Wednesday, 21 August 2013

2014 Guideline Rent Increase Amount

Every year the Ontario Government sets the annual guideline rent increase amount for the upcoming year.  For 2014, the maximum allowable rent increase is 0.8% without Landlord and Tenant Board approval.  This means that upon giving proper notice, in a Form N1, a landlord may increase the rent once in a 12 month period by 0.8% in 2014.

The maximum guideline amount, without authorization from the Landlord and Tenant Board is the amount that applies to a great number, and perhaps the majority of tenancies in Ontario.  However, it should be noted that there are an increasing number of rental units that are exempt from the guideline increase amount.  The exemption arises from legislative choices made many years ago beginning with the Tenant Protection Act in or about 1997.  That legislation, and subsequently the current Residential Tenancies Act continues an exemption from the annual guideline amount for certain properties.  To see which properties are exempt from the Guideline increase amount take a look at the provisions of the Residential Tenancies Act and specifically section 6(2).

Michael K. E. Thiele
Lawyer
Ottawa, Ontario

<a href="http://www.hypersmash.com">Hypersmash.com</a>

11 comments:

  1. Searching for an apartment in Toronto specially for rent is quite difficult.Thanks for posting rent increase amount,it's quite amazing.
    Landlord and Tenant Act Toronto

    ReplyDelete
  2. Michael, Can you shed some light on how the section 6(2) exemptions apply to residences, e.g., single family occupancy, which were converted into rental units? If a house was turned into rental units in 2001, would the rental units be exempt because they were not 'occupied for any purpose' prior to 1998 because, at that time, they weren't 'rental units' in the first place. The situation I am thinking about is one where the space was being occupied for residential purposes prior to 1998, it just hadn't been converted into a rental unit yet. Thanks, much appreciated!

    ReplyDelete
    Replies
    1. Hi:

      The wording of section 6(2) certainly is tricky. My interpretation of this sub-part is as follows:

      (a) "it was not occupied for any purpose before June 17, 1998" The key to this is "any purpose" meaning occupation of any kind denies the exemption--including as a non-residential unit. The case law has an example of a laundry room being combined with a bachelor unit to make a new rental unit. That unit was held to not be exempt.

      Take a look at s.6(2)(c)---was the house built since 1991? If so, you would have an exemption there on the basis of new build.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  3. Hi Michael,

    I read the LTA, and it says that there must be a 90-day notice for rent increases. I have a rental unit in a condo building that was completed 4 years ago. My current tenant has been living there for 2.5 years, with the current lease ending in May 31. During the past 2.5 years, there had been no increase in rent. I don't know if she plans to stay longer than May 31, but I would like to increase the rent starting June 1 regardless of her status.

    So a few questions:
    1) Is this unit exempt from the rent increase guideline? As in, I can increase the rent to whatever I'd like?
    2) Do I need to give my tenant a notice?
    3) Am I able to give notice in time for June 1 increase?

    Thanks for your help in advance!

    Emily

    ReplyDelete
    Replies
    1. Hi Emily: I presume your rental unit is Ontario and that the condo was built in 2012 approximately. Presumably your rental unit is partially exempt from rent control. Take a look at section 6(2) of the Residential Tenancies Act for the partial exemptions related to rent control.

      Being partially exempt from rent control you may indeed raise your rent without regard to the annual guideline amount. It is important to not tie the increase to other reasons that may be prohibited grounds for termination under the Residential Tenancies Act. For example--you can not raise the rent because of the presence of an animal.

      Presuming the partial exemption applies, you still have to give your tenant notice of rent increase. For a partially exempt unit you use Form N2--which you can get from the Landlord and Tenant Board website.

      Take a look at the notes on the form which indicate the amount of required notice. You will see that you are unable to raise the rent for June 1 because there is not enough notice between now and June 1. Your earliest date would be July 1, 2016, presuming there are no fixed term leases or other legal impediments.

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  4. Hi Michael,

    This is a great blog!

    I rent a room in an older house and my Landlady wants to increase my rent by 7%, but this year the allowed amount is 2%. I don't know if I should try filing with the LTB because her daughter is moving into one of the other rooms, and I'm not sure how that affects my rights.

    ReplyDelete
    Replies
    1. Hi: You are correct that the annual guideline amount for 2016 is 2%. This is the maximum amount that rent can be increased for Residential Tenancy Act covered units that are not partially exempt from rent control. You describe the premises you live in as "older" which is generally understood to mean that your unit will not be partially exempted. However, the years have rolled by since the Ontario Legislature created the partial exemption and what once seemed like a partial exemption for only new housing is now a partial exemption for aging properties. It is worth taking a look at the exemptions in section 6 of the Residential Tenancies Act to see if your rental unit is partially exempted.

