RENT INCREASE for 2021 is 0% (ZERO!)
Recent amendments to the Residential Tenancies Act (RTA) effectively freeze rents for the calendar year 2021 to the same amount charged in the year 2020.
New RTA section 3.1 that came into effect on October 1, 2020, provides as follows:
Guideline for 2021 (3.1) The guideline for the calendar year 2021 is zero per cent, despite subsection (2) and despite the guideline published under subsection (3) in The Ontario Gazette for 2021. 2020, c. 23, Sched. 7, s. 1. |
The new section over-rides previously published rent increase guidelines for the year 2021. New RTA section 3.2 also over-rides the requirement to publish the new 0% Guideline amount in The Ontario Gazette.
Does the Rent Freeze affect increases that will take place in the year 2020?
Validly given notices of rent increase that take effect in 2020, and any exempted rent increases (exempt from Guideline Increase amounts) that take effect in 2020, are valid and unaffected by the new RTA rent freeze provisions. Somewhat helpfully, new section 136.1 RTA provides a definition of "rent freeze period" and it is the period that begins January 1, 2021, and ends December 31, 2021.
WHAT ABOUT RENTAL UNITS THAT ARE NOT SUBJECT TO RENT CONTROL?
It does appear that the rent freeze applies to rental units that would otherwise be exempted from the limits of the guideline amount. Further, there are some residential leases in which landlords have specified multi-year rent increases for the term of longer leases or simply to give guidance to tenants signing leases in properties that are exempt from the guideline increase percentage. Any such agreements to increase rent, or any notices of rent increase already given, are likely to be void as contrary to the RTA. The amendments specifically contemplate and confirm that any Notice of Rent Increase that was lawfully given is now void if the increase was to take effect in the rent freeze period (s. 136.1(3) RTA).
Are there any exceptions?
Yes, there are. However, the exceptions are extremely narrow and very unlikely to apply to the vast majority of tenants. Exemptions do apply to accommodation subject to the Homes for Special Care Act, as well as certain supported group living residences.
Another exemption applies to Agreements to Increase the Rent, however, this should not be interpreted as simply any agreement--the agreement is a special kind of agreement as described in section 121 or 123 RTA (capital expenditures and extra services). Further, exemptions include increases that are permitted in the context of Above Guideline Rent Increase applications/orders.
What about rent increases for 2022?
Subject of course to any future amendments to the RTA, the current changes contemplate the ability to serve a Notice of Rent increase--during the freeze period--to take effect after the freeze period ends. It will be curious to see if landlord's with otherwise exempted units will seek to make up the loss in the year following the freeze. That possibility does not seem to be addressed though I imagine it would not be too difficult to establish that as an illegal rent increase if it could be proven that the rent is being increased to capture a lost increase during the rent freeze period.
Michael K. E. Thiele
www.ottawalawyers.com
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