When purchasing a property full of seasoned tenants the transition can be rough. Tenants may have been living there for decades with rent far below the market rate. An existing lease agreement may offer protection if tenants choose to complain or resist policy, rule, or rent changes. In extreme cases, you may need to know how to evict a tenant.
Even with an existing lease agreement though, there are still situations where you can make changes without losing tenants. It takes effort, and could mean coping with difficult tenants for a time, but it’s worthwhile — seasoned tenants often take good care of their rental and pay reliably.
Regardless of whether you intend to increase rent or evict, we have information you need:
Rules for Increasing Rent
It’s important you tread lightly and be amicable when approaching a rental situation where you plan to increase a tenant’s rent. There are several rules you must follow for the increase to be legally binding.
You didn’t buy the property to lose money, but it’s no surprise that someone would take issue with being asked to pay more money for the exact same good or service. If this happens your tenant may even push back or resist these increases, but at the end of the day you have to cover your costs and receive a sufficient premium for the risk you are assuming.
Legal Limitations
Before you can increase the rent, the following must usually be true.1
- It’s been 12 months since the last rent increase or start of the tenancy.
- You’ve provided formal notice at least 90 days before the increase comes into effect.
- The increase cannot be greater than the threshold set by the government.
It’s a good idea to give your renters much more than 90 days notice if you know you’ll be increasing their rent though — this allows time for them to prepare for the change.
You must ensure any rent increase does not exceed the legal threshold, otherwise your tenant can dispute the improper amount and you’ll be at the mercy of the Landlord and Tenant Board. The guideline increase for 2024 is 2.5%.1
Legal Exceptions
In certain circumstances, rent can be increased outside the regular guidelines: 1
- New buildings, additions to existing buildings, and most new basement apartments that are occupied for the first time after November 15 2018 are exempt from rent control.
- In care homes and retirement homes, the rent increase guideline only applies to the rent portion of the bill.
- You can submit a request to the Landlord and Tenant Board for approval to raise your rent above the guideline, but this requires the tenant to agree.
How to Evict A Tenant
If you’re unhappy with a tenant, choosing to evict is certainly an option. However, evicting a tenant is a very serious matter. It’s important you exhaust all options before giving someone the boot.
You must have legal cause to evict your a tenant. Many seasoned tenants will have a good history of utilizing the space properly and paying their rent on time, meaning you might have to search for other cause to validate moving forward with an eviction.
If you can’t find apparent reasons to evict a seasoned tenant, there are a few ways to use the system to your advantage, so long as it’s done in good faith:
Cash for Keys
This method involves offering your tenant a financial incentive to vacate the property. It’s a little controversial, but can be a tactful way to avoid an arduous eviction process. Keep in mind that tenants are not obligated to accept your offer, and you cannot coerce tenants into accepting.
If you decide to use a cash for keys approach then make sure all communications are properly documented and that you have a formal written agreement drawn up outlining the specific terms. It may also be a good idea to add conditions to the payout based on the state of the property in case there are tenant damages to property.
Repairs and Renovation
Ontario’s Residential Tenancies Act allows you to terminate tenancy if you’ll be performing extensive repairs and/or renovating to an extent that the property must be vacated for safety reasons2, however:
- You must give notice of termination at least 120 days prior to the end of the rental term.
- Tenants have the right to move back into the rental after work is completed, and the rent must be at the same amount it was before.
- Tenants also have the option to end the tenancy earlier if they give proper notice.
The caveat though, is that tenants must provide written intent to re-occupy the space after work is completed2 — if they don’t do that, you can refuse them. Most tenants don’t know this.
Either way, you must provide the tenant compensation equal to (1) three months’ rent or (2) rent equal to the amount of time the property is vacant due to repairs/renovations. Whichever is less.2
Personal or Family Use
If you have no other option and really must evict, you can resort to terminating tenancy due to personal or family use. This must be done in good faith and:
- The intended occupant must remain in the space for a minimum of one year.2
- There is no law that says you cannot charge rent, but you are required to sign an affidavit attesting that the rental unit will be used for personal or family use only.2
- The property must be occupied, and cannot be used for certain commercial purposes.2
You’ll also be required to either provide your tenant compensation equal to a month’s rent, or offer them another rental unit. Though that might not always be an option, or your ultimate goal.
Conclusion
Successfully managing rent increases and potential evictions with seasoned tenants involves understanding legal requirements, exploring alternative solutions, and approaching situations with care. Always consult relevant sources for the latest guidelines and consider hiring an expert.
Sources
1 Government of Ontario. 2021, December 31. Residential rent increases (Retrieved March 31st 2021)
2 Tribunals Ontario – Landlord and Tenant Board. 2021, September. Eviction for Personal Use, Demolition, Repairs and Conversion (Interpretation Guideline 12) (Retrieved March 31st 2021)