      That being said, I am concerned about an aspect of your comment. It sounds like you might live in the rental unit with your landlady. Do you share a kitchen and/or bathroom with her? In situations where the landlord or other specific persons (like children) live in the rental complex and you do not have a fully contained rental unit (i.e. you share facilities like kitchen and bath), it is very important to investigate whether your entire tenancy is exempted from the Residential Tenancies Act. If the Residential Tenancies Act does not apply then your landlord is not bound by the rent increase guidelines under the Residential Tenancies Act. This means that she can very likely raise the rent by the amount requested and the Landlord and Tenant Board will have no authority in the matter. Take a look at section 5 of the Residential Tenancies Act for all of the various total exemptions from the Residential Tenancies Act. You can search for free on the legal website www.canlii.org.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete
  5. Hello,

    Is possible to include in a rental agreement that the landlord agree to not raise the rent above the guideline. The property I am looking into renting is a new townhouse and I do not want to be hit with above rental increases as this is the reason why I am moving in the first place.

    ReplyDelete
    Replies
    1. Hi: This is a brilliantly good question. As far as I am aware, there is no definitive answer. I can tell you my concern because I have had the very thought that you are asking about. My concern about the kind of clause you are talking about is triggered by section 4 of the Residential Tenancies Act. This section (worth reviewing), makes void any provision in a lease that is contrary to the Residential Tenancies Act.

      Most often, we see section 4 being used to make void onerous provisions included in leases by landlords. Hence, lease clauses imposing obligations on the tenants that are imposed on the landlord by the statute are regularly declared void. I have not often seen section 4 being used the other way.

      By the "other way" I mean a situation where a tenant like yourself negotiates a clause that restricts the landlord's right to serve a Notice of Rent Increase in accordance with the RTA. The argument would be that if the Landlord has the right--then a clause removing that right is void by section 4 of the RTA.

      I've spent a little time looking for a case that I vaguely recall--and of course I can't locate it now. Given what might be a pressing time line for you I'll write about my recollection and you can perhaps do some additional research on the point. The case I recall was exactly a situation where the lease contained a clause restricting a landlord's right to do something that the landlord could do under the RTA. I can't remember now what that was (annoying I know), but I am recalling the case because it was eye-opening in the sense that section 4 voiding can actually be used by a landlord against a tenant. This is not what is generally expected with that section. I've quickly looked through all of the section 4 cases on Canlii (www.canlii.org) and unfortunately can't find the case a recall or any other similar one at the moment.

      Can you restrict the Landlord's right to unlimited rent increase pursuant to an N2 because of the partial exemption? I'd be very careful with the wording of such a clause in fear of it being voided by section 4. Find the rent increase section allowing the landlord to raise the rent to any amount based on the partial exemption and combine the analysis with section 4. Then I'd try to find language that doesn't offend section 4.

      Section 4 provides: 4. (1) Subject to section 194, a provision in a tenancy agreement that is inconsistent with this Act or the regulations is void

      So the challenge to you is to draft a clause that gets you what you want (no N2 rent increases but limited to annual guideline amount plus any lawful AGI application) but which is not inconsistent with the RTA.

      I'd have to spend some time trying to craft something that works--and perhaps it is impossible. However, my starting point I imagine would be to write a clause in terms of agreeing not to do something they are entitled to--as opposed to prohibiting something the RTA gives the landlord a right to do. The subtle difference of agreeing not to do something you have the right to do as opposed to banning a right granted by the RTA may dodge the impact of section 4.

      The foregoing are just thoughts on this topic. I haven't worked out the details entirely and if this is important to you (which I presume it is), you may want to consult with a lawyer or paralegal and work on language for the lease that has the best chance of surviving any challenge by the landlord.

      Good luck

      Michael K. E. Thiele
      www.ottawalawyers.com

      Delete

IMPORTANT NOTICE

Any answers provided are intended to reflect the Law of Ontario, Canada. The answers are not legal advice and no one should rely on the answers provided as legal advice. The answers are intended to be general information about Ontario Law and are the personal view of the author based on the limited facts provided to the author. The answers may not be legally accurate and may indeed be contrary to the law of Ontario. Answers and conclusions drawn may have been different if facts had been shared that have not been disclosed in the comment/question. This blog is intended to assist people in learning about Ontario Landlord and Tenant Law. However, if you have actual legal problems this blog should under no circumstances replace proper legal advice obtained by retaining a lawyer or licensed paralegal to advise you. Nothing in this blog, comments submitted or answers provided, gives rise to a solicitor and client relationship. Comments are published as submitted and commenters should be aware that if they identify themselves in a comment that their identity will become public upon the comment being published. Comments that have been published may be deleted upon request to the author.

Search This Blog

Follow by Email

About Michael Thiele

My photo

Ottawa lawyer and partner at Quinn Thiele Mineault Grodzki LLP.  Graduate of Queen's University in Kingston, Ontario.  Called to the bar in Ontario in 1997.  Undergraduate degree at Colby College, Waterville Maine, U.S.A.