Each year the Ontario government announces the province’s rent increase guideline for the following year. A rent increase guideline is the maximum amount a landlord can increase the rent for most current tenants without approval from the Landlord and Tenant Board (LTB).
For more information about the guideline, see Ministry of Municipal Affairs and Housing website - https://www.ontario.ca/page/residential-rent-increases.
The Residential Tenancies Act, 2006 (RTA) says a landlord can apply to the LTB for a rent increase that is above the guideline (AGI) amount for any of the following reasons:
Municipal taxes and charges include:
Municipal taxes and charges do not include:
An increase in municipal taxes and charges is considered “extraordinary” if it is greater than the guideline plus 50 per cent of the guideline. The rent increase guideline for the calendar year in which the first rent increase requested in the landlord’s application will take effect is used for this calculation.
Example: If the first rent increase requested in the application takes effect on September 1, 2020, the 2020 guideline of 2.2% is used. The following calculation is used to figure out how much the increase must be to be considered “extraordinary”:
2.2% x .50 (50%) = 1.1%
2.2% + 1.1% = 3.3%
If the increase in taxes is greater than 3.3%, it is considered “extraordinary.”
A capital expenditure is an amount that was spent for an extraordinary or significant renovation, repair, replacement or new addition. It must have an expected benefit of at least five years.
It does not include:
When deciding whether to allow an above guideline increase due to a capital expenditure, the LTB must consider:
Capital expenditures must be completed within an 18-month period that ends 90 days before the date of the first rent increase requested in the landlord’s application. The work must also be fully paid for before the application is filed, other any required Construction Lien hold backs.
Example: If the first rent increase requested in the application is September 1, 2020, the landlord must have completed the work by June 3, 2020. Also, the landlord cannot claim a capital expenditure that was completed before December 3, 2018.
Under the RTA, a capital expenditure must be “eligible”. A capital expenditure is eligible if it:
A capital expenditure item is not usually “eligible” if it replaces something that did not need replacing.
However, even if the item did not need replacing, it could still be considered eligible if it promotes:
A landlord can make an application based on costs for security services at the residential complex. This service cannot, however, be provided by an employee of the landlord and the service must still exist at the time of the hearing. Start-up costs and increases in the operating costs may both be allowed.
Landlords must provide detailed information in the application about their costs. They must also file proof that they paid these costs. This may include invoices from a contractor to show the amount charged for a major repair, and cancelled cheques to prove the landlord paid the invoice.
See “Look at the application file” for more information about how a tenant can view the documents filed by a landlord to support an above guideline rent increase.
The LTB can consider issues such as whether:
The LTB can only consider existing serious breaches of health, safety or housing standards, or of the landlord’s obligation to maintain and repair the residential complex. If a tenant believes that there are serious maintenance issues in their unit or the building they should provide evidence to the LTB and the landlord by the deadline in the Notice of Hearing.
If a Member finds that serious maintenance problems exist, the LTB may dismiss the application for the rental unit(s) affected by the maintenance problems, or, issue an order that does not allow the AGI rent increase to take effect until the work is complete.
There are also special rules in the RTA about elevators. If the landlord has not completed ordered elevator repairs the LTB may not be able order an above guideline rent increase.
Tenants can also file their own applications about maintenance (T6) and have those issues considered at a separate hearing. The application cannot be filed more than one year after the item was fixed.
When deciding the landlord’s application, the LTB cannot consider:
The LTB will schedule a hearing. Once a hearing is scheduled, the LTB will usually order the landlord to give a copy of the application and the Notice of Hearing to the tenants whose units are affected by the application.
The Notice of Hearing contains more information about how to participate in the hearing and any deadlines.
The hearing will be held either electronically (videoconference or telephone), in person or in writing.
An electronic hearing means a hearing held by telephone or videoconference technology that allows the parties to hear and/or see each other.
An in-person hearing is a hearing where the parties attend before the LTB in person.
In a written hearing, the landlord and the tenants file evidence and make submissions about the application in writing. The LTB then makes a decision without the parties appearing in person.
For more information about hearing formats, see the Updated Practice Direction on Hearing Format on Tribunal Ontario’s website at https://tribunalsontario.ca/en/practice-directions/.
