Tuesday, 20 March 2018

Raising the Rent in Ontario--Any limits?

So what has really changed, in the year 2018, in the Residential Tenancies Act with respect to increasing the rent for a rental unit covered by the Residential Tenancies Act in Ontario?  

The law still allows a landlord to charge any amount of rent at the commencement of a tenancy.  This means that between tenancies (i.e. a tenant moves out and a new lease is entered into with a new tenant) the landlord may charge any amount of rent that the market will bear.  There is no rent control and nothing stopping the landlord from getting whatever amount of rent possible for the rental unit.  The changes in 2017/18 under the Rental Fairness Act have not changed this part of the law.

How much is the landlord allowed to increase the rent for an existing tenant?  The rules for this have indeed been changed.  There used to be different rules for apartments that were exempted from the Rent Increase Rules  under the Residential Tenancies Act.   You may recall that the law allowed a landlord of a "newer" apartment complex to raise the rent on an annual basis by any percentage that they wished because that rental unit was exempt from rent control.  That WAS indeed the case and it is this law that has dramatically changed.  How was this accomplished?

The Residential Tenancies Act in section 120 limits the amount of an annual rent increase to a government established guideline amount.  The government is required, on an annual basis, to publish the maximum guideline amount that a landlord may increase the rent for each calendar year.  The very highest percentage increase that the Guideline may allow is 2.5%.  This is set out in section 120(2)(2) RTA.

The law limiting rent increases to once every 12 months has not changed and the manner of notification and the need to use the proper Rent Increase Form (Form N1) has also not changed.  The Form itself contains great notes at the end of the page to follow.  A tenant is still entitled to 90 days notice and still has termination rights if they do not wish to pay the rent increase amount.

The exemption to the percentage rent increase that many landlords enjoyed was connected to the age of a rental unit or its use as residential housing.   Until the recent passage of the Rental Fairness Act that exemption was implemented by exempting certain rental units through a complex definition.  That definition was contained in section 6(2) of the Residential Tenancies Act and it provided that section 120, the rent increase provision, did not apply to rental units that were not occupied for any purpose before June 17, 1998, or it was a rental unit no part of which has been previously rented since July 29, 1975, or no part of the building, mobile home park or land lease community was occupied for residential purposes before November 1, 1991.

Section 6(2) RTA operated to basically allow landlords of newer buildings to raise the rent by any percentage amount they wished so long as they gave proper 90 days notice and only did so once a year.   The big big change to the RTA, under the Rental Fairness Act, is that section 6(2) was repealed (i.e. deleted).  

The effect of repealing section 6(2) is that all rental units in Ontario are now subject to the rent increase guideline amount.  No rent may be increased more than by the guideline and in accordance with the other rules.  There are transition rules for rental units that were in the midst of a rent increase when the law was made effective but for the most part, increases now will be subject to the maximum guideline amount.

So what is the guideline in the year 2018?  The maximum amount that rent may be increased is 1.8%.

I have heard arguments that assert that the exemption still applies to rental units in buildings that were subject to the exemption at the time the tenancy was entered into.  This, in my view, is false.  There is no "grandfathering" of the exemption and it doesn't matter if a lease was entered into with the exemption as a part of the terms of the lease.

The new rules make rent increase calculations quite simple and straight forward.  Tenants do not have to worry about massive rent increases through this method as there is a cap even for the government is setting the annual guideline amount.

Michael K. E. Thiele
www.ottawalawyers.com

10 comments:

  1. Hi Michael,
    I'm so glad to have come across your blog. I attempted to find and study case law, but that's proven to be less accessible and more time consuming than anticipated. I've read several posts, but none that relate to my situation entirely.
    I have been a tenant in my unit for a number of years now and on my third landlord. I've never been one to complain about anything and have gotten along well with all other tenants. A new landlord took over and new tenant moved in downstairs. It started with their guest moving in, shortly after they did, the guest was parking in the driveway and was not permitted to do so. The landlord sent multiple messages stating just that, but they were ignored. The tenant started parking on the road and the guest stayed in the driveway. I confirmed with the landlord that the person was in fact a guest, then the tenant claimed that the vehicle was theirs.
    The landlord (not a lawyer) drafted a letter on legal letterhead, saying anyone can park in the driveway as long as they are taking up one spot per unit and not to complain about it anymore. It is actually posted on our building that it's "tenant parking only, other wills be tagged and towed." The letter also stated that one of the tenants was feeling uncomfortable due to others' attitudes and actions towards them. It went on say that the landlord can give notice if a tenant is interfering with reasonable enjoyment, etc. It seemed to be a threat to stop complaining or be evicted.
    Since then, there have been more issues. The new tenant is smoking inside and lying about it, in writing. I plan on buying air quality test kits and/or cigarette smoke detectors that record and compile data. I am aware that is not illegal for them to smoke, but there are children in the units and one of the other tenants has health issues that can be exacerbated by cigarette smoke. I am also forced to close my vents to prevent the smoke from entering my unit which causes me to lose heat. There was garbage left on the boulevard for weeks, even though the landlord asked that it be moved. There was a car battery in the driveway and I asked that it be disposed of as it was a safety concern, being that it's combustible.
    Every time I complain about something, the landlord words a message to the entire building in such a way, that indicates they are responding to a complaint instead of addressing the issues of their property. When I complained about the smoking, they sent a message to all of the tenants saying there was a complaint, but they came by hours after the complaint was made and stated that they did not notice the smell. If there was no issue from their perspective, the problem tenant should not be notified that there was another complaint against them. Regarding the battery, they said a tenant was concerned for their safety. I feel that this is intentionally meant to cause animosity. The new tenant also had a rage fit the other day and I was concerned for my physical safety if I left my unit as I believed they were mad that they were asked to move their vehicle. I have two documented safety concerns and one documented health concern thus far.
    There is a clear and pattern of the new tenant ignoring the landlord's requests and the landlord not addressing the concerns, other than saying, please do this. My apartment is well below market rate and it seems as though the landlord is not addressing anything with any conviction as if I move out, the landlord will benefit financially. I cannot afford to move at the moment, or that would have been my first course of action when the smoking started. Everything I have stated above is documented and there have been pictures taken when necessary (driveway, battery, garbage, etc).

