N2 Form Ontario — Rent Increase Notice for Exempt Units

When You Need Form N2 Instead of N1

Form N2 (Notice of Rent Increase — Unit Partially Exempt) is the prescribed LTB form for units exempt from Ontario's annual guideline cap under RTA s. 6.1. If your unit qualifies, you can set the increase amount yourself — there is no percentage ceiling. But the 12-month frequency rule and the 90-day notice requirement still apply in full.

Using the wrong form is a fatal error. An N1 served on an exempt unit or an N2 served on a controlled unit voids the notice entirely. You cannot fix it with a correction letter; you must issue a fresh notice and restart the 90-day clock.

Which Units Qualify for N2?

Two categories of units are exempt from guideline percentage caps:

Purpose-built rentals and condos (s. 6.1(2)): The unit is in a building where no part was occupied for residential purposes on or before November 15, 2018. The test is the building's first residential occupation date, not the date of the current lease or the date you purchased the unit. A 2020-built condo tower where the first tenant moved in during 2021 qualifies. A 2019-renovated unit in a building that had residential tenants in 2015 does not.

Secondary suites and basement units (s. 6.1(3)): The unit is in a detached, semi-detached, or row house that contained no more than two residential units on or before November 15, 2018. The secondary suite must have been created after that date, contain its own self-contained bathroom and kitchen facilities with secure interior and exterior locking doors, and meet at least one of two conditions: the owner lived in another unit in the house when the suite was first occupied, or the suite was built entirely within previously unfinished space (such as an unfinished basement).

If your RTA-covered unit does not clearly meet either test, use Form N1 and stay within the guideline. Claiming an exemption you cannot prove exposes you to a T1 rebate application for every dollar above the guideline amount.

What Makes N2 Different from N1

Both forms require:

• The tenant's full legal name and rental unit address
• The current lawful rent
• The proposed new rent and the effective date
• At least 90 days of notice before the effective date
• The effective date to fall on the first day of a rental period or the day a fixed-term tenancy expires

The key difference: Form N1 locks you to the published guideline percentage (2.1% for 2026, 1.9% for 2027). Form N2 has no percentage field — you state the new dollar amount directly. There is no cap, so a landlord could technically raise a $1,600 exempt unit to $2,000 in a single notice. The market and the tenant's willingness to stay are the only constraints.

The 12-month frequency rule under RTA s. 119 applies identically. You cannot increase an exempt unit's rent more than once in a 12-month period, and you cannot stack missed years.

Proving Exemption Status

The burden of proof rests entirely on the landlord. If your tenant files a T1 claiming the unit is actually rent-controlled, you need documentation — not your word — to establish exemption.

For purpose-built rentals (s. 6.1(2)):

• Municipal building permit showing construction completion date
• Certificate of occupancy from the local municipality
• Property tax records showing no residential assessment before November 2018
• The builder's closing documents if you purchased a new-build condo

For secondary suites (s. 6.1(3)):

• Building permit for the suite conversion, dated after November 15, 2018
• Contractor invoices proving the space was previously unfinished
• Photographs of the unfinished state (if available)
• Property tax records showing the property had two or fewer units before the date
• Proof you occupied another unit in the house when the suite was first rented (utility bills, tax filings listing the address as your principal residence)

Keep these records permanently. A tenant can file a T1 about an illegal rent amount within 12 months of the date it was first charged or collected; the exemption question can still surface years into the tenancy after a later increase.

Serving the N2

Service rules are identical to Form N1. The same five permitted methods apply (hand delivery, mailbox/door slot, regular mail, courier, and email with written consent), with the same deemed-receipt timelines. Door posting and text messages are prohibited and void the notice.

For a January 1, 2027 effective date, the tenant must receive (or be deemed to receive) the N2 by October 3, 2026. Mailing adds 5 calendar days, so the post date would need to be September 28, 2026 or earlier.

Complete a Certificate of Service (Form P1) immediately after delivery. This is your proof if the tenant challenges the increase or the exemption status at the LTB.

A Practical Example

Scenario: You own a condo in a tower that opened in 2021. No residential tenants occupied any unit in the building before that date. Current rent is $2,200/month. You want to raise rent effective April 1, 2027.

• Form: N2 (the building qualifies under s. 6.1(2))
• Amount: Your choice — say $2,400/month ($200 increase, approximately 9.1%)
• 12-month check: Last increase (or tenancy start) must have been on or before April 1, 2026 ✓
• 90-day notice deadline before April 1, 2027: tenant must receive by January 1, 2027
• If mailing: post by December 27, 2026

You would also keep the builder's completion certificate, your purchase agreement showing the 2021 occupancy start, and the municipal occupancy permit on file in case the tenant challenges the exemption.

When to Consult a Professional

If the unit's history is genuinely ambiguous — a building with partial residential use before 2018, a suite conversion where the timing is unclear, or a property that changed hands multiple times — the wrong form choice voids your increase and opens you to a rebate claim. A 30-minute consultation with a licensed paralegal can resolve the question before you serve a notice that might not hold up.

The Ontario Rent Increase Guide includes an exemption evidence checklist that walks through both s. 6.1(2) and s. 6.1(3) document requirements, plus the full N1 and N2 process side by side. It is designed for landlords managing the notice themselves.

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