July 04, 2022
Market Trends
RYPM
The Government of Ontario is more than doubling the
allowable rent increase a landlord can implement on rent-controlled buildings,
bringing the province’s guideline up to 2.5%.
Announced on Wednesday, the new cap will take effect in 2023
and will guide how much a landlord can raise rent during the year for most
tenants without needing approval from the Landlord
and Tenant Board. Although noticeably higher than the 1.2% guideline seen
in 2022, the 2.5% is actually well below what the cap would have been had it
kept pace with inflation.
The guideline is typically based on the Ontario Consumer
Price Index, which is a measure of inflation based on economic conditions over
the past year. But had the cap followed the province’s CPI, the 2023 guideline
would have been a much larger 5.3%. The 2.5% cap was decided upon to “help
protect tenants from significant increases,” the Ontario government noted in a
press release.
“As Ontario families face the rising cost of living, our government is providing
stability and predictability to the vast majority of tenants by capping the
rent increase guideline below inflation at 2.5%,” said Minister of
Municipal Affairs and Housing Steve Clark. “We continue to look for ways to
make homes more attainable for hardworking Ontarians, while making it easier to
build more houses and rental units to address the ongoing supply crisis.”
The guideline applies to most rental units occupied for the
first time before November 15, 2018, with exceptions to community housing,
long-term care homes, and commercial properties. Landlords who want to raise
rents beyond the guideline can apply to the Landlord and Tenant board for
exceptions, which are typically sought out after capital work has been
finished.
Landlords are not required to raise rents by the full
allowable amount, or at all, but those who do must provide written notice to
their tenants at least 90 days in advance. There must also have been 12 months
since the lease began or since the last rent increase.
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