(Note: Sources are cited with [x] and listed with hyperlinks at the bottom of this post.)

There is one date that splits every apartment building in Ontario into one of two assets. A rental unit first occupied for residential purposes after 15 November 2018 is exempt from the province's annual rent increase guideline. A unit first occupied on or before that date is not [1]. Twelve months of verified sales across Southwestern Ontario show what the market pays for the difference, and the number is large.

The rule

Ontario's rent increase guideline caps the annual increase a landlord can take on a rent-controlled unit without an order from the Landlord and Tenant Board. The guideline is 2.1% for 2026 and 1.9% for 2027, the lowest since 2022 [1]. For an exempt unit, the landlord can raise the rent by any amount between tenancies and, with proper 90-day notice on an N1, by any amount during a tenancy [1]. The exemption covers new buildings, additions to existing buildings, and most new basement apartments first occupied after the 2018 date. If the exemption is disputed, the landlord has to prove the first-occupancy date [1].

That is the whole rule. What it does to pricing is the interesting part.

What the sales say

Across 147 verified single-asset apartment sales in Southwestern Ontario between late October 2025 and October 2026, buildings first occupied in 2018 or earlier (130 sales) traded at a median of $210 per square foot and $182,803 per unit. Buildings first occupied in 2019 or later (6 sales) traded at a median of $374 per square foot and $354,570 per unit [2]. That is a 78% premium per square foot and a 94% premium per unit.

Handle the exact figure with care. Six sales is a small sample, and eleven more buildings in the dataset have no recorded year of construction. The direction is unambiguous. The precise size of the premium is not.

Two of the largest trades of the year make the point without any statistics. A 284-unit building on Hollywood Court in Cambridge, completed in 2024, sold for $147 million, or $517,606 per unit. A 558-unit building on Adelaide Street North in London, built in 1960, sold for $102.5 million, or $183,692 per unit [2]. Both are large, professionally managed, and were bought by institutional capital. One is priced at 2.8 times the other per unit. Location explains part of that. The year of first occupancy explains most of it.

Why buyers pay it

A rent-controlled building's income growth is capped at the guideline plus whatever it can capture at turnover. In the most recent CMHC survey, average turnover rents fell slightly in London and were little changed in Windsor, Hamilton and Kitchener-Cambridge-Waterloo [3]. With the 2027 guideline at 1.9% and turnover gains near zero, a controlled building in this region is, for underwriting purposes, a 2% growth asset.

An exempt building's income growth is capped by the market. In a soft market that is not worth much, and CMHC's mid-year 2026 update notes that vacancies are highest in buildings completed after 2020 [4]. But over a ten-year hold the option to reprice to market every year is worth a great deal, and buyers are pricing the option, not the current rent.

There is a second reason that is easy to miss. Exempt buildings are, by definition, less than eight years old. They carry lower capital expenditure risk, qualify more easily for CMHC-insured financing with energy-efficiency discounts, and attract the institutional buyer pool that pays the lowest cap rates. Some of the premium is the exemption. Some of it is just the building being new. The dataset cannot separate the two, and a seller does not need to.

If you own exempt stock

The exemption is the single most valuable feature of your building, and it should be the first line of the offering memorandum, not a footnote in the rent roll. Document the first-occupancy date now: the occupancy permit, the first lease, the first utility account. If the exemption is ever disputed, the burden of proof is on you [1].

Be careful about how you have been using it. A landlord who has been raising exempt rents by the guideline out of habit has been leaving money on the table, but a landlord who has been raising them aggressively into a softening market has been manufacturing turnover. Buyers will read your rent roll either way.

If you own controlled stock

Your value is being set by three things: the guideline, your turnover, and your N1 discipline. The first is outside your control. The second is weak right now across the region [3]. The third is entirely yours. A controlled building where every N1 has been served on time for a decade carries materially higher in-place rents than one where the owner skipped years, and that difference compounds into the sale price.

Serve your N1s. For a 1 February 2027 increase at 1.9%, the notice has to be served in the first days of November 2026 [1].

The bottom line

The 2018 line is not going anywhere. If you own on the right side of it, lead with it. If you own on the wrong side of it, the only lever you control is how well you have run the building, and buyers can tell.

Sources

[1] Government of Ontario, Residential rent increases (2027 guideline, exemptions, notice requirements). https://www.ontario.ca/page/residential-rent-increases

[2] Paid commercial subscriptions, verified transaction records, Southwestern Ontario multifamily sales, 27 October 2025 to 20 October 2026. Compiled by Terry Riddoch, RE/MAX Real Estate Centre. Pricing benchmarks use 147 single-asset sales with a disclosed price; portfolio allocations, retirement residences and mobile home parks excluded.

[3] Canada Mortgage and Housing Corporation, Rental Market Report, Canada and Selected Markets, Fall 2025 (October 2025 survey). https://eppd1strscr01.blob.core.windows.net/cmhcprdcontainer/sf/project/archive/housing_markets/rentalmarketreportcanadaandselectedmarkets/rental-market-report-2025-fall-en.pdf

[4] Canada Mortgage and Housing Corporation, 2026 Mid-Year Rental Market Update, 9 June 2026. https://www.cmhc-schl.gc.ca/observer/2026/2026-mid-year-rental-market-update