Key takeaways
- Ontario's rent increase guideline is 1.9% for 2027 and 2.1% for 2026. The year that counts is the one in which the increase takes effect, not the year the notice was written.
- Section 120(2) of the Residential Tenancies Act, 2006 builds the guideline from the Ontario Consumer Price Index averaged over the 12-month period ending at the end of May of the previous calendar year, rounded to the first decimal point, and caps it at 2.5 per cent. The guideline came in at exactly that maximum in 2023, 2024 and 2025.
- The November 15, 2018 exemption is narrower than the shorthand. Section 6.1(2) requires that no part of the building was occupied for residential purposes on or before that date, and section 6.1(4) switches the exemption off for a tenancy whose agreement was entered into on or before November 15, 2018 (for that tenancy only).
- An exempt unit is exempt from the guideline, not from the paperwork. Sections 116 and 119 are not on section 6.1's list, so 90 days' written notice on a Board-approved form and 12 months between increases still apply, and the landlord uses Form N2 rather than Form N1.
- Above-guideline increases for capital expenditures and security services are capped at 3 per cent above the guideline in any one 12-month period, with any remainder spread over the next two. There is no cap on the part justified by an extraordinary increase in municipal taxes and charges.
Ontario's rent increase guideline for 2027 is 1.9%. For 2026 it is 2.1%. The guideline is the most a landlord can raise the rent by in a year without asking the Board. The one that applies is the guideline for the calendar year your increase takes effect, not the year the notice was written. The Ministry's own example runs a lease signed June 1, 2026 forward to an increase on June 1, 2027 and applies the 2027 figure. Both are on the Ministry of Municipal Affairs and Housing's Residential rent increases page, updated June 23, 2026. This is general information, not legal advice.
An increase needs at least 90 days' written notice. So one taking effect January 1, 2027 must be served in early October 2026. Anything that takes effect before that is a 2026 increase, capped at 2.1%.
What the guideline actually limits
Section 120(1) of the Residential Tenancies Act, 2006 says no landlord may increase the rent charged to a tenant "during the term of their tenancy by more than the guideline, except in accordance with section 126 or 127 or an agreement under section 121 or 123." Three limits sit in that sentence.
It caps increases inside an existing tenancy. Subject to section 111, section 113 makes the lawful rent for a new tenant's first rental period "the rent first charged to the tenant". That is vacancy decontrol in one section: when a unit empties, the rent resets. The guideline puts no limit on what a landlord asks the next tenant.
It caps the rent, and section 2(1) says rent "does not include ... an amount that a landlord charges a tenant of a rental unit in a care home for care services or meals." So in a retirement home it covers the housing part of the bill, not the nursing, the food or the cleaning. Those need their own 90 days' notice under section 150, and are void without it.
And it names its exceptions: sections 126, 127, 121 and 123, all below.
From the Ministry's example: 1.9% on $1,000 = $19.00, so $1,000 + $19.00 = $1,019.00 a month. At a typical GTA rent, $2,000 × 1.9% = $38.00, giving $2,038.00.
How the number is set, and the cap that keeps doing the work
Section 120(2) sets the formula in two paragraphs. The guideline is "the percentage change from year to year in the Consumer Price Index for Ontario for prices of goods and services as reported monthly by Statistics Canada, averaged over the 12-month period that ends at the end of May of the previous calendar year, rounded to the first decimal point". In plain terms, it tracks a year of Ontario inflation. And it "shall be not more than 2.5 per cent." Section 120(3) requires the guideline to be published in The Ontario Gazette no later than August 31 of the preceding year.
The guideline came in at exactly 2.5%, the legal maximum, in 2023, 2024 and 2025. The 2021 zero was written into law. Section 120(3.1) fixes it at zero per cent, and the Ministry's footnote says it would otherwise have been 1.5%.
The guideline column is the Ministry's series. The index column is my own arithmetic. Each guideline is compounded onto the last from 1.0000 at December 31, 2020, assuming the landlord took the full guideline every year, with no exemption and no above-guideline order.
