If you are a residential landlord for long term tenants, chances are you will want to raise the rent at some point during the tenancy. There are many restrictions on raising the rent for residential landlords in Ontario. Understanding the basic rent increase procedure can spare you from a tenant’s compensation application. An experienced Landlord Tenant lawyer can assist you with any residential tenancy disputes.
Annual Rent Increase Guideline
For most rental units with an existing tenant there is an annual limit set by the Ontario government limiting how much rent can be increased annually. The annual rent increase guideline does not apply to:
- New rental units first occupied after November 15, 2018
- Vacant units (you can increase rent as much as you want between different tenants)
- Commercial rentals
- Student residences
- Public housing units
- Nursing/care home units
For these types of rental units, there is no prescribed cap on rent increases. For all other units, the annual rent increase cap is set year to year by the provincial government. In 2019 the annual cap is 1.8%, meaning $500 rent could be increased to $509, and $1000 rent could be increased to $1018.
When Can You Increase the Rent
When following the rent increase Guideline, it is important to remember that it is an annual increase. If a tenant has not lived in the unit for 12 months, you cannot increase the rent. The rent can only be increased once every 12 months.
Notice of Rent Increase
A Notice of Rent Increase form must be given to the tenant, before you can increase the rent. You must give tenants at least 90 days notice of the increase in rent. The forms can be found on the Landlord and Tenant Board website, and the appropriate form is an N1 form.
Above Guideline Increase
In an ordinary tenancy there are two ways you can increase the rent above the Guideline. You and your tenant can agree by signing an N10 Agreement to Increase Rent Above the Guideline. In this case you could increase the rent the Guideline amount plus 3%. The tenant can rescind their agreement in writing within 5 days of signing the agreement, and often the landlord must be providing additional services, or they must have incurred expenses from significant work on the property. It must still have been 12 months since the last rent increase.
Another option if you want to increase the rent above the Guideline is you can apply to the Landlord and Tenant Board for an Order. You would file an L5 Application. You must justify your application by either a significant municipal tax increase, increased security costs or significant capital expenditure on the building.
If you are experiencing issues with a tenancy including an unpaid rent increase, an experienced landlord and tenant lawyer is the smartest way to protect yourself. Mehdi Au LLP has experienced housing lawyers to work on you case.
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