Rent Increase Essentials: What Every Ontario Property Owner Needs to Know

Raising rent is one of the most sensitive responsibilities of being a landlord. Do it wrong and you risk tenant disputes, delays, or even legal penalties. Do it right and you protect your income while staying fully compliant with Ontario’s Residential Tenancies Act (RTA).

This guide explains the rules, notice periods, exemptions, and strategies for raising rent in Ontario—so you stay in control of your property without stepping outside the law.

1. Who Sets the Rent Increase Guideline?

The Ontario government sets an annual rent increase guideline.

For 2025, the guideline is 2.5%. That means landlords can raise rent by no more than 2.5% on most residential units, unless they apply for special approval.

The guideline applies to units that were first occupied on or before November 15, 2018.

Units first occupied after November 15, 2018—such as new builds, basement apartments, or additions—are exempt from rent control. For those units, landlords can raise rent by any amount once every 12 months, provided proper notice is given.

2. How Often Can You Raise Rent?

Rent can only be increased once every 12 months.

The 12-month period is measured either from the start of the tenancy or from the last legal rent increase.

Even if your unit is exempt from rent control, you must still respect the 12-month rule.

3. Serving Proper Notice

Ontario law requires at least 90 days’ written notice before a rent increase can take effect.

Use the official Form N1: Notice of Rent Increase.

The notice must include:

Current rent amount

New rent amount

Percentage increase

Date the increase takes effect

Statement of whether the increase is within the guideline or above it

If the notice is incomplete or served incorrectly, the rent increase is invalid, even if the percentage is correct.

4. Above-Guideline Increases (AGI)

In certain circumstances, landlords may apply to the Landlord and Tenant Board (LTB) to raise rent by more than the guideline. This is called an Above-Guideline Increase (AGI).

When AGI Can Apply

Capital expenditures: Significant repairs or upgrades that extend the life of the property (e.g., new roof, heating system replacement).

Extraordinary increases in municipal taxes or utilities: Increases that are well above normal inflation.

Security services: New or more expensive security measures such as 24-hour guards.

Limits

The LTB generally caps AGIs at 3% above the guideline per year, for up to three years.

For extraordinary municipal tax increases, there is no cap.

Process

Give tenants 90-day notice of the proposed increase.

File an AGI application with the LTB.

Attend a hearing (phone, video, or written process).

The LTB decides whether to approve, reduce, or deny the request.

5. How to Calculate Rent Increases

Example 1: Within the Guideline

Current rent: $1,500

Guideline: 2.5%

Increase: $37.50

New rent: $1,537.50

Example 2: Above Guideline with Approval

Current rent: $1,500

Guideline: 2.5%

Approved AGI: 3% additional

Total increase: 5.5% = $82.50

New rent: $1,582.50

6. Exempt Units

If your property qualifies as exempt (occupied for the first time after November 15, 2018):

You may set any rent amount at the beginning of the tenancy.

You may increase rent by any amount, but only once every 12 months.

You must still give 90-day written notice using Form N1 or equivalent.

7. Common Mistakes Landlords Make

Raising rent too soon: Forgetting about the 12-month rule.

Improper notice: Using the wrong form or not providing all details.

Failing to document exemption: If the unit is exempt, keep building permits, occupancy certificates, or other proof.

Attempting an AGI without evidence: You need receipts, invoices, and records for capital expenditures or tax increases.

8. Tenant Rights to Challenge Increases

Tenants can dispute rent increases at the LTB if:

The notice was invalid.

The increase was above guideline without proper approval.

The landlord claimed AGI but cannot prove the expenses.

If a tenant challenges the increase, the landlord must show evidence that the increase was valid under the RTA.

9. Strategies for Property Owners

Plan increases annually: Even if you don’t need the extra rent today, small increases each year are easier for tenants to absorb and protect your income long-term.

Document everything: Notices, receipts, and proof of exemption should always be on file.

Budget for capital expenses: If you anticipate large repairs, plan ahead so you can justify AGIs properly.

Stay professional: Rent increases are sensitive. A clear explanation and professional communication reduce disputes.

10. Quick Reference Table

Rule	Requirement
Frequency	Maximum once every 12 months
Notice	90 days’ written notice (Form N1)
Guideline for 2025	2.5%
Exempt Units	Occupied after Nov 15, 2018 – not subject to cap
Above Guideline Increase	Requires LTB approval; up to 3% above guideline/year
Documentation	Lease, notices, receipts, tax records, AGI evidence

Final Word from Visture

Raising rent in Ontario isn’t complicated, but it is structured. Stick to the guideline, respect the 12-month and 90-day rules, and keep your paperwork tight. If you need an AGI, be prepared with strong evidence.

At Visture, we help property owners apply the rules correctly. From drafting notices to representing landlords at the LTB, we manage the process so you don’t risk delays or disputes.