Year | Guideline | Compounded index (end of 2020 = 1.0000) |
|---|---|---|
2021 | 0% (rent freeze) | 1.0000 |
2022 | 1.2% | 1.0120 |
2023 | 2.5% (at the cap) | 1.0373 |
2024 | 2.5% (at the cap) | 1.0632 |
2025 | 2.5% (at the cap) | 1.0898 |
2026 | 2.1% | 1.1127 |
2027 | 1.9% | 1.1338 |
1.000 × 1.012 × 1.025 × 1.025 × 1.025 × 1.021 × 1.019 = 1.1338, or 13.4% across seven guidelines. A rent of $2,000 at the end of 2020 becomes $2,000 × 1.1338 = $2,267.60. That is $267.60 more a month.
The two rules that survive the November 15, 2018 exemption
Ninety days' written notice. Section 116(1) bars an increase "without first giving the tenant at least 90 days written notice". Section 116(3) requires it "in a form approved by the Board". Section 116(4) makes an increase void if that notice was not given. Void means it never takes effect at all. The Form N1 instructions add how to deliver it. The notice can be handed over, mailed, couriered, faxed, left in the mailbox or put under the door, but "you cannot give the tenant this notice by posting it on the door."
That void is not permanent. Section 135.1(1) treats an otherwise void increase as valid "if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months". But subsection (2) switches that rescue off where the tenant fought back in time. The tenant must have applied, within one year after the increase was first charged, in a way that puts the increase's validity in issue.
Twelve months between increases. Section 119(1) allows an increase only if at least 12 months have passed since the last increase for that tenant in that unit. If there was no last increase, count from the day the unit was first rented to them.
And the right form. Most landlords use Form N1. The instructions give three exceptions. Form N2 is used where the unit "is exempt from the rules under the RTA limiting the amount of the rent increase". Form N3 is for a care home, and Form N10 for an agreed above-guideline increase. All four are on the Board's forms page.
The November 15, 2018 exemption, in the statute's own words
The Ministry puts it as "new buildings, additions to existing buildings and most new basement apartments that are occupied for the first time for residential purposes after November 15, 2018". That is a test on the whole building, not on the single unit. What the summary leaves out is s. 6.1(4) and (5), the carve-back for a tenancy agreement entered into before November 15, 2018. The wording that governs is section 6.1, and it has two routes.
Route one, section 6.1(2). Sections 120, 121, 122, 126, 127, 129, 131, 132, 133, 165 and 167 stop applying where the unit sits in a building, mobile home park or land lease community and "no part of the building, mobile home park or land lease community was occupied for residential purposes on or before November 15, 2018". The same goes where the unit "is entirely located in an addition" no part of which was so occupied. The test is the whole building, not the unit. A new apartment carved out of a building that had tenants in 2018 does not qualify.
Route two, section 6.1(3), the basement-apartment route, lifts the same sections apart from 165 and 167. It needs all four of these. A detached, semi-detached or row house that "on or at any time before November 15, 2018, contained not more than two residential units". A unit with its own bathroom and kitchen, one or more entrances, a door at each securable from inside and at least one lockable from outside. A unit that became one after November 15, 2018. And either the owner living in another unit of the house when it was first occupied, or the space being unfinished right before.
Two qualifiers travel with both routes. Section 6.1(4) switches the exemption off for a unit "subject to a tenancy in respect of which a tenancy agreement was entered into on or before November 15, 2018". Section 6.1(5) limits that carve-back to that one tenancy, so the next tenancy is exempt again. Section 6.1(6) puts the burden on the landlord to prove the exemption applies.
Read the exempted sections again. 116 and 119 are on neither list. So both of those rules survive an exempt unit. The N2 instructions confirm both, while saying that on the amount "the landlord can raise the rent by any amount."
Who else is outside the guideline
Section 7(1) lifts section 120 and the above-guideline rules (sections 126 to 133) off community and social housing. That covers federal housing and designated projects under the Housing Services Act, 2011. It also covers non-profit projects under a prescribed program, non-member co-op units, educational-institution housing for students or staff, and religious-institution housing run charitably on a non-profit basis. Section 116 is not on that list. Section 7(3) drops sections 116 and 118 only for a rent-geared-to-income increase caused by a rise in the tenant's income in a paragraph 1-4 complex. Section 7(2) drops the 12-month rule for those rent-geared-to-income tenants and for units in paragraphs 5 and 6.
