February 22nd, 2014

Landlords Ask: How Much Can I Raise the Rent for New Condos, Townhouses, Houses and Buildings in 2014?

We informed Ontario landlords about the 2014 rent increase guideline back in June.

Lots of Ontario landlords were unhappy when they read the report and learned the Ontario government set the 2014 Rent Increase Guideline at only 0.8%.

The news led to even more frustration and even anger when an Ontario Landlords Association member was interviewed about the meager increase in the Toronto Sun newspaper.

The OLA member explained how the increase hurt small landlords and our ability to provide well maintained rental properties for our tenants.

Landlords can only raise the rent by 0.8% for current tenants in Ontario and many landlords feel it’s simply too low and doesn’t take into account the real rising expenses residential landlords face.

After all  Alberta landlords don’t have any rent increase guideline.

And British Columbia landlords area allowed to raise the rent by the rate of inflation PLUS 2 % to account for the special costs landlords knows we face.

The ridiculously low guideline has led some Ottawa landlords to want to leave the residential rental industry completely and move to commercial rental properties where there is more freedom to run run your rental business like a real business.

Are You Exempt from the 2014 Rent Increase Guideline?

We have received thousands of emails from landlords asking us to help clarify the Rent Increase Guideline for them.

Here’s A Common Question from a New Landlord On the Ontario Landlord Forum:

Excellent forum and thank you for all the good advice and posts here.

I bought a townhouse property which was newly built in 2013 and rented since Spring 2013.

My taxes are higher than expected and when I first took possession from the builder I forgot there was a fee for the road which is considered un-assumed and I have to pay a pretty big monthly fee to the builder to maintain it.

I currently rent the property for $1600/month and would like to raise the rent to take account for my increased costs.

I read that the 2014 rent increase is only 0.8% 

0.8% won’t cover my costs and I think I might be exempt from the because the property is only a year old. Can someone with experience explain how this works because I want to make sure I do it right.

You May Be Exempt From the Ontario Rent Increase Guideline

The annual guideline applies to most rental properties in Ontario. 

However, it you need to know it doesn’t cover all of them.

The Residential Tenancies Act has Section 6 (2) which lists where a landlord can raise the rent above the rent increase guideline.

It’s important you look at this carefully.

The Residential Tenancy Act and the rent increase guideline doesn’t apply to landlords if you meet the following criteria:

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:

1.         It was not occupied for any purpose before June 17, 1998

– meaning it is either in a new building (often a condominium building) built since 1998, or an older building with a new unit or never occupied, residentially or otherwise, before June 17, 1998;

2.         It is a rental unit no part of which has been previously rented since July  

            29, 1975

– meaning only the owner has used or occupied the unit since 1975; or

3.         No part of the building, mobile home park or land lease community was

            occupied for residential purposes before November 1, 1991

– meaning the building was probably commercially used before 1991 and then was converted to residential use.

Landlords Ask: If I Qualify For the Above What’s Next?

If any of the the above situations describe your situation, 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.

You can find these forms here: http://www.ltb.gov.on.ca/en/Forms/STEL02_111311.html

Some Groups Want To End This Important Rule for New Landlords

The NDP and Some Left Wing Toronto Councillors aren’t happy with rent increase exemptions, calling it a ‘loophole.’

Some claim it’s unfair and leads to some tenants being “hammered” by huge rent increases.

Others claim it leaves some renters vulnerable to large rent increases.

We will discuss this in future posts.

Ontario Landlords and Raising the Rent

Landlords make sure you are aware of the rules.

The rent increase guideline exemption is designed to encourage investment in new rental properties and it exists for you to use it.

Ontario Landlords, make sure you are aware of the rules and do proper tenant screening to find great tenants, cover your costs, make profits and have a successful rental business.