What Is the Maximum a Landlord Is Allowed to Increase Rent?
For 2020, Rent May Be Increased 2.2% Per the Standard Allowable Amount.
The Government of Ontario announced the rent increase guideline for the year 2020 is two 2/10 (2.2%) percent. This is the highest rent increase rate provided since the year 2013, which was two and a half (2.5%) percent. This amount applies to rent increases for the period between January 1st, 2020 and December 31st, 2020. The guideline amount is determined using the Ontario Consumer Price Index as calculated by Statistics Canada using inflation and economic conditions data as measured annually in order to, among other things, determine the rent increase guideline amount for the following year. Of course, please note that the rent increase guideline applies only to rental properties that are subject to rent control.
When a landlords seeks to increase the rent by the prescribed rent increase guideline, the landlord is without need to obtain the consent of the tenants or the approval of the Landlord and Tenant Board. To legally increase the rent rate, the landlord must use the Form N1 - Notice of Rent as prescribed by Residential Tenancies Act, 2006, S.O. 2006, Chapter 17, and the regulations and as governed within the jurisdiction of the Landlord Tenant Board. The form can be found here: Form N1
To ensure validity, tenants must be served with the Form N1 at least ninety (90) days prior to the date that the rent increase will take effect. Furthermore, note that the rent may be increased only once every twelve (12) months; and accordingly, the first rent increase may apply only upon the first anniversary of the tenancy. A landlords should always take the annual rent increase regardless of the amount; otherwise, the landlord loses the availability to take the rent increase whereas a landlord is unable to retroactively add two years together.
In order to ensure that the N1 form is valid, a landlord must determine the date that the rent will increase according to the regular rental period.
If a tenant pays rent on the 1st of every month and the rent increase should become effective on May 1st, 2020, then the landlord must serve the N1 Form - Notice of Rent during the month of January 2020 so to ensure that the ninety (90) day notice period is complied with.
If the rent is due on the 15th of every month and the N1 Form - Notice of Rent is served on February 19th, 2020, the earliest date the rent may increase is June 15th, 2020.
A landlord must serve the N1 - Notice of Rent form using one of the approved methods of service:
- By handing the form directly to the tenant;
- By handing the form to an adult person in the tenant’s rental unit; or
- By placing the notice under the door of the rental unit.
If both the landlord and tenant have signed the Consent to Service by Email form (which can also be found on the LTB website) or any other written agreement where both parties agree to service by email, then the landlord may send the N1 - Notice of Rent to the tenant via email.
If the N1 - Notice of Rent is given to the tenant by a method of service other than an allowable method, the rent increase will be deemed invalid and unenforceable at the Landlord Tenant Board. Furthermore, if the tenant pays a rent increase in accordance to an invalid notice, the tenant may seek to claw back monies paid as unlawful rent for up to one year.