Ontario Approves Maximum Rent Increase

Landlords of residential units can raise their tenants’ rent by 2.5% next year, an increase not seen in a decade.

The Ontario government approved the maximum allowable increase in June.

The last time tenants of ‘rent-controlled’ units faced a 2.5% increase was in 2013.

This is the most a landlord can raise rent in 2023, without obtaining approval from the Landlord and Tenant Board (LTB), unless the residential unit was occupied for the first time after Nov. 15, 2018. In this case, a landlord can raise rent above the guideline, so long as proper notice is given.

A landlord may only raise the rent if they give their tenant at least 90-days written notice using the correct form (typically a N1). In addition, at least 12 months must have passed since the first day of the tenancy or the last rent increase.

The rent increase guideline is determined using the Ontario Consumer Price Index, which measures inflation calculated monthly by Statistics Canada using data that reflects economic conditions over the past year. If the province’s rent increase matched recent inflation, the 2023 guideline would have surged to 5.3%. (The province caps the guideline to help protect tenants from significant rent increases.)

Landlords can apply to the LTB for above-guideline increases if their municipal taxes and charges have increased by an “extraordinary” amount; security services costs increased or they began providing security services for the first time; or they conducted and payed for significant renovations, repairs, replacements or new additions to the building or individual units.

The new rent guideline for 2023 comes on the heels of a report by Bullpen Research & Consulting Inc. and TorontoRentals.com that found rent in Toronto has risen 20% over the past year and is now approaching pre-pandemic levels. On average, rental rates climbed to $2,474 in May, up from $2,035 a year ago.

This year, landlords are allowed to raise rent by up to 1.2%. Prior to this, there was a government-imposed rent freeze. It began in 2020 to help Ontarians through the COVID-19 pandemic.