Tenants can prepare for their hearing by:
Tenants can view the documents in the landlord's application in order to understand the application and verify what the landlord has claimed. For example, if the landlord claimed that the parking garage was renovated, the tenants may want to confirm that this work was done.
In most cases, the landlord must make all the supporting documents and evidence available to the tenants for viewing or provide an electronic copy. The Notice of Hearing has more information.
Tenants can represent themselves during the hearing or they may have someone represent them like a lawyer, paralegal, friend or relative. If they want to do this, they should make arrangements for a representative as soon as possible.
If tenants in the building want to get together and appoint a spokesperson, they should organize this promptly. It is important that the tenants and/or their representative are prepared to proceed on the day of the hearing. A request to adjourn the hearing to a later date may not be granted.
Tenants who cannot participate in the hearing should give their representative their written authorization to represent them. The LTB can proceed to hear the application even if none of the tenants participate in the hearing.
The LTB provides French Language Services if a party asks for it, or if the application is filed in French.
The LTB can also arrange for services of a Sign Language Interpreter for a party who may require one or provide other necessary accommodations.
Sometimes the LTB will schedule a Case Management Hearing (CMH) before the hearing. At the CMH, an LTB Dispute Resolution Officer (DRO) will assist the parties to identify and discuss any issues they may have, and help the parties to try to come up with their own solutions and reach an agreement that resolves the application.
If the parties reach an agreement, they can ask the LTB to issue a consent order based on the terms that they agreed to.
If the parties do not reach an agreement, they can stop the mediation process and a hearing will be held instead. The DRO may issue any necessary procedural order to make sure the parties are ready for the hearing.
More information about mediation can be found in the brochure Mediation at the LTB on the LTB's website at https://tribunalsontario.ca/ltb/brochures-videos/.
The landlord will first be given the opportunity to tell the LTB adjudicator, also known as a Member, why they should be granted an above guideline rent increase. The landlord (or their representative) will explain what capital expenditure work they have done and/or what types of increased operating costs they have experienced. The landlord may also call witnesses to testify about the work done to the building.
The tenants can then ask the landlord’s witnesses any questions to clarify something, get more details, or to point out a possible problem. The purpose of questioning is not to argue with the landlord, but to question the landlord or their witness about issues that are relevant to the application.
The tenants will then have the opportunity to tell their side and discuss any evidence they may have submitted. Once the tenants are finished, the landlord can question the tenant(s).
The Member may also ask the parties questions during the hearing. The landlord and tenants can tell the Member what they believe the decision should be based on the evidence submitted.
The tenants can give the LTB a written response to the landlord’s application. The landlord can provide a written reply to each tenant response. The Notice of Hearing has more details about how to make written submissions and the deadlines. The Member will make a decision after considering the submissions.
After the hearing, the LTB will send a written copy of the order to the landlord and all the tenants affected by the application. The order will set out the percentage increase that the landlord has justified and will explain when the rent can be increased.
A rent increase for capital expenditures and operating costs for security services cannot be more than 3% above the guideline in any one year. If the landlord justifies an increase for capital expenditures and operating costs that is more than 3% above the guideline, the order will set out that the remaining increase can be taken in the following two 12-month periods, at a rate of up to 3% above the guideline per year.
There is no limit on the percentage rent increase above the guideline allowed for an extraordinary increase in the cost for municipal taxes and charges.
If the residential complex is a mobile home park and the landlord does capital expenditures for infrastructure work required by the government (work related to roads, systems for water, fuel, sewage disposal, and electricity are just some examples), the increase for these capital expenditures is not capped at 3%. It will be up to the LTB to decide how much the rent will be increased in any given year.
In order for the landlord to collect the above guideline rent increase they are asking the LTB to approve; they must have given the tenants notices of rent increase with the higher amount. The tenants, however, do not have to pay this higher amount unless it is approved in an LTB order.
Rent increases included in an order cannot be charged to a new tenant who moved into the unit after the landlord’s deadline to file the application. The landlord’s deadline to file is 90 days before the date of the first rent increase requested in the application.
This brochure provides general information only. For more information you may: