The annual rent increase guideline
The Ministry of Municipal Affairs and Housing publishes an annual rent increase guideline. It's based on the Ontario Consumer Price Index and is capped (typically at 2.5%). Recent guidelines:
- 2023: 2.5%
- 2024: 2.5%
- 2025: 2.5%
- 2026: Verify the current year's guideline at ontario.ca/page/residential-rent-increases (announced annually).
The guideline applies to rent-controlled units (see exemption below). The landlord can apply the guideline to existing tenancies once every 12 months, with 90 days written notice on Form N1.
The November 15, 2018 exemption
The Rental Fairness Act exempted units first occupied for residential use on or after November 15, 2018 from rent control. On these units, the landlord can raise rent by ANY amount, subject only to the 12-month rule and 90-day notice.
Practical effect for Toronto: a meaningful share of new-build condo stock (most condos that started leasing in 2019 or later) is in this category. As a tenant, ask:
- When was the building first occupied?
- When was this specific unit first occupied for residential use?
This is a material question. A 10% annual rent increase on a $3,000/month unit is $300/month — $3,600/year of cost difference vs. a guideline-controlled unit. Many tenants don't know to ask until the first notice arrives.
Above-guideline increases (AGI)
Even on rent-controlled units, landlords can apply for an above-guideline increase through the LTB when:
- The landlord has incurred capital expenditures for major repairs / replacements (windows, roof, mechanical systems).
- Operating costs related to security services have increased.
- Municipal taxes or utilities have risen extraordinarily.
The application is filed with the LTB; tenants receive notice and can attend the hearing. The granted increase is on top of the regular guideline and can be spread over several years. AGI applications are most common in older purpose-built rental buildings, less common in condo rentals.
Vacancy decontrol
Ontario has vacancy decontrol: when a tenant vacates, the landlord can set the new tenant's rent at any market level. There's no rent-control "freeze" that carries between tenancies.
Practical implication: the rent you negotiate at the START of your tenancy is your reference rent for the duration. Negotiate hard at signing — the rent can only rise by the guideline (or by anything, if exempt) once you're in.
For landlords with rent-controlled units, vacancy decontrol creates an incentive to encourage tenant turnover — which is why the RTA carefully restricts the reasons for landlord-initiated terminations.
New tenancies after the lease ends
When a one-year lease term expires, the tenancy doesn't end — it continues as a month-to-month under the same terms. The landlord can still raise rent (with proper notice and timing), but cannot terminate or require renewal at higher terms.
Some landlords ask tenants to "sign a new lease at higher rent" after one year. This is unenforceable — you don't have to. The month-to-month continues automatically and the rent stays the same until a proper N1 notice raises it on the schedule allowed.
That said, signing a new fixed-term lease can have advantages: it locks the rent for another fixed period and can be used to negotiate things (e.g. landlord agrees to a kitchen upgrade in exchange for a 24-month renewal). Tactical, not mandatory.
Frequently asked questions
How do I know if my unit is rent-controlled?
Ask the landlord when the unit was first occupied for residential use. If before November 15, 2018: rent-controlled. If on or after: exempt. The landlord must be truthful; you can also check the building's occupancy permit date with the City as a cross-check.
Can the landlord give me notice mid-lease that rent is going up?
Only if the notice takes effect at least 12 months after the last rent increase (or the start of the tenancy) and at least 90 days in the future. Mid-lease notice effective in the same lease term is sometimes valid for the next year, sometimes not — check the dates carefully.
What if my landlord raises the rent illegally?
You can file a Form T1 with the LTB seeking an order for return of the excess rent paid. There's a 12-month window from the date of payment.
Can my landlord refuse to renew my lease and ask me to move?
No — the RTA doesn't let the landlord refuse renewal. The month-to-month tenancy continues until properly terminated (by either side) under one of the RTA's specific grounds. A request to leave at the end of the term is not legally binding.
Talk to a Toronto Condo Broker
I'm Scott — a licensed Broker at Central Home Realty Inc., Brokerage, focused on the Toronto downtown condo market. If you have a question about anything you read here, send me a note. I read every message myself.