Ontario Landlords - Don’t Forget Your 2023 Rent Increases!
I almost forgot about this myself, I want to increase the rent for my Ontario investment properties as of January 1, 2023 and I almost missed my window - here is your friendly reminder!
What is Rent Control
In Ontario, any rental unit that was occupied for the first time before November 15, 2018 is subject to rent control. This means that the 2023 rent increase guideline provided by the Ontario government is the most you can increase rents in 2023. Here is some information you need to know as a landlord:
You must give your tenant at least 90 days notice before the date of the rent increase. NOTE: If you want to increase your rent as of January 1, 2023 you need to give your tenant the notice before the end of September
Notice must be given using the N1 Notice of Rent Increase Form (here are Detailed Instructions on how to complete the form)
You may only increase the rent if at least 12 months have passed since the last rent increase or since a new tenant moved into the rental unit.
No Notice of Rent Increase is required where the landlord and tenant have signed an Agreement to Increase the Rent Above the Guideline (Form N10) - a tenant would typically never sign this though unless they are getting an improvement of some kind
You can increase the rent more than the guideline if there are extenuating circumstances but this needs to be approved by an order under the Residential Tenancies Act, 2006 and good luck with that.
When your tenant moves out, you can then adjust the rent to market rate
Any units occupied after November 15, 2018 are not subject to rent control and you can increase the rent by any amount but you must still follow the same rules/procedures.
How Does The Rental Guideline Determined
The annual rent increase guideline is determined according to section 120 (2) of the Residential Tenancies Act, 2006 which averages the monthly Ontario Consumer Price Index over a twelve month period that ends at the end of May of the previous calendar year. If the calculation for the annual guideline amount exceeds 2.5%, it will be capped at 2.5%.
How Do I Apply the Ontario Rental Guideline?
The rental guideline simply determines the maximum amount you may raise the rent. You can raise therefore raise the rent by amount up to that amount, not raise it at all, or lower the rent for a tenant if you like (it’s sometimes worth it to keep AAA tenants).
If you wanted to maximize the rental increase then here is an example:
Current Rent = $2,000 / mo.
Applicable Rental Guideline = 2.5%
Maximum Allowable Rental Increase = $2,000 x 2.5% = $50
New Rental Amount = $2,000 + $50 = $2,050
How Can Notice be Given?
There are the official ways a tenant can be given notice:
Hand it directly to the tenant or to an adult in the rental unit,
Leave it in the tenant's mailbox or where mail is ordinarily delivered
Place it under the door of the rental unit or through a mail slot in the door,
Send it by fax to a fax machine where the tenant carries on business or to a fax machine in their home,
Send it by courier
Send it by mail
NOTE: Notice via email is not listed as an official way to provide notice and may depend on the terms included in your lease. You can still email it, but always mail them a copy using CanadaPost to cover yourself or hand deliver it to your tenant.
NOTE: For tenant notices to be enforceable, they must be given using the proper forms, the forms must be completed correctly, and the tenants notified in the appropriate method, otherwise they can be simply refused. If you have doubts/concerns, bring in professionals to manage it for you - you may save yourself A LOT of time and money later. Get in touch if you need help.