Ontario's 2027 Rent Increase Guideline Is 1.9%: What It Covers and What It Doesn't

Ontario's rent increase guideline for 2027 is 1.9%. For 2026 it is 2.1%. 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.

Because an increase needs at least 90 days' written notice, one taking effect January 1, 2027 must be served in early October 2026. Anything effective 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 the first rental period for a new tenant "the rent first charged to the tenant": vacancy decontrol, in one section. 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." In a retirement home it governs the accommodation part of the bill, not nursing, food or cleaning. Those need their own 90 days' notice under section 150, 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", 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 statutory maximum, in 2023, 2024 and 2025. The 2021 zero was legislated: 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 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.

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", and section 116(4) makes an increase void if that notice was not given. The Form N1 instructions add how: 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) deems an otherwise void increase not void "if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months". But subsection (2) switches the rescue off where the tenant has, within one year after the increase was first charged, applied in a way that puts its validity in issue.

Twelve months between increases. Section 119(1) allows an increase only if at least 12 months have elapsed since the last increase for that tenant in that unit, or, if there was none, since 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 where the unit "is exempt from the rules under the RTA limiting the amount of the rent increase", Form N3 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 states 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 the building-level test, not a unit-level one. What its summary leaves out is s. 6.1(4) and (5), the carve-back for a tenancy agreement entered into before November 15, 2018. The operative text is section 6.1, which 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", or 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: 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; which became such a unit 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 immediately 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 tenancy alone, so the next tenancy is exempt again. Section 6.1(6) puts the onus on the landlord to prove the exemption applies.

Read the exempted sections again: 116 and 119 are on neither list. 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 machinery (sections 126 to 133) off community and social housing: federal housing, designated projects under the Housing Services Act, 2011, 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 RGI tenants and for units in paragraphs 5 and 6.

Section 5 removes the Act entirely from, 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; and accommodation occupied to receive agreed rehabilitative or therapeutic services, where the parties agreed on a set duration or on ending when the objectives 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: an extraordinary increase in the cost for municipal taxes and charges, eligible capital expenditures, 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", using 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%. Taxes must rise by more than 2.85% before a 2027 application can rest on them.

Section 126(11) holds the percentage attributable to capital expenditures and security services to no more than 3 per cent, with any remainder spread across the following 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 excludes ordinary work, regular maintenance, substantially cosmetic work and work meant to raise the complex's prestige or luxury. Section 27(2) of O. Reg. 516/06 never takes its useful life as less than 10 years. It must be completed within an 18-month window ending 90 days before the first increase and 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 completed.

While the application is pending, section 126(5) caps what you must pay at the lesser of the notice's new rent and the greatest amount the landlord could charge without applying, ordinarily the guideline increase. Section 126(6) lets you pay the notice amount instead, and makes the landlord owe you 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 attributed to the capital expenditure.

Under section 121 a landlord and tenant may instead agree to go above the guideline for a specified capital expenditure or a new or additional 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 force earlier than six days after signing. It is Form N10, and section 121(6) means no N1 goes with it.

When rent goes down

Two mechanisms, both under-used. Section 131 reduces the lawful rent automatically when municipal property tax on the complex falls by more than the prescribed percentage: 2.49 per cent, set by section 41(1) of O. Reg. 516/06. The reduction is a fraction of the tax cut: 20 per cent of the tax decrease for the multi-residential property class and 15 per cent otherwise, which the Board's brochure restates as 7 or more units versus 6 or fewer. 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, municipalities must notify 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 takes possession after that date. No application is needed to take it; 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 discontinued or reduced, within one year of the reduction.

If your increase looks wrong

The window is one year, and it closes twice. Section 136(2) deems an increase lawful unless an application putting its lawfulness in issue is made within one year of it being first charged, and section 135(4) bars an order for money collected illegally on an application filed more than one year after the collection. Miss it and a wrong increase becomes your lawful rent.

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.