As the Landlord, you must prove that the building or addition, or the new unit in an existing house, was first occupied for residential purposes after November 15, 2018.
Keep these important documents when you’re working on a property:
- building permits, permit applications and plans
- occupancy permits
- new home warranty documents
- documents from the builder or invoices from the contractor
- “before and after” photographs
7. Application for a Higher Increase
If you want to raise the rent above the rent control guideline, as a landlord you can apply to the Landlord and Tenant Board. This is the provincial body that resolves disputes between residential landlords and tenants.
It’s also possible through the Landlord and Tenant Board to form an agreement with your tenant to increase the rent above the guideline.
In this instance, the tenant agrees to a higher rent increase because the landlord has done—or will do—capital work; or has provided—or will provide—a new or additional service.
The form for this type of increase is also available at the Landlord and Tenant Board, and asks you to provide details of the work or new or additional service. This rent increase cannot be more than the rent increase guideline plus 3%.
The Bottom Line
When it comes to rent increases, there are four key takeaways for landlords:
- You must wait 12 months after a tenant moves in before raising the rent.
- You can only increase rent once every 12 months.
- You must give notice at least 90 days before actually raising the rent.
- You must follow the annual cap on rent increases, which for 2024 is set at 2.5%.
There are other considerations for landlords in the Ontario law, such as limitations on terminating tenancies. We will have more on this in an upcoming article.
If you’d like to learn more as a real estate investor, tune in to our new podcast Real Estate and Wealth once launched.
Calvert Home Mortgage Investment Corporation is an alternative lender in Alberta and Ontario that supports real estate investors. Contact one of the experienced Calvert underwriters for more information on how rental investments are good for the real estate market.
Ardith Stephanson is a freelance writer and journalist who writes on a variety of topic areas.
