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The Ontario housing market remains one of the most talked-about subjects influenced by an active force of supply, demand, and affordability. Entering 2025, the rental market in the province can be summarized as having low vacancy rates that have persisted over time- the Canada Mortgage and Housing Corporation (CMHC) has reported levels approximating 1.6 percent in most popular cities- and issues with the living costs that have always been present. It is not merely desirable, but necessary, to know the regulations that relate to rent in this highly competitive business world.
These rules are essential to the tenants due to the stability and guaranteed defenses against unexpected, unaffordable rent hikes. To landlords, they provide them with a clear framework for handling their investment properties as well as having a good and lawful relationship with their tenants in a conducive manner. Both a tenant, as a person wishing to plan the upcoming year financially, and an owner or manager of property, as a person who wants to know in advance the measures he/she will have to take to adjust rent levels, will profit by getting the answer to the question, how much can a landlord increase rent in ontario, right away.
This guide will walk you through everything you need to know about the ontario rent increase 2025, from the official guideline to the specific forms and timelines required. We will explore exemptions, the process for increases above the standard limit, and the rights and responsibilities of both parties.
Each year, the Ontario Ministry of Municipal Affairs and Housing sets a rent increase guideline that dictates the maximum rent increase ontario landlords can implement for most existing tenants without special approval.
For 2025, the official guideline has been set at 2.5%.
This figure is determined by the Ontario Consumer Price Index (CPI), a measure of inflation and the changing cost of a basket of common goods and services. The government caps this guideline to prevent extreme increases, even in years with high inflation, providing a balance between a landlord's rising costs and a tenant's need for affordability. The 2025 rent increase ontario guideline of 2.5% applies to the vast majority of private residential rental units in the province, including those with monthly, weekly, or fixed-term (e.g., one-year) leases.
How does it work in practice?
If a tenant's current rent is $2,000 per month, a 2.5% increase would be calculated as follows:
2,000×0.025=$50
The new rent would amount to 2,050 dollars a month. A landlord cannot round it out; there has to be an increase. It is worth mentioning here that a landlord is not supposed to raise the rent by any amount, not to mention raising the rent by 2.5%. This percentage is merely the statutory limit on what a typical rise in rent is to be.
A landlord is only allowed to raise the rent once every 12 months and only after 12 months the tenancy has commenced or after a movable increase was last made.
A rent increase can only be legal in case the landlord goes about it the right way, and this is by issuing a sufficient and positive notice. According to the Residential Tenancies Act, 2006 (RTA), this process is strictly defined in the province of Ontario.
The legal requirement is a minimum of 90 days' written notice before the rent increase is set to take effect.
This implies that the landlord should at least 3 months (regulated by the property and the time) in advance give the tenant official notice informing of the new and increased rent. To illustrate, in case a landlord needs to raise the rent that will begin on May 1, 2025, the landlord is to file the notice to the tenant no later than January 31, 2025.
Critically, this notice must be delivered using the official ontario rent increase form designated by the Landlord and Tenant Board (LTB). This form is called the Notice of Rent Increase Form N1. A simple text message, email, or verbal conversation is not a legally valid notice.
The notice of rent increase form N1 must be filled out completely and accurately, including:
Such regulations are independent of any type of leasing. The requirement to use Form N1 and the 90-day notice applies even to a tenant on a month-to-month tenancy after their initial lease period has expired. When they do not follow these rules, the whole increase in rent becomes invalid.
Must Read: Your Rights as a Tenant: A Complete Guide
While the 2.5% guideline for the rent increase in 2025 Ontario covers most tenants, a significant exception exists that both landlords and tenants must be aware of. Not all rental units in Ontario are subject to the provincial rent increase guideline.
The primary exemption applies to new construction. Specifically, rental units are exempt from the guideline if:
For these non-rent-controlled properties, landlords can increase the rent by any amount they choose. However, they must still follow the other rules under the RTA. This means they are still required to:
The provincial government created this exemption to encourage the development of new rental products. It, however, forms a two-tier system in which occupants in newer buildings are deprived of a capped rent, which might go up significantly, year by year.
Social housing units (whose rent is frequently at income levels) are usually other specific exemptions of the guideline, as well as commercial properties and some care/ retirement homes. In case you are unsure whether your unit is exempt or not, it is vital to check the date of occupancy of your unit or contact the LTB.
In certain situations, a landlord may need to increase the rent by more than the 2.5% guideline, even for a rent-controlled unit. This is legally permissible but requires a formal application and approval from the Landlord and Tenant Board. This process is known as applying for an above guideline rent increase ontario.
A landlord cannot unilaterally decide to charge more. They must file a Landlord Application for an Above Guideline Increase (Form L5) with the LTB. There are only three specific circumstances under which an AGI may be approved:
The AGI Process for Tenants and Landlords:
When a landlord applies for an AGI, tenants must be notified and will receive a copy of the application from the LTB. Tenants have the right to review the evidence, challenge the costs, and participate in the LTB hearing. The LTB will review the landlord's expenses and determine if they are justified. If approved, the LTB will issue an order stating the total allowable increase, which is typically capped at 3% above the guideline per year and can be phased in over several years if the total cost is very high.
