As many people know, at the moment (2019) in Toronto rent prices are at all time highs. They are the highest in all of Canada for that matter. The average 1 bedroom condo in Toronto has reached over $2200 per month. Luckily for tenants the Canadian government has made laws and regulations so that landlords don’t take advantage of tenants and increase rent by ridiculous amounts every year. This is referred to the rent increase guideline in Ontario. It has been in existence since 1991.
The guideline applies to most residential rental units which are covered by the Residential Tenancies Act. The purpose of this act is to provide protection for tenants from unlawful rent increases and unlawful evictions. The act has many other purposes but we are not going to get into that in this particular blog as it is quite complex and lengthy. If you like to read more about the Residential Tenancies Act click here.
The rent increase guideline does not apply to every single residential unit out there, here are the exceptions:
- Commercial properties
- Nursing homes
- Social housing units
- Vacant residential units
- New buildings
- Additions to existing buildings
- And most new basement apartments (that are occupied for the first time for residential purposes after November 15, 2018
So, for example if you plan to rent or are renting a commercial unit for your business, there is no law to regulate how much the landlord can increase your rent unlike a residential unit.
How is the guideline calculated?
The Ontario Consumer Price Index is used to calculate the maximum rent increase landlords can legally do. It is a Statistics Canada tool that measures inflation and many economic conditions over a year. These include price increases or decreases for food, shelter, clothing, transportation, alcohol and many more. Data from May to June is used to determine the guideline for the following year.
When Can A Landlord Increase A Tenant’s Rent?
Assuming that they don’t fall under the exceptions which I wrote above. The rent for a unit can be increased 12 months after the last rent increase, or a tenant first moves in. And before this can be done the landlord has to by law give the tenant 90 days’ notice in writing before this increase can take effect.
Previous Rent Increase Guidelines
Here is a chart that shows the percentage amount the rent increase guideline was.
So, as an example if you are paying $2000 a month for rent currently, the consumer price index is 1.8% this year so your rent can go up $36 per month. So, your new rent per month will be $2036. Which is an extra $432 per year in rent that you have to pay. That is roughly buying a small coffee at Tim Hortons for every business day in a month. This is not a large amount to many people, however many seniors on a fixed income might be pushed out of their homes due to the affordability the rent increases can cause.
Ontario has set the 2020 Rent Increase Guideline in Ontario at 2.2%. This will be the highest increase since back in 2013 which was at 2.5%.
It is always good to know your rights and responsibilities if you are a tenant or a landlord renting your property. The Landlord and Tenancy Act has everything you need to know incase you are not sure of something.
Realtor with Century 21 Heritage Group