How Much Can a Landlord Increase Rent in Ontario?

The Short Answer: It Depends on When Your Unit Was First Occupied

For most rental units in Ontario — those first occupied for residential purposes on or before November 15, 2018 — the maximum allowable rent increase is the annual guideline published by the Ministry of Municipal Affairs and Housing. For 2026, that guideline is 2.1%. For 2027, it's 1.9%.

Units first occupied after November 15, 2018 are exempt from the guideline cap under RTA Section 6.1. For a standard rent increase, landlords of exempt units can increase rent by any amount, though they still must give 90 days' notice on the prescribed LTB form and respect the 12-month frequency rule. A separate rule in RTA Section 36.1 allows a limited electricity-cost increase if a tenant installs and uses a window or portable air conditioner on or after July 1, 2026, and the landlord is obligated under the tenancy agreement to supply electricity. That increase is exempt from the usual guideline, notice, and 12-month restrictions unless the tenancy agreement expressly allows the air conditioner without a rent increase.

How the Annual Guideline Is Set

The Ministry calculates the guideline each year based on the change in Ontario's Consumer Price Index over the 12 months ending May 31 of the previous year. Under RTA Section 120(2), the guideline can never exceed 2.5%, regardless of how high inflation runs.

The rate that applies to your increase is determined by the effective date, not the date you serve the notice. A notice served in November 2026 for a January 1, 2027 effective date uses the 1.9% rate.

What the Cap Means in Dollar Terms

On a $2,000 monthly rent:

• 2026 increase (2.1%): $42.00 per month, bringing rent to $2,042.00
• 2027 increase (1.9%): $38.00 per month, bringing rent to $2,038.00

On a $2,500 monthly rent:

• 2026: $52.50 → $2,552.50
• 2027: $47.50 → $2,547.50

The calculation applies only to the lawful base rent. If you've formally separated parking or storage charges under RTA Section 123, those are excluded.

When There Is No Cap

Three situations allow increases above the guideline:

1. Exempt units (RTA Section 6.1). If the entire building was first occupied after November 15, 2018, or the unit is a qualifying secondary suite created after that date, the guideline percentage does not apply. You use Form N2 instead of Form N1, and the increase amount is whatever you and the market determine — subject to the 12-month rule and 90 days' notice.

2. Above-guideline increases (Form L5). Landlords of rent-controlled units can apply to the LTB for an increase above the guideline based on extraordinary municipal tax increases, eligible capital expenditures, or new security service costs. Capital expenditure AGIs are capped at 3% per year above the guideline, up to 9% over three years. The L5 must be filed at least 90 days before the requested effective date.

3. Voluntary agreement (Form N10). A landlord and tenant can agree to an increase above the guideline in exchange for specified capital improvements or new services. These agreements are capped at guideline plus 3%, and the tenant can cancel within 14 days.

Can You Make Up for Missed Years?

No. Under RTA Section 119, a skipped annual increase is permanently lost. If you didn't raise the rent in 2025, you cannot add the 2025 guideline onto your 2026 increase. Each year's increase is calculated against the current lawful rent at the current year's guideline rate. There is no catch-up mechanism.

Vacancy Decontrol: The Reset

When a tenant moves out and the unit becomes vacant, Ontario's vacancy decontrol rules under RTA Section 113 allow the landlord and new tenant to agree on any initial rent. This resets the lawful rent baseline for the new tenancy, but does not change the unit's rent-control status. For a rent-controlled unit, vacancy decontrol is the route to set a new market rent with a new tenant.

The Practical Takeaway

For rent-controlled units, the maximum increase is the published guideline — 2.1% in 2026, 1.9% in 2027 — applied once every 12 months with 90 days' notice on Form N1. For exempt units, there is no percentage cap, but the notice and frequency rules still apply.

The Ontario Rent Increase Guide includes a rent increase calculation sheet, the Form N1 walkthrough, and the exemption evidence checklist for landlords working through the full process.

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