In This Article
What is the Rent Increase Guideline?
Ontario's rent increase guideline is the maximum percentage by which a landlord can increase rent for an existing tenant in any 12-month period, without LTB approval. It is set annually by the Ontario government and is tied to the Ontario Consumer Price Index.
The guideline applies automatically to all rent-controlled units. A landlord cannot increase rent above the guideline without either the tenant's written agreement or an approved Above-Guideline Increase (AGI) from the LTB.
Key rule: The guideline applies to the unit, not the tenant. If a new tenant moves in, you can set rent at any amount — the guideline only restricts increases to an existing tenant during a continuous tenancy.
Which Properties Are Subject to the Guideline?
Not all rental units in Ontario are subject to rent control. The RTA was amended in 2018 to exempt newer units from the guideline.
| Property Type | Rent Control Applies? |
|---|---|
| Residential units first occupied for residential purposes before November 15, 2018 | Yes — guideline applies |
| Residential units first occupied for residential purposes on or after November 15, 2018 | No — guideline does not apply |
| Social housing, co-operative housing, and certain other exempt categories | Exempt — different rules apply |
What "first occupied" means: The exemption is based on when the unit was first occupied as a residential unit — not when you purchased the property or when the current tenant moved in. A unit built and first rented in 2020 is exempt even if a new landlord purchases it in 2025 and the tenant has lived there since 2020.
If you are unsure whether your unit was first occupied before or after November 15, 2018, check the building permit records with your local municipality or consult the property's original registration documents.
Recent Guideline History
The Ontario rent increase guideline is published each year by the Ministry of Municipal Affairs and Housing. For reference:
| Year | Guideline |
|---|---|
| 2022 | 1.2% |
| 2023 | 2.5% |
| 2024 | 2.5% |
| 2025 | 2.5% |
| 2026 | 2.1% |
Always verify the current guideline directly at ontario.ca before serving an N1. The guideline is set annually and this article may not reflect the most current figure. Using the wrong percentage on a notice can make it defective.
How to Calculate the Allowable Increase
The calculation is straightforward: multiply the current rent by the guideline percentage.
New Rent = Current Rent × (1 + Guideline %)
| Current Rent | 2.5% Guideline Increase | New Rent |
|---|---|---|
| $1,800/month | $45/month | $1,845/month |
| $2,000/month | $50/month | $2,050/month |
| $2,400/month | $60/month | $2,460/month |
| $2,800/month | $70/month | $2,870/month |
| $3,200/month | $80/month | $3,280/month |
You are not required to increase rent by the full guideline amount — you can increase by any amount up to the guideline, or choose not to increase at all. However, you cannot "bank" unused increases. If you skip a year, you cannot add the unused percentage to a future year's increase.
Serving the N1 Notice
To raise the rent, you must serve your tenant with an N1 — Notice of Rent Increase. This is the official LTB form and must be used — a letter or email is not an acceptable substitute.
The N1 form is available from the LTB website at tribunalsontario.ca.
N1 Notice Requirements
The N1 has strict timing and content requirements. Getting either wrong means the notice is defective and the rent increase cannot take effect.
| Requirement | Rule |
|---|---|
| Minimum notice period | At least 90 days before the effective date of the increase |
| Effective date | Must be on the first day of a new rental period (e.g., the first of the month for monthly tenancies) |
| Minimum time between increases | At least 12 months must have passed since the last rent increase (or since the tenancy began, if no increase has been given) |
| Amount | Must not exceed the guideline for that calendar year (unless an AGI is approved) |
| Form | Must use the official LTB N1 form |
90-day rule in practice: If your tenant pays rent on the 1st of each month and you want the increase to take effect October 1, you must serve the N1 no later than July 2 (90 days before October 1). Serving it on July 3 means the earliest effective date is November 1.
Service Methods for the N1
The N1 must be served using an LTB-approved method:
- Hand delivery to the tenant — deemed served same day
- Leaving in the mailbox or under the door — deemed served same day
- Regular mail — deemed served 5 days after mailing (add 5 days to your 90-day calculation)
- Email — only if the tenant has agreed in writing to receive notices by email
If you are mailing the N1, remember to add 5 days for deemed service. A notice mailed 90 days before the intended effective date will arrive late — you need to mail it at least 95 days before.
Above-Guideline Increases (AGI)
In limited circumstances, landlords can apply to the LTB to increase rent above the guideline. These are called Above-Guideline Increases (AGIs). They are not automatic — they require a formal LTB application and a hearing.
Grounds for an AGI include:
- Extraordinary increases in operating costs — municipal taxes, utilities, or insurance that have increased significantly above the guideline
- Capital expenditures — major improvements to the building (new roof, new plumbing, new HVAC) that are not routine maintenance
- Security services — costs of providing security services that have increased significantly
AGIs are contested. Tenants have the right to participate in AGI hearings and challenge the landlord's application. The process can take months. Capital expenditures must be properly documented and the LTB scrutinizes whether the work constitutes a capital improvement vs. routine maintenance.
When You Cannot Raise Rent
Even if you are within the guideline, there are situations where a rent increase is not permitted:
- Less than 12 months since last increase. You must wait a full 12 months between rent increases, regardless of the guideline.
- Outstanding LTB orders against you. If there is an outstanding LTB order regarding maintenance, repairs, or tenant harassment against the unit, an AGI will not be approved and some standard increases may be challenged.
- Unit not in good repair. While not an automatic bar to a standard guideline increase, tenants can apply to the LTB to have rent reduced if the unit is not maintained in a good state of repair — which can offset a rent increase.
- The tenancy agreement prohibits it. If a fixed-term lease contains provisions about rent that conflict with what you intend, review carefully before serving a notice.
Free: The Complete N-Form Guide Pack
Step-by-step procedures for the N1, N4, and N12 — including service requirements, notice periods, and the mistakes that get applications dismissed. Free download.
Download Free →Summary: Rent Increase Checklist
- Confirm your unit is subject to rent control (first occupied before November 15, 2018)
- Verify the current year's guideline at ontario.ca before calculating
- Confirm at least 12 months have passed since the last rent increase or tenancy start date
- Use the official LTB N1 form — not a letter or email
- Serve the N1 at least 90 days before the effective date (95 days if mailing)
- Set the effective date on the first day of a rental period
- Keep a copy of the notice and document how and when it was served
This article is for informational purposes only and does not constitute legal advice. Ontario tenancy law is regularly updated. Always verify the current rent increase guideline at ontario.ca and consult a licensed paralegal or lawyer for your specific situation.