Subject to a few exceptions, a tenant’s rent can only be increased 12 months after the date of the last rent increase or the date a tenant first moves in. A tenant must be given written notice of a rent increase at least 90 days before it takes effect.
Accordingly, rent can only be increased annually and up to a maximum percentage of the existing rent. The maximum percentage of increase is referred to as the Rent Increase Guideline and is set by the Ministry each year calculated using the Ontario Consumer Price Index (which is based on inflation and economic conditions). The current Rent Increase Guideline percentage for 2019 is 1.8%. An increase in excess of this amount would be deemed illegal and the tenant would likely be entitled to reimbursement of the overpayment if it were ever challenged in the future.
Although the percentage increase may seem relatively small, it is important that the increase always be calculated and applied each year. Failure to apply the permitted increase will most certainly result in the tenant paying below market rent at some point in the future. It should be noted that a Landlord cannot retroactively apply the percentage increases from previous years as rent increases are limited to once in a 12 month period and only to the applicable maximum percentage at that time.
Information provided by:
Lawyer, Nesbitt Coulter
35 Perry Street
Tel 519-539-1234 ext 243