Author: Anika Helen - Paralegal
Edited By: Ryan Carson

What is rent control?

The term “rent control” means “rent stabilization”, which allows to establish a small, set percentage by which landlords can increase rent each year. Rent control in Ontario specifically refers to the system of rent regulation in Ontario.

What are some of the main features of rent control?

Vacancy Decontrol
Landlords can increase the price of a vacant rental property for new tenants. There is no set amount as to how much a landlord can increase the rent to. As long as the tenant agrees to pay, the rent can be increased to anything that is agreed up on by both parties. However, it is important for landlords to keep in mind that rent increase has to be reasonable enough to get new tenants. For example, rent for a two-bedroom apartment should not be increased to $4,000 a month from $1,800, as it would be difficult to find renters for the property. There may be cases where an order prohibiting a rent increase (OPRI) is in effect, in which case a landlord may only collect the previous lawful rent from a new tenant until the order for OPRI ceases to apply.

If a rental unit is located in a building, mobile home park or land lease community, or an addition to such entity, where no part of such entity was occupied for residential purposes on or before November 15, 2018, there is no guideline restriction on the annual rent increase. Rent increases are also not restricted to the guideline in rental units in single detached, semi-detached, or row houses if the house meets the detailed physical criteria and the rental unit was created after November 15, 2018. Nevertheless, notice requirements for rent increase still applies just as the same for rental units that are not exempt from this guideline.

Rents however cannot be illogically increased on a change in ownership or when capital expenditures are incurred. The legal rent runs with the building, at least until the unit is vacant to be rented out to new tenants. According to the express statutory exemptions, a rent increase order or tenant agreement is required to increase rents above the annual guideline.

There are previsions in the Residential Tenancies Act, S.O. 2006, c.17 (RTA) addressing:

Assignments, to ensure a balanced process for a tenant wanting to assign his or her unit, since an assignment prevents the landlord from being able to set a new rent for a new occupant (ss. 95-96);
And harassment, to discourage landlords from using inappropriate strategies to obtain possession of units to re-rent at new, lawful rents (ss.23, 29 and 30).

Annual Increases and Decreases
Although landlords are entitled to set lawful rents for new tenancies under the RTA without regard to past rents, the new rents negotiated then become subject to normal rent control system, set out in s. 113 of the RTA, unless the units are exempt from the guidelines under ss. 6-8 of the RTA.

The Ministry of Housing sets the guideline for the annual maximum percentage increase for residential rents. It is usually based on inflation and the Consumer Price Index (CPI) for Ontario. However, regardless of the CPI the guideline can never exceed 2.5%. The guideline is usually fixed in every August for the following year. Rents can be increase only once every 12 months and a 90-day written notice has to be provided to the tenant on the proper form.

As discussed above, there are two ways that rent can increase on the set date by more than the guideline:

The landlord has brought an application for above-guideline rent increase;
And the landlord and tenant have entered into an agreement in the required form, explaining why the rent had to be increased and that the tenant agrees with the decision. Rent can only be increased up to 3% above the guideline of 2.5%.

Rents can also be increased during the tenancy year and not just the anniversary date, if the landlord is providing a new service or amenity to the tenant. For example, additional parking space, gym access, etc. and a notice for rent increase in this scenario is not required. And there is NO cap on the amount of increase, but it has to be related to the cost of the service being provided.

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