Rent Increases in Residential Tenancies

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When can the rent be increased?

When beginning a tenancy, the landlord and tenant decide on what the rent will be for the rental unit and what services will be included in the rent (for example, electricity, heat, and parking).  In most cases, the rent may not be increased for the first 12 months of the tenancy.  After this 12 month period, a landlord is generally able to increase the rent, as long as it has been longer than 12 months since the last increase, if any.  The landlord must give the tenant 90 days’ notice in writing of any rent increase.

How much can the rent be increased?

The rent increase cannot be greater than the amount set out in the Rent Increase Guideline.  The Guideline amount can change every year, but cannot be greater than 2.5% per year.  The Guideline is posted annually on the Ontario Landlord and Tenant Board website.  The Guideline for 2013 is 2.5%.

Example: The monthly rent of a rental unit is $1000 beginning September 1, 2012.  After giving 90 days’ written notice to the tenant, the landlord could increase the rent 12 months later on September 1, 2013.  The Guideline for 2013 is 2.5%.  The rent increase is 2.5% of $1000, which is $25.  Therefore, the new rent starting September 1, 2013 could be $1025.

There are circumstances in which a landlord may be able to increase the rent by more than the Guideline amount.  First, the landlord and tenant may agree to a rent increase if the landlord is doing major repairs or renovations to the unit, or agrees to provide a new service to the tenant.  Second, a landlord may bring an application to the Landlord and Tenant Board to increase the rent more than the Guideline amount if:

  • The landlord’s costs for municipal taxes and charges, and/or utilities have increased significantly;
  • The landlord has done major repairs or renovations; or,
  • The landlord has had to hire security services.

Even if the Board approves an increase above the Guideline, the additional increase cannot be more than 3% above the Guideline. 

Does a rent increase allow the tenancy to be immediately terminated?

If the landlord has followed the proper procedure for increasing the rent, the tenant is not able to immediately terminate the tenancy.  The tenant would still be required to provide notice to the landlord in accordance with the Residential Tenancies Act and/or the lease.

Matthew Wilson is an associate lawyer at Lerners LLP. See his professional biography for more information about Matthew and his work in the area of real estate and land development, or email him at mwilson@lerners.ca

 

Topics:  Landlords, Leases, Rent, Residential Leases, Tenants

Published In: Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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