For property owners and managers in Ontario, staying compliant with the Residential Tenancies Act, 2006 (RTA) is non-negotiable. Understanding the annual rent increase rules is crucial for business continuity and maintaining positive tenant relations. For most rent-controlled units, the maximum allowable increase is set by the provincial government’s Rent Increase Guideline.
This guide breaks down the 2026 guideline, outlining the rules that govern rent adjustments for landlords across the province.
The Official 2026 Rent Increase Guideline
The Ontario government has officially set the Rent Increase Guideline for the calendar year 2026. This percentage is the maximum amount a landlord can raise the rent for the majority of existing tenants without special approval from the Landlord and Tenant Board (LTB):
- 2026 Rent Increase Guideline: 2.1%
Calculating the Increase
If a property’s current monthly rent is $2,000, the maximum increase permitted under the guideline is $42.00. The new monthly rent would be $2,042.00.
Units Covered by the Guideline
The 2.1% Guideline applies to most rental units in Ontario covered by the RTA that were first occupied:
- On or before November 15, 2018.
Landlords of properties (apartments, houses, or condominium units) that were first lived in by anyone before this specific date must adhere to the annual rent increase cap.
Mandatory Rules for All Landlords
Landlords must follow strict procedural rules for any rent increase, even when it is within the guideline:
- Notice Period: A landlord must provide the tenant with at least 90 days’ written notice before the increase’s effective date.
- Proper Form: The notice must be delivered on the government-approved form, typically Form N1 (Notice of Rent Increase).
- Frequency: Rent can only be increased once every 12 months. This 12-month period must pass since the last rent increase or since the tenancy began.
- Documentation: The increase is not automatic. The landlord must correctly issue and serve the notice for the increase to be valid.
Step-by-Step Process for a Guideline Rent Increase
To legally implement a rent increase within the annual guideline, a landlord must follow these critical steps:
- Determine Eligibility and Guideline:
- Ensure at least 12 months have passed since the last rent increase (or since the tenant first moved in).
- Verify the unit is covered by rent control (first occupied on or before November 15, 2018).
- Confirm the current Rent Increase Guideline for the year the increase will take effect (2.1% for 2026).
- Calculate the New Rent:
- Multiply the current lawful rent by the Guideline percentage (e.g., $2,000 x 0.021 = $42.00 increase).
- The new rent cannot exceed this amount.
- Complete the Required Form (N1):
- Fill out the Form N1: Notice of Rent Increase completely and accurately. This form is mandatory for rent-controlled units.
- Include the names of all tenants, the unit address, the date the increase is effective, and the new total rent amount.
- Serve the Notice (Form N1) to the Tenant:
- You must give the tenant the Form N1 at least 90 full days before the date the increase takes effect. (For example, for a January 1st increase, the notice must be given no later than September 30th.)
- Acceptable methods of service include: handing it directly to the tenant, leaving it in the mailbox or mail slot, or sending it by courier or mail.
- Always keep a copy of the completed and dated N1 form for your records, along with proof of service.
Required Landlord and Tenant Board (LTB) Forms:
- For Rent-Controlled Units (Guideline Increase): Form N1 – Notice of Rent Increase
- For Units Exempt from Rent Control (“Post-2018” Units): Form N2 – Notice of Rent Increase (Unit Partially Exempt)
- For Above-Guideline Increase Applications: Form L5 – Application for a Rent Increase Above the Guideline (Used to ask the LTB for permission to increase rent above the guideline)
The Rent Control Exemption: The “Post-2018” Rule
Landlords should be aware of the rent control exemption for newer units, a rule that provides greater flexibility in setting rent:
- Units First Occupied After November 15, 2018, are Exempt.
If a unit—including new apartment buildings, new condos, or self-contained basement units—was first occupied for residential purposes after this date, the annual Rent Increase Guideline does not apply.
Implications for Exempt Units:
The landlord of an exempt unit can raise the rent by any amount. However, the requirement to provide 90 days’ written notice and the limit of once every 12 months for increases still apply (using Form N2).
Applying for Above-Guideline Increases (AGI)
In limited circumstances, a landlord may apply to the Landlord and Tenant Board (LTB) for an Above-Guideline Increase (AGI), which permits raising the rent above the 2.1% guideline.
An AGI is not guaranteed and requires LTB approval based on specific, legally defined criteria, primarily:
- Capital Expenditures: Significant, non-routine repairs, renovations, or replacements (e.g., roof replacement, new windows) that benefit the rental complex.
- For this reason, the maximum increase the LTB can approve is generally 3% above the guideline (a total of up to 5.1% in 2026), which may be spread out over up to three years.
- Extraordinary Increases in Costs: Substantial rises in municipal taxes, charges, or new/increased security services.
Landlords must be prepared to submit detailed documentation and evidence to support an AGI application. Tenants who receive an AGI notice have the right to challenge the application at an LTB hearing.
For landlords, understanding whether a unit is covered by the guideline, adhering to the 2.1% cap for 2026, and strictly following the proper notice requirements are essential steps for legal compliance and successful property management in the Ontario rental market.
