Updated: Nov 17
Lawyers and Paralegals across Ontario get lots of questions about rent increases, here is what we wish Landlords and Tenants knew. Every year, the Ontario government issues a "rent increase guideline" to cap the amount a Landlord can raise the rent for that year in most private residential rental units. This guideline applies to most rented houses, apartments, basement apartments and condos (click here for more information about special exceptions for things like newly occupied units), and excludes things like vacant residential units, community housing units, long-term care homes and commercial properties. For 2023, that amount is 2.5%. To learn more about guideline rent increases click here.
Grounds for an Above Guideline Rent Increase in Ontario
The Residential Tenancies Act in Ontario allows a Landlord to make an application to the Landlord and Tenant Board for an "Above Guideline Rent Increase". Information is available through the Ontario government website here but summarized below are the three grounds are best described as 1) An extraordinary increase in taxes/municipal fees, 2) Capital Expenditure and 3) Security services.
1) Municipal Taxes and Charges
These include taxes or other charges levied on a landlord by the municipality but specifically do not include:
charges for inspections done by a municipality related to an alleged breach of a health, safety, housing or maintenance standard
charges for emergency repairs carried out by a municipality
charges for work in the nature of a capital expenditure carried out by a municipality
charges for services, work or non-emergency repairs performed by a municipality related to the landlord's non-compliance with a by-law
penalties, interest, late payment fees and fines
any amount spent by a municipality to arrange for vital service for a rental unit in accordance with a vital service by-law plus an administrative fee of 10 per cent of that amount
When is it an extraordinary Increase?
Regulations define an extraordinary increase as being "greater than the guideline plus 50 per cent of the guideline." So, for 2023, the guideline is 2.5%, 50% of 2.5% is 1.25%, so an extraordinary increase would be anything over 3.75%
2) Capital Expenditure
A "capital expenditure" for this purpose is defined by regulations as "an amount that was spent for an extraordinary or significant renovation, repair, replacement or new addition." and that "It must have an expected benefit of at least five years." This expressly does not include regular maintenance or "substantially cosmetic" work. To be eligible, the board will consider if that expenditure:
is necessary to protect or restore the physical integrity of the complex,
is necessary to maintain health, safety or housing standards,
is necessary to maintain plumbing, heating, mechanical, electrical, ventilation or air conditioning systems,
provides access to persons with disabilities, or
promotes energy or water conservation
As a general rule, if the expenditure was to replace something that did not need to be replaced, it is ineligible. The most notable exceptions are if it increases access for persons with disabilities, helps with water energy conservation, or contributes to the security at the residential complex.
3) Security services
This could include monitored or unmonitored systems, video cameras, or more secure accesses to common lobbies or entries for larger buildings. In the event of a monitored service, it is ineligible if the service is provided by an employee of the landlord and the service must still exist at the time of the hearing. This application can include costs for both start up and increases in the operating costs over time.
As always, remember that this blog should not be taken as legal advice and is no substitute for a consult about your specific facts. If you have questions, call Jon today at 519-564-3242 to discuss how this could apply to you.