What rent control laws must Ontario landlords follow?

As a premier property management and leasing company in Ontario, Royal York Property Management is committed to providing unparalleled service and expertise to landlords, investors, and tenants across Canada. With a vast portfolio of over 22,000 properties valued at more than $10.1 billion, we have established ourselves as a trusted partner in the real estate industry.

At Royal York Property Management, we know how difficult it is to manage rentals in the legal framework of Ontario. Each landlord must look out for rent control law decision-making to avoid being caught up by it. This blog aims to give you current advice on how to go about managing your rental properties legally and effectively within the existing rent control laws in Ontario.

Rent Control in Ontario: An Overview

Understanding the Basics

Ontario’s rent control laws under the Residential Tenancies Act (RTA) regulate issues such as raising rents, maintenance duties, and tenant rights for landlords. They ensure tenants are not subjected to unreasonable rent increments and also protect the landlord's interest so that any expenses incurred can be recovered and an adequate return on investment can be made.

Recent updates to the RTA

• Annual Rent Increase Guideline: By 2023, the guideline for rent increases had increased to 2.5%. This is the most one can raise rent within a year without going through the Landlord and Tenant Board’s approval process.

• Exemptions to Rent Control: Properties that were used as homes for the first time after November 15th, 2018 are exempted from these controls on rental rates, thereby enabling landlords to charge any amount at will during every beginning of tenancy.

Guidelines for Rent Increases

• Notice Requirements: Before increasing rents, landlords must provide tenants with a written notice of 90 days using an approved form.

• Timing of Increases: For example, rent could only be raised after 12 months have elapsed since the last increment or after a new occupier moves in.

Special Situations Allowing Above-Guideline Increases

• Substantial Reconstructions: When significant changes have been made by landlords that require a building permit or the unit cannot be occupied during the renovation works, they can apply for an above-guideline increase.

• Increased Operating Costs: Landlords may ask for approval to shift some of the increased taxes or electricity costs to tenants if these increases exceed the guidelines.

The purpose of this article is to outline what amendments were made in these regulations and then analyze, how compliance should be done by landlords so as not to break them. 

Legal Implications of Non-Compliance

Understanding the Consequences

• Financial Penalties: Being found to violate the rent control laws can lead to heavy financial penalties, including being required to repay tenants for rent that has been overcharged.

• Reputational Damage: Non-compliance also damages your reputation as a landlord, which may negatively impact your ability to attract and retain tenants in the competitive Ontario rental market.

Proactive Compliance Measures

• Regular Legal Reviews: Regularly review your rental practices and policies with legal experts to ensure that you remain compliant as evolving rent control laws continue to shape the rental landscape in Ontario.

• Tenant Education: Educate your tenants about the rent control laws and their rights. This creates trust and can help reduce misunderstandings and legal disputes.

Improving Tenant Relations Under Rent Control

Creating Long-Term Tenant Relationships

• Provide Rewards: Consider providing rewards for long-term leases, thereby creating stability on your side and your tenants’ side under the rent control framework.

• Get to Know Your Tenants: The regularity of contact through events or feedback sessions could go a long way in creating relationships where tenants are better able to understand the rent hike necessity and are very willing to cooperate with property policies.

Maximize Business Strategy Using Rent Control

• Strategic Property Improvement: Invest in strategic improvements that prop up the value of your property and justify the maximum allowable rent increases under rent control laws.

• Utilize Vacancy Decontrol: Learn how to use vacancy decontrol, which allows rent to be reset to market values in a tenant’s absence, ensuring that your property maximizes returns.

Rent control laws in Ontario can be navigated without fear. Landlords need to be aware of current trends and take an active role in ensuring that they adhere to rent control rules while at the same time run profitable properties.  

Looking for professional advice or assistance in the management of your rental properties under the rent control laws of Ontario? Reach out to Royal York Property Management today. Our team is ready to help you optimize your property management strategies and ensure compliance with all provincial regulations.

Moreover, you can find us on Facebook, Instagram, and LinkedIn. We are on X too.

Common FAQs

FAQ / People Also Ask

1. What is allowed for the maximum increase in rent in Ontario?

The government of Ontario determines an annual maximum rent increase, which is determined by the Ontario Consumer Price Index. For example, for 2021, the increase was capped at 1.5 percent. A landlord must provide a 90-day written notice before implementing any rent increases.

2. Can I increase the rent at any given time?

In Ontario, rent can only be increased once per year per tenant and can’t be increased before the 12th month of a tenancy. The landlord must provide the tenant with a 90-day written notice using the official form before the rent increase becomes effective.

3. What happens to me if I disregard rent control laws?

Disregarding the rent control laws in Ontario can lead to a range of consequences, including financial penalties, orders to repay the rent that was charged illegally, and damage to the reputation of landlords. Issues of non-compliance are dealt with by the landlord and tenant board, and tenants can file complaints against a non-compliant landlord.

4. Are all residential properties in Ontario subject to rent control?

Most residential properties in Ontario are subject to rent control, however, there are some exceptions. Properties that were first occupied for residential purposes after November 15, 2018 are not subject to the rent control legislation, and a landlord can set rents at the start of each tenancy without regard to the legislation.

5. How do I properly notify tenants of a rent increase?

If a landlord is going to inform tenants of an increase in rent in Ontario, it must be done using the official form that the Ministry of Municipal Affairs and Housing provides. It must be provided for 90 days or more before the rent increase will take effect. Be sure to fill out the notice correctly, as otherwise, it may not stand up in court.