Rent control in Ontario affects both landlords and tenants in real ways. If you rent or own residential property, it’s important to understand how these rules work.
Rent increases are not automatic. They follow strict legal limits set by the province under the Residential Tenancies Act, 2006 (RTA).
The system can be confusing, especially with exemptions and special cases that many people are unaware of.
For example, newer buildings may not be subject to the same rent control rules as older ones. There are also steps landlords must take to increase rent legally, and tenants have rights if they believe those steps aren’t followed.
This article provides an overview of the basics of rent control in the province of Ontario. You’ll learn how it works, who it applies to, and what the law says about raising rent.
We’ll also explain how the Landlord and Tenant Board fits into all of this. Whether you rent or own a place, this is practical information you should know.
Understanding Rent Control in Ontario
Rent control in Ontario helps limit how much landlords can raise the rent each year. These rules apply to most residential units and are outlined in the Residential Tenancies Act, 2006 (RTA).
Under the RTA, landlords can increase rent only once every 12 months. To do this legally, they must give tenants at least 90 days’ written notice, using the standard form approved by the Landlord and Tenant Board (LTB). If they don’t follow this process, the increase may be considered invalid.
Each year, the Ontario Ministry of Municipal Affairs and Housing sets a maximum rent increase guideline. This limit is based on inflation and is tied to the Ontario Consumer Price Index. For 2025, the guideline remains at 2.5%—the same as in 2023 and 2024. Even if inflation is higher, landlords still cannot raise rent beyond this amount unless they apply for and are granted an exception through the LTB.
This guideline applies to most rental units, but not all. Some properties, such as those first occupied for residential use after November 15, 2018, are exempt. We’ll cover those details later in the article.
Exemptions to Rent Control in Ontario
Let’s take a look at which rental units are exempt from rent control in Ontario and the specific rules that apply to these exemptions!
Which Units Are Exempt?
Not every rental unit in Ontario is subject to rent control. Under the Residential Tenancies Act, 2006 (RTA), certain units are exempt from the annual rent increase guideline.
These exemptions apply to two main types of units:
1. Newly Built Properties
This includes entire buildings, mobile home parks, or land lease communities that had no residential occupancy on or before November 15, 2018. Essentially, if the property was not lived in before this date, the units are exempt.
2. Specific Rental Units in Houses
Rental units located in detached, semi-detached, or row houses may be exempt if they meet all the following conditions:
- The property had no more than two residential units on or before November 15, 2018.
- The rental unit has its own bathroom and kitchen.
- It has at least one secure exterior or interior entrance with doors that can be locked from inside and at least one door that can be locked from outside.
- The unit was created on or after November 15, 2018.
- Either the building is owner-occupied, or the unit was created by finishing previously unused space, like a basement or attic.
For these exempt units, landlords are not bound by the annual rent increase guideline and can set rent increases at their discretion. However, they must still adhere to the rules of providing at least 90 days’ written notice before implementing any rent increase, and increases can only occur once every 12 months.
This exemption provides landlords with more flexibility for new or specially created rental units, while ensuring that tenants still receive proper notice and protection against frequent rent increases.
Proving Exemption Status
If there’s a dispute regarding a unit’s exemption status, the burden of proof lies with the landlord. There are documents that can be important if a tenant challenges a rent increase or questions the unit’s exemption status.
To establish that a unit is exempt from rent control, landlords should maintain documentation such as:
- Occupancy permits indicate the date the unit was first occupied.
- Building permits or construction completion documents.
- Statutory declarations confirming the unit’s first residential use occurred after November 15, 2018.
Importance for Tenants and Landlords
Understanding whether a rental unit is exempt from rent control is vital for both landlords and tenants.
For landlords, it determines the flexibility they have in setting rent prices.
For tenants, it affects the predictability of future rent increases.
It’s advisable for tenants to inquire about the unit’s occupancy date and for landlords to be transparent and maintain proper records to avoid potential disputes.
Can Landlords Raise Rent Beyond the Guideline?
Yes, landlords can apply to increase rent beyond the annual guideline, but only under certain conditions and with approval from the Landlord and Tenant Board.
Let’s find out all the hows.
Understanding Above Guideline Increases (AGIs)
In Ontario, landlords are generally limited to increasing rent by the annual guideline set by the province. However, under specific circumstances, they can apply to the Landlord and Tenant Board (LTB) for an Above Guideline Increase (AGI).
When Can a Landlord Apply for an AGI?
To proceed with the rent increase, landlords must file Form L5 with the LTB at least 90 days before the proposed rent increase date.
A landlord may seek an AGI in situations such as:
- Significant Capital Expenditures: Major repairs or renovations that extend the life of the property, like replacing roofs or heating systems.
- Increased Operating Costs: Notably higher expenses for services like security.
- Extraordinary Municipal Charges: Substantial increases in municipal taxes or charges.
Limits on AGIs
For capital expenditures and security service costs, the rent increase is capped at 3% above the guideline in any one year. If the justified increase exceeds this amount, the additional amount can be distributed over the next two years, with each year not exceeding 3% above the guideline.
There is no specific cap on increases due to extraordinary municipal charges; however, such applications are subject to approval by the LTB.
Tenant Rights Regarding AGIs
Tenants have the right to:
- Receive Proper Notice: Landlords must provide a formal notice detailing the AGI application.
- Participate in Hearings: Tenants can attend LTB hearings to express concerns or objections.
- Dispute Unjustified Increases: If tenants believe an AGI is unwarranted, they can present evidence to the LTB.
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What Can Tenants Do If They Don’t Agree With A Rent Increase?
There are several steps tenants can take if they believe a rent increase is illegal or unfair.
Getting an Application Form to the LTB
Tenants can submit a T2 Application to the LTB if they feel their rights have been violated. It’s important to file this application within one year of the alleged violation.
This includes situations where:
- The landlord has increased the rent without proper notice.
- The increase exceeds the allowable limit without LTB approval.
- There are other breaches of the Residential Tenancies Act.
Attending LTB Hearings
Once an application is filed, the LTB schedules a hearing where both parties can present their cases. Tenants should gather all relevant documentation, such as notices received, communication records, and any other pertinent evidence.
Seeking Mediation
Before the hearing, the LTB may offer mediation services to help landlords and tenants reach a mutual agreement. This can be a quicker and less formal way to resolve disputes.
Rent Control in Ontario: Final Notes You Should Know
Rent control in Ontario plays a key role in protecting both tenants and landlords. It helps keep rent increases fair and predictable while also providing landlords with clear rules to follow when managing their properties. These laws are not just about limiting rent—they’re about creating balance in the rental market.
If you’re a tenant, it’s important to know when your rent can go up, by how much, and what your rights are if you think an increase isn’t legal. You should also understand if your unit is covered by rent control or exempt based on when it was first occupied.
For landlords, following the rules under the Residential Tenancies Act helps avoid legal trouble and keeps tenant relationships strong. It’s also important to know about special cases, like Above Guideline Increases, and how to apply for them if needed.
It’s always a good idea to stay updated on rent laws, read your lease closely, and speak with a legal professional if you’re unsure about your rights or responsibilities.
Rent control can seem complex at first, but once you understand the basics, it becomes much easier to manage and follow. Keeping up with changes to the law each year will also help you stay informed and avoid mistakes.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