    Continued...

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  2. Continuation:

    1. Can I have the guest towed (as I am a tenant, not the property owner) if it's only his name on the vehicle registration?
    2. Is the landlord not addressing the never-ending problems considered interfering with my enjoyment of the property? If not, what would constitute interfering?
    3. Which remedies in the T2 would you suggest I ask for if they are interfering?
    4. Should I list that my vital services have been interfered with? Or is that on me for closing the vents?
    5. Is what I've listed enough to show that the landlord is trying to force me out or trying to get me to do something that constitutes being evicted, like confront the neighbour, so they can benefit financially?

    Thanks,

    - Single Mom Trying

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    Replies
    1. Hi: It's a long question. Most of the things you raise are not, in my view, something you can do very much about. Except for the smoking. Smoking is a substantial interference with reasonable enjoyment and you do not have to put up with it. Collect evidence of smoking and you may file an application to the Board if the landlord does not take action to prevent the smoking. It does not matter if the unit is not marketed as a non-smoking building. 1) With respect to towing the car. No. You may not. 2) The problems you identify must rise to the level of a substantial interference with reasonable enjoyment. The test to determine whether these issues are arising is an objective test--i.e. no whether you are bothered but whether the "reasonable every person" would be bothered. 3) I can't give advice on the T2 in this blog for remedies to seek. Frankly, from your description the only complaint that strikes me as potentially strong is smoking. And at that, the landlord has investigated and not smelled it---so if it stopped then there is nothing to be done. 4) I don't see a vital service breach on the facts you set out. You are closing off the heat yourself. That is not the landlord interfering with a vital service. I appreciate that it is because of the smoking--but that is the focus not vital services. 5) No.

      Hope that helps

      Michael K. E. Thiele
      www.ottawalawyers.com

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  3. Hello, I have a question about evicting a person whom is not on the original lease, are you still active to answer questions?

    ReplyDelete
    Replies
    1. Hello: This blog is for general legal information. I answer the questions that I think people will find interesting. So, I can't guarantee an answer or the timing of an answer. If you need a particular question answered within a particular time you should consult a lawyer or paralegal directly. If you've got time, feel free to post a question and I'll eventually look at it and hopefully answer. Cheers Mike Thiele

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  4. What is the new law for noise level(s) in a apartment buildings? Is it 10pm!? Or is it 24 hrs around the clock?

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    Replies
    1. HI Amber. Great question. Instead of answering you here I just wrote an article addressing the question you pose. See the article in this blog. Thanks for writing.

      Michael Thiele

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  5. Hi Machael,

    I'm glad to have come across your blog. I have tried my best to understand Ontario tenant law for myself, but it would help tremendously to get your insight on my specific situation. Recently my landlord expressed interest in increasing our rent from $2400 to $3000 per month.

    To provide some background, I live with 3 students in a unit on the 3rd floor of a three story townhouse in the Annex (1980s-1990s construction, I'm guessing). The 3rd and 1st floors have long since been rental units, and the landlords extended family live on the 2nd floor. All three floors have independent entrances, bathrooms, and kitchens, but share utilities.

    One of my roommates began on a 1 year lease in 2013 which expired in 2014, on which he was (as I understand it), not the primary signatory. Since then, my room mate has been paying via an "implied agreement", simply continuing to give the landlord a cheque each month for $2400 with no issues until now.

    So my primary questions are:

    1) Given our situation, are we subject to the Ontario tenancy act and the provisions on maximum rent increase?
    2) Can he apply all the previous years rent increases (since 2014) to the original $2400, or just a one time increase of 1.8% starting in 90 days?
    3) If he demands an increase to some amount ($3000 or some compromise) without providing an N1, should we just ignore it and continue to pay the $2400 as usual?
    4) If he was to apply to the tenancy board to increase by more than 1.8% due to the substantially higher property taxes than 2014, would he be likely to succeed?
    5) If he was to evict on the grounds of family occupancy or renovation, for instance, would we have any way of knowing if he had just rented it out to somebody else at a new, higher rate? Would we have any recourse?

    Thank you for your time,

    Todd Darcie

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    Replies
    1. Hi Todd:

      Based on your question you seem to be quite well informed about the RTA. From what you've written here I think the following would likely be the answer to your questions.

      1) Yes, you are subject to the RTA. No obvious exemption and in the worst case if your roommate was never a tenant there would have been a deemed assignment long ago. The Guideline applies.
      2) Annual guideline amounts are use it or lose it. Hence you can not accumulate them. 1.8% is current guideline as well as next year's.
      3) A lawful rent increase requires the service of a Notice of Rent Increase (usually the N1).
      4) not enough information here. Above Guideline Increases for property tax require "extraordinary" property tax increases as per the definition in the regulations.
      5) If you received an N12 for Landlord's Own Use you would be entitled to compensation. If the N12 was a scam and the landlord never moved in there is no oversight or verification. If you don't check in or monitor it nothing will happen. If the N12 was served in "bad faith" you could bring an application on that basis against the landlord.

      Michael K. E. Thiele
      www.ottawalawyers.com

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    2. Thanks for your reply Michael

      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.

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About Michael Thiele

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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.