Section 5 removes the Act entirely from several kinds of housing. Among others: hotel, motel and vacation accommodation; member units of a non-profit housing co-operative; accommodation subject to the Fixing Long-Term Care Act, 2021; emergency shelters; premises where the occupant must share a bathroom or kitchen with the owner or the owner's spouse, child or parent (or the spouse's child or parent) living in the same building. The list also covers accommodation occupied to receive agreed rehabilitative or therapeutic services, where the parties agreed on a set length or on ending when the goals are met or will not be, and intended for no more than a year. Commercial property was never in scope.
Above-guideline increases: the grounds, the cap, and what you pay meanwhile
Section 126(1) gives three grounds for applying to the Landlord and Tenant Board for more than the guideline. They are an extraordinary increase in the cost for municipal taxes and charges, eligible capital expenditures (major work on the building), and operating costs for security services "provided ... by persons not employed by the landlord". Section 126(3) requires the application at least 90 days before the first intended increase. It takes an application and an order, not just a notice.
Section 28(1) of O. Reg. 516/06 makes a tax increase extraordinary only if "it is greater than the guideline plus 50 per cent of the guideline". Use the guideline for the year the first increase takes effect. The Board's brochure runs that for 2020; for 2027 it is 1.9% × 0.50 = 0.95%, and 1.9% + 0.95% = 2.85%. So taxes must rise by more than 2.85% before a 2027 application can rest on them.
Section 126(11) holds the share coming from capital expenditures and security services to no more than 3 per cent. Anything left over is spread across the next two 12-month periods, at no more than 3 per cent each. Guideline 14 says the same, and adds the half both sides miss: the 3 per cent limit does not apply to the municipal-taxes ground at all.
An eligible capital expenditure is extraordinary or significant work with an expected benefit of at least five years. The brochure rules out ordinary work, regular maintenance, mostly cosmetic work, and work meant to raise the complex's prestige or luxury. Section 27(2) of O. Reg. 516/06 never treats its useful life as less than 10 years. The work must be finished within an 18-month window ending 90 days before the first increase. It must also be paid in full before filing, apart from required construction lien holdbacks. Section 126(9) makes it ineligible for a unit whose new tenancy agreement took effect after the work was done.
While the application is waiting, section 126(5) caps what you must pay. You pay the lower of two amounts: the new rent on the notice, or the most the landlord could charge without applying. That second amount is normally the guideline increase. Section 126(6) lets you pay the notice amount instead, and makes the landlord owe you back whatever the order does not justify. When the work's weighted useful life ends, section 129 requires the rent to drop by the percentage the order gave to the capital expenditure.
Under section 121 a landlord and tenant may instead agree to go above the guideline for a named capital expenditure or a new or extra service. But section 121(3) holds that agreement to "the guideline plus 3 per cent of the previous lawful rent charged". Section 121(4) gives the tenant five days to cancel in writing, and section 121(5) stops it taking effect earlier than six days after signing. It is Form N10, and section 121(6) means no N1 goes with it.
A notice above the guideline is not an approved increase
Form N1 carries a box reading "the rent increase must be approved by an order ... I have applied to the Board". If that box is shaded, the higher figure is a request, not your rent. But Form N1 warns that if you pay only the guideline amount while the application is waiting, "the tenant may owe the landlord once the order is issued." The shortfall is backdated, not forgiven.
When rent goes down
Two routes, both under-used. Section 131 cuts the lawful rent automatically when municipal property tax on the complex falls by more than the prescribed percentage. That percentage is 2.49 per cent, set by section 41(1) of O. Reg. 516/06. The cut is a fraction of the tax saving. It is 20 per cent of the tax decrease for the multi-residential property class and 15 per cent otherwise. The Board's brochure puts that as 7 or more units versus 6 or fewer. Here is its worked example: taxes falling from $20,000 to $18,000 is a $2,000 drop, 10%; 20% of 10% is 2%; on a rent of $800 that is $16, so the new rent is $784.
