As an expert in the real estate industry, I have encountered numerous questions about rental properties in Ontario. One of the most common questions is whether there are any restrictions on rental increases in the province. The short answer is yes, there are restrictions in place to protect both landlords and tenants.
What is a Rental Increase?
A rental increase is when a landlord raises the rent for a tenant. This can happen for various reasons, such as increased property taxes, maintenance costs, or market demand.In Ontario, landlords are allowed to increase the rent once every 12 months for existing tenants. It is important to note that rental increases do not apply to all types of rental properties. For example, if you are renting a unit in a condominium or co-operative building, the rules may be different. It is always best to consult with a legal professional or your landlord to understand the specific rules for your rental property.
The Rent Increase Guideline
In Ontario, there is a guideline that determines how much landlords can increase the rent each year. This guideline is set by the government and is based on the Consumer Price Index (CPI).The CPI measures the average change in prices for goods and services over time. The current rent increase guideline for 2021 is 1.5%. This means that landlords can only increase the rent by 1.5% for existing tenants. However, this guideline does not apply to all rental properties. For example, if your rental unit was built after November 15, 2018, the guideline does not apply. Additionally, landlords can apply for an above-guideline increase if they can prove that their expenses have increased significantly.
This could include major repairs or renovations that were necessary to maintain the property. However, landlords must follow a specific process and obtain approval from the Landlord and Tenant Board before implementing an above-guideline increase.
Exceptions to the Guideline
There are certain situations where the rent increase guideline does not apply. These include:- Units that are exempt from rent control, such as most units in buildings built after November 15, 2018
- Units that are not covered by the Residential Tenancies Act, such as commercial properties or student residences
- Units where the tenant has agreed to a higher rent increase in their lease agreement
How to Calculate a Rent Increase
If you are a landlord looking to increase the rent for your tenants, it is important to follow the proper steps and calculations. The first step is to determine the current rent for your unit.This can be found on the tenant's lease agreement or by checking with your property management company. Next, you will need to calculate the maximum allowable increase based on the current rent and the rent increase guideline. For example, if your current rent is $1,500 and the guideline is 1.5%, your maximum allowable increase would be $22.50 ($1,500 x 1.5%). This means that you can only increase the rent by $22.50 for existing tenants. It is important to note that landlords cannot round up or down when calculating a rent increase. The amount must be exact and cannot exceed the maximum allowable increase.
What Happens if a Landlord Increases Rent Illegally?
If a landlord increases the rent without following the proper guidelines and procedures, the tenant has the right to dispute the increase.They can do this by filing an application with the Landlord and Tenant Board within 12 months of the increase taking effect. If the Board finds that the landlord increased the rent illegally, they can order the landlord to pay back any excess rent that was collected. The landlord may also face penalties and fines for not following the proper procedures.
Final Thoughts
In conclusion, there are restrictions on rental increases in Ontario to protect both landlords and tenants. The rent increase guideline is set by the government and is based on the Consumer Price Index. Landlords must follow specific procedures and calculations when increasing rent, and tenants have the right to dispute any illegal increases. As an expert in the real estate industry, I always advise landlords and tenants to consult with a legal professional or their property management company before making any decisions regarding rental increases.This will ensure that all parties are following the proper guidelines and procedures, and avoid any potential disputes or penalties.
