What you need to know about rent control in Ontario

Rental units in Ontario can be subject to rent control, but there are several exemptions – including when the unit was first occupied. Dilshad Burman with what tenants need to know.

By Dilshad Burman

Posted August 24, 2023 5:15 pm.

Last Updated October 19, 2023 1:48 pm.

In Ontario, landlords are allowed to raise rent once a year and a question that comes up for many renters is whether their unit is subject to rent control — which is a mechanism to make renting stable for tenants.

Rent control usually limits increases to the rate of inflation in an attempt to keep rates affordable for a majority of renters.

“But there’s a cap — it was introduced by the Liberals a number of years ago. It says that even if inflation is five or six per cent, a landlord can’t increase rent above two and a half per cent,” explains Geordie Dent, executive director of the Federation of Metro Tenants Associations (FMTA).

The rent increase guideline in Ontario for 2023 is at that maximum of 2.5 per cent for rent-controlled units.

Rent control only applies to units first occupied by anyone, not just the current renter, before Nov. 15, 2018. For any units that came to market after, there is no limit to how much rent can be raised annually.

Other scenarios where rent control does not apply include:

If the tenant shares a kitchen or bathroom with the landlord
If the tenant is a roommate and pays rent to the lease holder
If the unit is in a housing co-op, is a social housing unit or a rent-geared-to-income unit.
In situations where a unit, like a basement apartment, was finished and occupied after Nov. 15, 2018, even if the house is older and occupied prior to that date

Dent says those without rent control can sometimes find themselves in a vulnerable position.

“You might have a maintenance issue and your landlord might be not willing to deal with it, and you might pressure them to deal with this maintenance issue. And then the landlord will retaliate with a thousand dollars a month rent increase the next time you get a rent increase – we call these economic evictions,” he says. “We get calls now weekly on our tenant hotline from people facing these scenarios.”

Dent says in Ontario, as mortgage rates increase, even tenants in rent-controlled units are facing pressure to agree to increases above the provincial limit.

However, there are only a few reasons why a landlord can request an above guideline increase (AGI) in rent:

If the landlord’s municipal taxes and charges have increased an “extraordinary” amount — greater than the rent increase guideline plus 50 per cent of the guideline
If the landlord did any major capital work described by the Landlord Tenant Board (LTB) as “extraordinary or significant renovations, repairs, replacements or new additions to the building or to individual units”
If the landlord’s costs for security services increased or they began providing those services for the first time

Landlords must submit an L5 application to the LTB for an above guideline increase.

“The landlord isn’t just automatically guaranteed the money. They’ve got to do the work, apply to the court. So [a tenant] wants to be sure that if they’re asking you for this extra amount of money that they’ve actually been approved for it,” says Dent.

In one application, the landlord can request a nine per cent increase. If the LTB grants the full amount, the increase is to be spread out over three years — which is three percent per year.

The three per cent AGI is in addition to the allowable annual increase of 2.5 per cent, making the maximum rent increase permitted this year if a landlord is granted an above guideline increase 5.5 per cent.

Tenants can contact the LTB to confirm whether the landlord filed a L5 form and whether the AGI was approved. They can also choose to fight the increase by presenting arguments to the LTB.

“The moment [landlords] apply [for an AGI], the tenant’s already a defendant — they just have to decide whether they want to engage in that defense or not,” says Dent.

“It does take some work. You do have to do a file review. Sometimes you’re going to maybe hire a paralegal or someone to help with that, sometimes you’re going to get some help online … there are free legal services the City of Toronto provides now to help with above-guideline rent increases. So there’s a variety of things that tenants can do.”

It’s important to note that if an AGI is approved by the board, it can be retroactive to the date the landlord applied for it, but while waiting for the decision tenants are not obliged to pay the requested increase.

“Landlords are allowed to ask for the money before they get approved in the courts, [but] sometimes they don’t get everything they’ve asked for. So in those scenarios, tenants can wait to see what the LTB says before they actually pay the money,” says Dent.