To ensure fairness and prevent exploitation, the RTA clearly outlines situations where a rent increase is illegal. A landlord cannot legally raise the rent if:
If a landlord attempts to impose an increase under any of these conditions, the increase is void, and the tenant is not required to pay it.
Also read: When Can a Landlord Evict a Tenant in Ontario? (2025 Guide for Tenants & Landlords)
Receiving a rent increase notice can be stressful. Fortunately, tenants have several tools at their disposal to verify if the increase is legal and compliant with the rent increase ontario 2025 rules.
If you have determined that a rent increase is illegal, you have several options.
The 2025 rent increase ontario guideline of 2.5% exists in the context of a much hotter rental market. Data from sources like Rentals.ca and the CMHC consistently show that asking rents for vacant units are rising at a much faster pace.
In 2024, year-over-year average rent growth for new listings in major Ontario cities far outpaced the guideline:
This disparity highlights the value of rent control for existing tenants. Someone who has lived in a rent-controlled unit for several years is likely paying significantly less than the current market rate for a similar unit next door.
How Ontario’s Cap Compares:
Ontario's 2.5% cap for 2025 is relatively tenant-friendly compared to other provinces. For instance, British Columbia announced a 3.5% cap for 2024. Alberta has no provincial rent control, allowing for unlimited increases with proper notice. Quebec uses a complex calculation that often results in a different recommended rate for heated vs. unheated units. This makes Ontario's straightforward cap a critical piece of its tenant protection framework.
Understanding the answer to "how much can you increase rent in ontario" is crucial for fostering a stable and lawful rental market.
For Tenants: Knowledge is your best defense. Knowing your rights—the 2.5% cap, the 90-day notice period, and the official N1 form—empowers you to identify and dispute unlawful increases. It provides the security of knowing your housing costs won't unexpectedly skyrocket, allowing for better financial planning. Always keep copies of your lease, N1 notices, and records of rent payments.
For Landlords: Compliance is key to good business. Following the rules meticulously prevents costly and time-consuming disputes at the LTB. Using the correct forms, providing adequate notice, and respecting the guideline ensures a steady rental income without legal friction. For those with exempt properties or those considering an AGI, understanding the specific processes is equally important to manage your investment effectively. Clear documentation is your best friend.
Navigating the complexities of rent increases, notice periods, and documentation can be a chore for both landlords and tenants. This is where modern property management tools can streamline the process and ensure compliance. TenantPay is designed to eliminate the guesswork and administrative burden.
By simplifying rent management, TenantPay helps landlords stay compliant and tenants feel secure. Start for free at TenantPay to see how it can improve your rental experience.
In Ontario, the rules surrounding rent increases are designed to create a predictable and fair system for both tenants and landlords. The ontario rent increase 2025 guideline of 2.5% serves as a critical protection for tenants in rent-controlled units, shielding them from the full volatility of the housing market.
At the same time, the legal framework provides landlords with clear pathways to adjust rent, whether through the annual guideline or the above guideline rent increase ontario process for major investments. Adherence to the rules especially the 90-day notice period and the use of the official Form N1 is non-negotiable. By staying informed and understanding their respective rights and obligations, both parties can avoid disputes, build trust, and contribute to a healthier, more stable rental environment for everyone.
To make managing these responsibilities even easier, platforms like TenantPay offer a modern solution. By automating rent payments, maintaining a clear digital record, and helping track crucial dates, TenantPay simplifies compliance for landlords and provides transparency for tenants.
The annual rent increase guideline for 2025 in Ontario is set by the government at 2.5%. This is the maximum a landlord can increase rent for most tenants without applying to the Landlord and Tenant Board.
A landlord can only increase the rent once every 12 months. There must be at least 12 full months between each rent increase.
Landlords in Ontario are required to give tenants proper written notice of at least 90 days before a rent increase can take effect.
A landlord must use the official Landlord and Tenant Board form, specifically the 'N1: Notice of Rent Increase', to legally inform a tenant of a rent increase.
No, a new landlord inherits the existing lease agreement and must follow the same rules. They cannot increase the rent until at least 12 months have passed since the last increase.
No, rental units first occupied for residential use after November 15, 2018, are exempt from the provincial rent increase guideline. Landlords of these units can increase rent by any amount, but only once per year with 90 days' notice.
If a rent increase is above the guideline or proper notice wasn't given, you can speak to your landlord or file an application with the Landlord and Tenant Board (LTB).
Yes, a landlord can apply to the LTB for an above-guideline increase if they have incurred major capital expenses or significant increases in municipal taxes.
If the notice is not on the correct form or you are given less than 90 days' warning, the notice is void. You are not legally required to pay the increased amount until you receive a proper notice.
A landlord can legally increase the rent only after providing 90 days' written notice on the correct form, and only 12 months after the tenancy started or the last rent increase occurred.
