How much a rents can legally be increased in Ontario are governed by the Province.  Most of you reading this will probably be familiar with the annual rental increase the Province sets each year.  Most of you will also think that it is the end of the story but that is not necessarily the case.   The are times when Landlords can raise rents above that maximum.   

The goal today is to clear up the confusion and explain exactly what the law says about rental increases in Ontario.   

1. The Legal Foundation: The Residential Tenancies Act

Let's start with the basics so we all understand where the law comes from.   All residential rental increase rules in Ontario flow from something called the Residential Tenancies Act, 2006 (RTA), which is then administered by the Landlord and Tenant Board (LTB), which is a tribunal under Tribunals Ontario. The LTB is the body that sets official forms that we all use, hears disputes, and issues orders regarding rent increases.

The RTA governs most rental housing in Ontario, including apartments, houses, basement suites, and condominiums rented to residential tenants. You should know however that not all rental units are treated equally under the Act.  What you need to understand is that the most critical dividing line is the date the unit was first occupied.  Read this again: "the most critical dividing line is the date the unit was first occupied".   

This is going to become very important, as you will see, and if you are buying a rental property, that date may be something you might want to know when forecasting your future rental income.    

2. The Single Most Important Question: Does Rent Control Apply to Your Unit?

Before any other analysis, you must determine whether your unit is subject to rent control. The answer depends almost entirely on one date:

November 15, 2018

• Units first occupied for residential purposes on or before November 15, 2018 are subject to rent control. The annual increase is capped at the government's published rent increase guideline.  This is what you read in the paper or check from the province.  It's usually 2% more or less. But... 
• Units first occupied for residential purposes after November 15, 2018 are exempt from rent control. The landlord may increase rent by any amount, subject only to procedural rules.

The exemption was introduced by the Ontario government in 2018 to encourage the construction of new purpose-built rental housing by removing the financial ceiling on returns for developers and landlords of new units. The policy remains somewhat controversial depending with whom you are speaking.  Tenant advocates argue it has eroded housing affordability while Landlords contend it is necessary to stimulate rental supply.  

So we are clear, the exemption applies specifically to:

• Rental units in new buildings first occupied after November 15, 2018
• Units in new additions to existing buildings, first occupied after that date
• Most new basement apartments first occupied after that date
• New units in mobile home parks and land lease communities

So the take away here is if you are a landlord or investor in Ontario buying or selling a building, remember that date.   

3. The Rent Increase Guideline: How It Works

For rent-controlled units, the rent increase guideline is the maximum percentage by which a landlord can increase rent in any given year without obtaining LTB approval. The Ontario government publishes this figure each year, and it is calculated using the Ontario Consumer Price Index (CPI).  This number comes from a Statistics Canada measure of inflation that tracks inflation by looking at the change in prices for a "fixed basket of goods and services".  For those interested in learning more about how the CPI is calculated, follow this link:  https://www.statcan.gc.ca/en/subjects-start/prices_and_price_indexes/consumer_price_indexes/faq

Specifically, the guideline is based on CPI data from June of one year to May of the following year. This means that when inflation is high, the guideline rises but, and this is something I did not know, it is subject to a legislated maximum cap of 2.5%. No matter how high inflation climbs, the guideline will never exceed 2.5% under current legislation.

A few years in the chart above deserve particular attention:

• 2021 - 0% (Rent Freeze): In response to the economic hardship caused by COVID-19, the Ontario government imposed a complete freeze on rent increases for 2021. This was a legislated exception, not a guideline calculation.
• 2023, 2024, 2025  - 2.5% (Cap): During the period of elevated inflation following the pandemic, the Ontario CPI would have generated a higher guideline, but the legislated 2.5% cap prevented increases above that amount.
• 2026 -  2.1%: As inflation eased, the guideline dropped below the cap for the first time since 2022.

4. The Rules of Procedure: Notice, Timing, and Proper Forms

Even when a landlord has the legal right to increase rent, whether for a rent-controlled or an exempt unit, there are strict procedural requirements that must be followed. A rent increase that does not comply with these rules is not legally valid, and a tenant may dispute it at the LTB.

