CHAPTER 16: INCREASING THE RENT Emond Montgomery Publications 1

Chapter 16: Increasing the Rent The Guideline The 12-Month Rule Written Notices of Rent Increase What is Lawful Rent? Discounts Validation of Initially Illegal Rent Increases Emond Montgomery Publications 2

The Guideline Rent control restricts the amount of rent that could otherwise be charged in a free-market environment Rent control has been in place in Ontario since 1975 At an appropriate rent-increase date, a landlord in Ontario always has the ability to raise the rent in accordance with a guideline that is announced each year by the government The guideline for the calendar year is determined using the Consumer Price Index for Ontario, averaged over a 12-month period. Tenants are required to pay the new rent, provided that proper notice of the rent increase is given and there are at least 12 months between rent increases Emond Montgomery Publications 3

The 12-Month Rule There must be at least 12 months between rent increases imposed on a tenant in a rental unit (s. 119(1)(a)) After a unit is first rented, the landlord can only take a rent increase 12 or more months later These rules apply to some, but not all, units which are exempt from the guideline Emond Montgomery Publications 4

Written Notice of Rent Increase To increase rent, a landlord must generally give a tenant a written notice of increase 90 days before the intended increase is to take effect (s. 116(1)) Except for units exempt from the guideline, Form N1 should be used For units exempt from the guideline, Form N2 should be used For the units which are exempt, see Chapter 3, the section on partial exemptions Emond Montgomery Publications 5

What Is Lawful Rent? When a landlord and tenant first enter into a tenancy agreement, the parties agree upon a rent acceptable to both of them, which becomes the “lawful rent” (s. 113) This procedure is known as “vacancy decontrol” Emond Montgomery Publications 6

Discounts The RTA sets out two types of discounts: a “prompt-payment” discount is used as an incentive for the tenant to pay rent on time a “market discount” allows landlords to provide rent-free or rent- reduced periods as a marketing tool Emond Montgomery Publications 7

Validation of Initially Illegal Rent Increases Unless a tenant makes an application challenging the rent within one year of an alleged illegal increase, the rent charged and the rent increase taken are deemed to be lawful (s. 136) That applies to increases with 90 days written notice where the increase was higher than lawful The Court of Appeal has ruled that the validation does not apply to a rent increase taken without notice or with defective notice Emond Montgomery Publications 8