- Ontario sets an annual rent increase guideline each year, capping standard rent increases for most existing tenancies.
- A rent increase — even within the guideline — requires at least 90 days written notice using the proper form (N1 or N2).
- A landlord can apply for an Above-Guideline Increase (AGI) based on specific capital expenditures, extraordinary utility increases, or municipal tax increases.
- Buildings first occupied for residential purposes after November 15, 2018 are exempt from rent control, meaning no guideline limit applies.
- Rent can generally only be increased once every 12 months for the same tenant in the same unit.
- Vacancy decontrol allows a landlord to reset rent to market rate once a tenant voluntarily moves out and a new tenancy begins.
The Rent Increase Guideline Explained
Each year, the Ontario government sets a rent increase guideline — a percentage that represents the maximum amount most landlords can raise rent for existing tenants without seeking special approval. This guideline is calculated based on the Ontario Consumer Price Index and is published annually by the province, typically in the summer for the following calendar year.
Standard Rent Increases
For most residential tenancies subject to rent control, a landlord can raise rent once every 12 months, up to the guideline percentage, without needing any special application or LTB approval — only proper notice is required.
If the annual guideline for a given year is 2.5%, a landlord with a rent-controlled unit currently renting at $2,000 per month can increase rent to a maximum of $2,050 per month, provided proper notice is given and at least 12 months have passed since the last increase.
Notice Requirements for Rent Increases
Regardless of the amount, any rent increase requires the landlord to give the tenant at least 90 days written notice, using the correct standard form (N1 for a standard guideline increase, or N2 for certain other circumstances). Verbal notice, informal notice, or insufficient notice periods are not legally valid.
A rent increase that does not follow the proper notice form and timeline is not legally enforceable, even if the percentage itself complies with the guideline. Tenants are not obligated to pay an increase that was not properly noticed.
Above-Guideline Increases (AGI)
Landlords who believe they have grounds for a larger increase can apply to the LTB for an Above-Guideline Increase. Eligible grounds include:
- Eligible capital expenditures — significant repairs, replacements, or improvements to the building (such as a new roof, elevator, or major system replacement).
- Extraordinary increases in municipal taxes and charges.
- Extraordinary increases in utility costs the landlord pays for the building.
The LTB requires detailed documentation to support an AGI application, including invoices and evidence that the expenditure qualifies under the specific eligible categories. Tenants can also participate in the hearing and challenge the application.
Even where an AGI is approved, there are annual caps on how much of the increase can actually be implemented in any single year — a large approved AGI is often phased in gradually over multiple years rather than applied all at once.
Units Exempt From Rent Control
Not every rental unit in Ontario is subject to the annual guideline. The most significant exemption applies to units first occupied for residential purposes on or after November 15, 2018 — these units are entirely exempt from Ontario's rent control provisions.
| Situation | Subject to Guideline? |
|---|---|
| Unit first occupied before Nov 15, 2018 | Yes — guideline applies |
| Unit first occupied on/after Nov 15, 2018 | No — exempt from rent control |
| Most social/community housing | Special rules may apply |
| Commercial tenancies | Not covered by the Residential Tenancies Act |
Being exempt from the guideline percentage does not exempt a landlord from other requirements, including proper 90-day written notice and generally limiting increases to once every 12 months for a given tenant.
Vacancy Decontrol: Resetting Rent Between Tenants
Under "vacancy decontrol," once a tenant voluntarily vacates a rent-controlled unit, the landlord is free to set the rent for a new incoming tenant at market rate — this new rent is not bound by the previous tenant's rent-controlled amount. Once the new tenancy begins, however, the standard guideline rules apply again for that new tenant going forward.
What Counts as an Illegal Rent Increase
- An increase exceeding the guideline percentage without an approved AGI or applicable exemption.
- An increase given with less than 90 days notice.
- An increase applied more than once within a 12-month period for the same tenant.
- An increase using an improper or informal notice method.
Whether you are planning a rent increase or have received one you believe may be improper, our Toronto landlord & tenant lawyers can help. Call 416-274-2222 for a free consultation.
Frequently Asked Questions
For most existing tenancies, rent can only be increased by the provincial guideline percentage set annually by the government, unless the landlord obtains LTB approval for an Above-Guideline Increase or the unit is otherwise exempt from rent control.
At least 90 days written notice using the proper form (N1 for a standard increase or N2 for an increase where the landlord has also applied for or received an AGI).
An AGI is a formal application to the LTB allowing a landlord to raise rent beyond the standard guideline, based on specific eligible capital expenditures, extraordinary increases in municipal taxes, or extraordinary utility cost increases.
Yes. Residential units first occupied on or after November 15, 2018, are exempt from Ontario's rent control provisions, meaning landlords of these units are not bound by the annual guideline.
Even for exempt units, the landlord must still provide proper written notice (at least 90 days) and generally cannot increase rent more than once every 12 months for the same tenant.
Yes, generally. Under "vacancy decontrol," once a tenant voluntarily moves out and the unit is re-rented to a new tenant, the landlord can set the new rent at market rate, without being bound by the previous tenant's rent amount.
No. Rent increases must comply with the guideline (or an approved AGI/exemption) — landlords cannot impose an illegal, excessive increase as a way to pressure a tenant into leaving.
A tenant can refuse to pay the illegal portion of the increase and can apply to the LTB to dispute the increase, or raise the issue as a defence if the landlord later seeks eviction based on non-payment of the disputed amount.