Understanding rent controls in Ontario is vital for maintaining a profitable and legally compliant investment. These regulations dictate exactly how much and how often you can adjust your rental income. As we move into 2026, landlords must balance their financial goals with the strict caps set by the provincial government.
The 2026 Rent Increase Guideline: 2.1%
The Ontario rent increase 2026 guideline has been officially set at 2.1%. This percentage is calculated annually based on the Ontario Consumer Price Index (CPI), which tracks inflation and the cost of living. This guideline is the maximum amount a landlord can raise the rent for most sitting tenants without seeking special permission from the Landlord and Tenant Board (LTB).
The Importance of Using the Right Form
While understanding the legal percentages is the first step, the actual implementation of an increase requires strict adherence to provincial paperwork. To officially notify your tenants of an upcoming change in rent, you must use the correct legal document. For a complete walkthrough on how to fill out the paperwork correctly and avoid common filing errors, please refer to our detailed guide on The N1 Form: Everything Landlords Need to Know About Raising Rent.
The “2018 Rule” and Rent Control Exemptions
While the 2.1% cap applies to the majority of units, a major turning point in Ontario rent control occurred in late 2018. Generally, rental units are exempt from the annual rent increase cap if they were first occupied for residential purposes after November 15, 2018. This includes:
- Entirely new apartment buildings or condominiums.
- Basement apartments or attic suites created within an existing home after Nov 15, 2018.
- New additions to existing buildings that were never used for residential purposes before that date.
If your property is exempt, you can increase the rent to market value once every 12 months. However, you must still provide the full 90 days’ notice using Form N2 rather than the standard N1.
Vacancy Decontrol: The Reset Button
One of the most important concepts for landlords to understand is vacancy decontrol. This rule states that rent controls in Ontario only apply to existing tenancies. When a tenant voluntarily moves out or a lease is legally terminated, you are permitted to set the new rent at any price the market will bear for the next tenant. Once that new tenant signs a lease, the 12-month rule and the 2026 guideline (if applicable) will then apply to them moving forward.
Above Guideline Increases (AGI)
If the 2.1% cap does not cover your rising operational costs, you may apply for an Above Guideline Increase (AGI). The LTB may grant an AGI for three specific reasons:
- Capital Expenditures: Significant, non-routine repairs or replacements (e.g., a new roof, boiler, or structural repairs).
- Municipal Taxes: If your property taxes have increased by more than the guideline plus 50% (e.g., a “guideline-and-a-half” increase).
- Security Services: Costs related to hiring security personnel for the complex.
AGIs are typically capped at 3% above the guideline per year and are often spread over a three-year period. You must file a Form L5 with the LTB and notify your tenants before this increase can be collected.
Frequently Asked Questions: Rent Increases in Ontario
Can I raise rent if the tenant is still in a fixed-term lease?
Yes, as long as 12 months have passed since they moved in or since their last increase. The end of a lease term does not have to coincide with a rent increase.
What if I missed last year’s increase? Can I “double up” in 2026?
No. Rent increases are not cumulative. If you did not increase the rent in 2025, you cannot add that percentage to the Ontario rent increase 2026 cap. You are limited to the current year’s 2.1% guideline.
What should I do if my property includes utilities?
The 2.1% increase applies to the “total rent,” which includes the base rent plus any charges for services like parking or utilities if they are bundled into the monthly payment.