Where a complex has seven or more units, councils must tell landlords between June 1 and September 15 and tenants between October 1 and December 15. The reduction takes effect December 31 of the year the taxes fell. It does not reach a tenant who moves in after that date. You need no application to take it, and Form A4 disputes the amount. Separately, section 130 lets a current or former tenant apply for a reduction where a service or facility has been cut or stopped. The deadline there is one year from the cut.
If your increase looks wrong
The window is one year, and it closes twice. Section 136(2) treats an increase as lawful unless an application putting its lawfulness in issue is made within one year of it being first charged. Section 135(4) bars an order for money collected illegally on an application filed more than one year after the collection. Miss the window and a wrong increase becomes your lawful rent.
Frequently asked questions
I rent a condo in a tower finished in 2021. Can my landlord raise the rent by any amount?
Probably. But the test is the whole building, not the year on the brochure, and section 6.1(6) puts the burden on the landlord to prove it. Either way you are owed 90 days' notice on Form N2, and no more than one increase every 12 months.
Does the guideline cover my parking spot and locker?
It covers whatever is inside your rent. But section 123 lets a landlord raise the rent at any time if you agree to add a parking space, or a thing listed in section 16(1) of O. Reg. 516/06. That list is cable, satellite, an air conditioner, extra electricity for one, a locker, heat, electricity, water or floor space. That increase sits outside the guideline and, under section 123(2), outside the 90-day and 12-month rules. Section 16(2) caps it at the landlord's actual cost, or a reasonable amount based on value where that cost cannot be worked out or there is none. Floor space is charged in proportion under section 16(3). Section 124 voids such an agreement if it was obtained by pressure or by a false, incomplete or misleading statement.
My landlord says property taxes went up, so the rent goes up more. Is that automatic?
No. It takes an application filed 90 days ahead, a Board order, and, for a 2027 increase, a tax rise above 2.85%. The 3 per cent yearly cap does not apply to the tax ground, so such an order can go past it.
If you are unsure whether your unit is exempt, the Ministry's page says either side can contact the Board: 416-645-8080, or 1-888-332-3234 toll-free.
Sources (10)
- Residential rent increases · Ministry of Municipal Affairs and Housing (retrieved )
- Residential Tenancies Act, 2006, S.O. 2006, c. 17 (King's Printer Word export) · King's Printer for Ontario (retrieved )
- O. Reg. 516/06 (General) under the Residential Tenancies Act, 2006 (King's Printer Word export) · King's Printer for Ontario (retrieved )
- Form N1: Notice of Rent Increase · Landlord and Tenant Board (retrieved )
- Form N1 Instructions · Landlord and Tenant Board (retrieved )
- Form N2 Instructions: Notice of Rent Increase (Unit Partially Exempt) · Landlord and Tenant Board (retrieved )
- Information about Applications for a Rent Increase Above the Guideline · Landlord and Tenant Board (retrieved )
- Interpretation Guideline 14: Applications for Rent Increases Above the Guideline · Landlord and Tenant Board (retrieved )
- Automatic Rent Reductions and Tax Decreases · Landlord and Tenant Board (retrieved )
- Forms, filing and fees · Landlord and Tenant Board (retrieved )
How this guide was made
Checked on August 26, 2026, with every source re-fetched fresh that day. Both guideline figures come from the Ministry of Municipal Affairs and Housing's own page, Residential rent increases (updated June 23, 2026), which also supplies the guideline series back to 1991 and the Ministry's sample calculation. Every section number, period, percentage and test below was read in the King's Printer Word export of the Residential Tenancies Act, 2006 at ontario.ca/laws/docs/06r17_e.doc, whose header reads 'Consolidation Period: From July 1, 2026 to the e-Laws currency date. Last amendment: 2025, c. 14, Sched. 12', and in O. Reg. 516/06 in the same format ('Consolidation Period: From July 21, 2026 to the e-Laws currency date. Last amendment: 241/26'), not in any summary of them. Procedure came from the Landlord and Tenant Board's Form N1 (v. 01/04/2022) and its instructions, the N2 instructions, Interpretation Guideline 14, and the Board's brochures on above-guideline applications (updated April 2, 2025) and automatic rent reductions. The compounded index column in the table is my own arithmetic on the Ministry's published guideline series and is labelled as such. This is general information, not legal advice.