• The 90-Day Written Notice Requirement.   A landlord must give the tenant at least 90 days' written notice before any rent increase takes effect. This is a hard requirement under the RTA - there are no exceptions. The notice must be given in writing, and it must be on the proper form approved by the LTB.
• The N1 Form.  For most rent-controlled units, the landlord must use Form N1 - Notice of Rent Increase. If the unit is only partially exempt from rent control, the landlord must use Form N2. Landlords who apply for an above-guideline increase use Form N3 once LTB approval is granted.
• The 12-Month Rule.  Rent can only be increased once every 12 months. The 12-month clock starts from either the date the tenant first moved in, or the date of the last lawful rent increase - whichever is most recent. A landlord cannot accelerate increases by giving multiple notices; the 12-month gap is mandatory regardless of notice timing.

An important note, verbal notices are not valid.  A rent increase communicated verbally, by text message, or by any means other than a proper written notice in the approved LTB form is not legally enforceable. A tenant who receives a verbal or improperly delivered notice is not obligated to pay it.

5. Above-Guideline Increases (AGI): When Landlords Can Exceed the Cap

For rent-controlled units, the guideline is not an absolute ceiling in every circumstance. The RTA allows landlords to apply to the LTB for permission to increase rent above the guideline in specific, legally defined situations. These are called Above-Guideline Increases (AGIs).

An AGI is not automatic - the landlord must apply to the LTB, serve the application on affected tenants, and obtain an order after a hearing. Tenants have the right to attend the hearing and oppose the application.

The Three Grounds for an AGI:

1. Extraordinary Increase in Municipal Taxes and Charges:  A tax increase is "extraordinary" if it exceeds the guideline plus 50% of the guideline. For example, if the guideline is 2.1%, an extraordinary tax increase would be one greater than approximately 3.15%. There is no cap on the rent increase that can be approved for this reason. 
2. Capital Expenditures (Significant Renovations or Replacements):  The landlord must have undertaken an extraordinary or significant renovation, repair, replacement, or new addition with an expected benefit of at least five years. The maximum increase for capital expenditures is the guideline plus 3% in any one year.
3. Operating Costs for Security Services:  If the landlord has introduced new security services for the first time or experienced an increase in the operating costs of existing security services, an AGI may be granted. This applies only to services provided by third-party contractors (not the landlord's own employees).

The AGI Process.  A landlord must file an L5 Application with the LTB. Once filed, the LTB schedules a hearing and orders the landlord to serve copies of the application and Notice of Hearing to all affected tenants. Hearings may be held by videoconference, telephone, in writing, or in person. Tenants may attend, submit evidence, and make arguments against the application.

Voluntary Agreement Between Landlord and Tenant (Form N10).  There is one additional path to an above-guideline increase that does not require an LTB hearing: a written agreement between the landlord and tenant using Form N10. Under this arrangement, the tenant agrees to a higher rent increase in exchange for the landlord completing specific capital improvements, purchasing new equipment for the unit, or adding a new service. This agreement must be in writing on the approved form and is entirely voluntary a tenant cannot be pressured into signing.

6. Exempt Units: The November 2018 Loophole Explained

As noted above, units first occupied after November 15, 2018 are exempt from rent control. This has significant practical implications that both tenants and landlords of newer buildings need to understand clearly.

The practical implication for tenants in newer buildings is stark: a landlord of a post-November 2018 unit could, in theory, double the rent with 90 days' notice. While market forces generally prevent such dramatic increases, there is no legal ceiling. For tenants, this makes it especially important to negotiate lease renewal terms carefully and to understand what unit type you are in before signing.

7. Tenant Rights: What to Do If Something Seems Wrong

Even where rent increases are otherwise permitted, tenants have legal rights that can be enforced through the LTB. The following are the most common grounds on which a tenant can challenge a rent increase.

Improper or Insufficient Notice.  If a landlord fails to provide at least 90 days' written notice, uses an incorrect form, or delivers notice improperly, the rent increase is not legally valid. The tenant is not obligated to pay the increased amount and can file an application at the LTB. Even for exempt units, the procedural requirements (90 days, proper form, 12-month gap) still apply and can be challenged.

