What to Expect When the Provincial Rent Freeze Ends
December 27, 2021
Landlords can increase residential rent 12 months after either the tenancy begins or the last rent increase was implemented. A rent increase guideline is released each year, based on the Ontario Consumer Price Index (CPI), which is a measure of inflation. According to the Residential Tenancies Act, 2006, the guideline averages the monthly Ontario Consumer Price Index over a twelve-month period that ends in May of the previous calendar year. The guideline represents the maximum amount a landlord can increase the rent in the following calendar year, without requiring the approval of the Landlord and Tenant Board (LTB).
Very few exceptions to the guideline exist, including long-term care homes, commercial properties, and newly built rental units rented for the first time after November 15, 2018. Landlords can also seek approval for increasing rent beyond the limit of the guideline from the LTB; this would typically apply in cases where the landlord is making significant improvements to a unit or building, adding new services for tenants such as air conditioning or parking, or there is a significant increase in utility charges. Landlords must give 90 days’ notice before a rent increase can take effect, using an N1 form (Notice of Rent Increase). Should tenants feel that they have received an improper rent increase, they can bring the issue to the LTB within 12 months for adjudication.
2021 Rent Freeze
On October 1, 2020 the Ontario Legislature passed Bill 204, Helping Tenants and Small Businesses Act, 2020. This Bill provided a province-wide residential rent freeze for the 2021 calendar year, and applies to the majority of rental tenants in Ontario. The rent freeze was meant to ease the financial impact of the COVID-19 pandemic on the average renter, as many faced unemployment, lower wages, or unpaid time off to care for children home from school or sick family members.
Many housing providers also offered deferred payment plans to renters having difficulty paying their rent due to financial strain caused by the pandemic. For landlords, the combination of some renters being unable to pay rent and deferred rent payments for many more meant a significant drop in revenue. At the same time, landlords’ operating costs increased in insurance, utilities, and cleaning expenses among others.
For those landlords facing mounting arrears accumulated throughout the pandemic, it is encouraged that they try to negotiate a rent repayment agreement with the tenant(s) in question before applying to the LTB for an eviction order. When considering eviction applications post-pandemic, the LTB is now considering whether the landlord has made good faith attempts to work with the tenant to address their arrears before seeking eviction. This will both mitigate evictions and decrease the burden on the LTB for mediating settlements. Landlords cannot impose a repayment agreement on a tenant, nor can a tenant be penalized (evicted, charged, etc.) for not agreeing to a proposed repayment plan.
2022 Rent Increase
The rent freeze will end on December 31, 2021. Landlords can increase rent as of January 1, 2022, as long as they have given the proper notice in writing (N1) at least 90 days prior. The province has set the Rent Increase Guideline for 2022 at 1.2%. This increase is below average for recent years (1.74% average increase between 2015 and 2019), but is in line with inflation. The 1.2% increase should offset the increased costs landlords have carried throughout the pandemic.
For those rental units that the rent increase guideline applies to, annual rent increases are not mandatory or automatic. It is up to individual landlords to decide whether to increase their tenants’ rent, and how much to increase the rent should they choose to (up to the annual guideline). However, given that the majority of Ontario rental units have not seen a rent increase since 2019, it is likely that increases early in 2022 will be common. As of October 1, 2021 many Ontario renters began receiving N1 Notices of Rent Increase to take effect on January 1, 2022.
For more information on the rent increase guideline, or to determine whether a unit is exempt from the guideline, contact the LTB:
Toll free: 1-888-332-3234