What Tenant should know about Rent Control in Ontario

Ontario, as one of Canada's prime residential areas, is a hub for renters and property investors alike. The area's vibrant real estate market is governed by several regulatory measures, one of them being rent control. As a tenant in Ontario, understanding the intricacies of rent control can save you from unnecessary budgetary hiccups.

Having a thorough grasp of these regulations is not only crucial in ensuring you get the best deal out of your rental agreement, but also in safeguarding your rights as a tenant. This blog aims to provide you with a comprehensive understanding of rent control in Ontario, touching on critical aspects such as its implementation, exemptions, and yearly rent increases.

Let’s begin by understanding what rent control is. Essentially, it is a law that limits the amount landlords can increase the rent for existing tenants in their rental units. Ontario's rent control system is governed by the Residential Tenancies Act, which is enforced by the Landlord and Tenant Board.

One significant point to note is that Ontario's rent control law varies depending on when the residence was first built or occupied for residential purposes. Rental units first built or occupied on or after November 15, 2018, are exempt from rent control. This means landlords in these units can increase the rent by any amount, given they provide 90 days notice to the tenants.

However, tenants living in units that were first built or occupied before November 15, 2018, are subject to rent control. This means the landlord can only increase the rent once every 12 months by an amount stipulated by the Ontario government, known as the rent increase guideline. The guideline is established each year based on the Ontario Consumer Price Index, a measure of inflation calculated monthly by Statistics Canada.

For 2021, the rent increase guideline was set at 1.5% for rent-controlled units. However, due to the economic pressures brought about by the COVID-19 pandemic, the Ontario government introduced a rent freeze. Under this freeze, landlords of rent-controlled units cannot increase rent at all in 2021, irrespective of the 1.5% guideline.

However, it's worth noting that landlords can apply to the Landlord and Tenant Board for an "Above Guideline Increase" if they have incurred significant costs for capital repairs, renovations, or security services. This is an exception and is not the norm, but as a tenant, it's essential to be aware of it.

Another vital point for tenants to understand is the 12-month rule. A landlord is not allowed to increase the rent unless 12 months have passed since the tenant first moved in or since the tenant’s last rent increase. The landlord must also provide the tenant with a written notice of a rent increase at least 90 days before it takes effect.