Increase Exceeds the Guideline (Rent-Controlled Units).  If a landlord attempts to increase rent beyond the guideline for a rent-controlled unit without an approved AGI order, the tenant may file a T1 application (Tenant Application About a Rent Increase) at the LTB within 12 months of the illegal charge being first collected. The LTB can order repayment of any illegally collected rent.

Increase Less Than 12 Months After Last Increase.  If the landlord attempts to raise rent before the 12-month period has elapsed since the last increase (or since the tenant moved in), this is an illegal increase regardless of the amount. The tenant can dispute it at the LTB.

Increase During a Fixed-Term Lease.  A landlord generally cannot increase rent during a fixed-term tenancy agreement unless the lease specifically allows for it. Any increase must still comply with all notice requirements and timing rules.

How to File a Dispute at the LTB.  Tenants can file applications at the Landlord and Tenant Board online, by mail, or in person at an LTB office. The T1 application form is used to dispute rent increases. Legal assistance is available through Legal Aid Ontario. LTB website: tribunalsontario.ca/ltb.

8. Special Circumstances and Nuances Worth Knowing

Rent Freeze Provisions.  Ontario exercised its authority to freeze rents at 0% for 2021 during the COVID-19 pandemic. While there is no freeze in place as of 2026, the province retains the power to suspend increases by legislation, as it has done before.

What Counts as "Rent"?  Under the RTA, "rent" includes not only the base rent but also charges for parking, storage lockers, cable, and certain other services if they were included in the original tenancy agreement. These components are subject to the same rent control rules as the base rent, which means a landlord cannot circumvent the guideline by separately increasing a charge for parking that has always been bundled into the rent.

Vacancy Decontrol.  Ontario practices a form of vacancy decontrol: rent control applies to the unit while the current tenant occupies it, but once a tenant moves out, the landlord may set any new rent for the next tenant. There is no carry-over of the previous tenant's controlled rent for the incoming tenant, even on pre-2018 units. This is a significant source of rent increases in the market even for "rent-controlled" buildings.

Subsidized and Social Housing.  Some subsidized housing providers use their own rent increase guidelines, which may differ from the provincial guideline. If you live in social housing or a co-operative, different rules may apply -consult your housing provider directly.

9. Quick-Reference Summary

Final Thoughts

Ontario's rental increase framework is a layered system where the rules you face depend heavily on the age of your unit, whether you've had a rent-controlled or exempt unit all along, and whether your landlord follows proper procedure. For tenants in buildings built before November 2018, meaningful protections exist - but they only work if you know your rights and assert them. For tenants in newer buildings, the protections are largely procedural: the notice requirements still apply, but there is no ceiling on the amount.

For landlords, the message is equally clear: the right to increase rent exists, but the process is rigid. Errors in notice, timing, or form selection can invalidate an increase entirely and expose you to LTB complaints. Following the rules to the letter is not just good practice - it is legally required.

If you are navigating a purchase or sale of a property with existing tenants - particularly a multi-unit residential building - understanding rent control status is a fundamental part of your due diligence. The presence of long-term, below-market-rent tenants in controlled units can materially affect the income projections and valuation of a property.

Terry Riddoch

About the Author: Terry Riddoch, Ontario Multi-Family and Commercial Real Estate Broker

Terry Riddoch is a licensed Ontario real estate broker with Re/Max Real Estate Centre, based in Waterloo Region and specializing in multi-family and apartment building sales across Ontario. With 19 years of experience and over $90 million in closed transactions, he advises independent landlords, private investors, and national investment groups on buying, selling, and valuing apartment buildings, investments and development land across the Province of Ontario including Kitchener, Waterloo, Cambridge, Guelph, Hamilton, London, Windsor, Kingston, Belleville and Brockville.

Clients know Terry for candid advice, data-driven analysis, and doing the work well ahead of the deal. He writes regularly on Ontario landlord rules, rent control, the Landlord and Tenant Board, and housing policy to help property owners make informed decisions.

Thinking about selling an apartment building, or looking for your next investment property? Call Terry at (519) 591-1725, email [email protected], or visit terryriddoch.ca for a confidential, no-obligation conversation about your property.

Sources & References