Each year the Ontario government via the Ministry of Municipal Affairs and Housing announces the province’s rent increase guideline for the following year. The formula used to arrive at the annual rent increase guideline is based on the Ontario Consumer Price Index (CPI). The Consumer Price Index is released monthly by Statistics Canada and is widely regarded as a reliable and objective measure of inflation.
The 2015 rent increase guideline is calculated by averaging the percentage change in the Ontario Consumer Price Index during the previous 12 months from June 2013 to May 2014.
Increasing Your Rent by the Guideline – Landlord and/or Tenant Requirements
The rent for a unit can be increased up to the guideline limit if at least 12 months have passed since a tenant first moved in, or if at least 12 months have passed since the last rent increase. In addition the landlord must provide at least 90 days notice to tenants prior to effecting a rent increase.
Changes to Extraordinary Operating Costs Increase
- There will be a change to the threshold for what qualifies for an extraordinary operating cost increase in 2015. According to the regulations, “an increase in the cost of municipal taxes and charges or utilities is extraordinary if it is greater than the guideline plus 50 percent of the guideline”. That means that the threshold for extraordinary operating costs will be 2.4% for 2015.
Changes to interest rate on last month’s rent deposits
- The interest rate on last month’s rent deposits also changes in accordance with the Residential Tenancies Act which requires interest to be paid to the tenant annually at a rate equal to the guideline. The interest rate on last month’s rent (LMR) deposits for 2012 will be 1.6%.
Quick FACT – Always Ask for the age of the condo/building as exemptions exist; and some buildings and most of the new condos are not governed by the annual rent increase guideline
|Exemptions from the Annual Rent Increase Guideline:|
|The annual guideline applies to most, but not all residential rental properties in Ontario. The Act lists situations, in section 6 (2), in which a landlord may increase rent to an amount that is not limited to the guideline amount.
The provisions of the RTA that deal with the maximum amount by which rents can be increased do not apply with respect to a rental unit if:
In the above situations, an N2 rent increase form can be given when increasing the rent by any amount. In most other situations (unless the rent increase is by agreement of both parties) an N1 form should be given to increase rent only by the guideline.
Landlords are required to provide 90 days written notice when increasing the rent using either the N1 or N2 form, available online at: http://www.ltb.gov.on.ca/en/Forms/STEL02_111311.html
Managing with head and heart♥