Rent Increase: How much can a landlord increase a tenants rent?

Rent of an existing tenant can be increased once a year and can only be increased by the amount stated as per rent guidelines (calculated according to the Ontario Consumer Price Index).

In 2018, rent increases were capped at 1.8%.

There are 3 exceptions to this rule where you are allowed to apply for an above guideline rent increase:

• There has been an extraordinary increase in the cost of municipal taxes of the complex.
• The landlord has had major works completed (major renovations, repairs, replacements, or new additions — where the benefit will extend for at least 5 years).
• The landlord has experienced operating costs related to security services, where services were not provided by an employee of the landlord.

If any of these circumstances are applicable to you, you may apply to the Landlord and Tenant Board for an increase above guildlines. The application must be submitted 90 days before the effective date of increased rent.

It is worth noting:

• If you miss an increase, you cannot add it onto the next increase.
• Tenants must be given 90 days notice prior to an increase.

The 3% Limit

The maximum annual increase allowed is 3% for applications based on capital expenditures and security services. If more than 3% is justified, the rent is increased 3% in the first year and 3% each year thereafter, for a maximum period of 3 years.

The 3% limit does not apply to applications based on municipal taxes and charges. If an increase is justified by these categories, a landlord may apply the entire increase in the first year.

Do the same rules apply to landlords when they purchase a property with an existing tenant?

The rules above apply regardless of whether you recently purchased a property with an existing tenant who is paying rent well below market rental rates.

This makes it important to request the current rental rates (rent roll) of existing tenants when purchasing a property. Too often, properties will be marketed using market rental rates, rather than the current rent roll.

Resources

Guidelines and application information published by the Landlord and Tenant Board can be found here.

Current and historical rent increase data can be found here

Landlord and Tenant Board main website can be found here.