Each year the Ontario government announces the province’s rent increase guideline for the following year. The rent increase guideline is the maximum amount by which a landlord can increase the rent for a current tenant without approval from the Ontario Rental Housing Tribunal.
The 2006 guideline is 2.1 per cent.
The new rent increase guideline applies to a rent increase that begins any time between January 1, 2006, and December 31, 2006, and applies to most residential units in Ontario.
In most cases, the rent for a unit can be increased if at least 12 months have passed since a tenant first moved in or since his or her last rent increase. The tenant must be given proper written notice of the rental increase at least 90 days before the rent increase takes effect.
The guideline was designed to take into account increases in landlords’ building maintenance and operating costs in order to protect tenant health and safety.
The Guideline Formula
The rent increase guideline is based on a formula that takes into account inflation in the costs of operating a rental building.
The guideline is calculated by averaging over three years the changes in the operating costs of a building. A total of eight operating costs are used in the calculation, including municipal property taxes, heat and maintenance.
Sample Rent Increase Guideline
The monthly rent for an apartment is $800 beginning May 1, 2005. With proper written 90 days notice to the tenant, the landlord could lawfully increase the rent 12 months later on May 1, 2006.
The guideline for 2006 is 2.1%. The 2006 rental increase is 2.1% of $800 = $16.80. Therefore, the new rent on May 1, 2006, could be up to $816.80 ($800 + $16.80).
Above Guideline Increases
Landlords may apply to the Ontario Rental Housing Tribunal for an increase above the guideline, if their annual costs for heat, hydro, water or municipal taxes have increased by more than the average for the particular cost as shown in the table below.
|
Operating Cost Category |
Three-Year Moving Average |
|
Heating |
4.78 |
|
Hydro |
4.25 |
|
Water |
5.77 |
|
Municipal Taxes and Charges |
3.10 |
Landlords may also apply for an increase above the guideline, if building security costs have increased or major capital work has been done.
The Ontario Rental Housing Tribunal provides information to the public through a network of regional offices across Ontario.