Ontario Announces 1.9% Rent Increase Limit for 2027
Introduction
Ontario has announced a 1.9% rent increase guideline for 2027. This is lower than the 2.1% guideline for 2026 and the 2.5% rate that applied from 2023 to 2025.
The new guideline applies to eligible rent increases that take effect between January 1 and December 31, 2027. However, the 1.9% limit does not apply to every rental unit in Ontario. Some properties qualify for an exemption, while certain landlords can apply for an increase above the guideline.
What Does the 1.9% Rent Increase Mean?
The 1.9% guideline sets the maximum annual rent increase for most rent-controlled units in Ontario.
For example, if you currently pay $2,000 per month, your landlord can generally increase your rent by up to $38 per month under the guideline. As a result, your new monthly rent would be $2,038.
Here are a few more examples:
| Current monthly rent | Maximum increase | New monthly rent |
|---|---|---|
| $1,400 | $26.60 | $1,426.60 |
| $1,700 | $32.30 | $1,732.30 |
| $2,000 | $38.00 | $2,038.00 |
| $2,500 | $47.50 | $2,547.50 |
| $3,000 | $57.00 | $3,057.00 |
However, these amounts apply only when the unit falls under the rent increase guideline and the landlord follows the legal requirements.
When Can a Landlord Increase Rent?
Ontario landlords must follow two important rules when increasing rent.
- 12-month rule: A landlord must wait at least 12 months after the tenancy begins or the last lawful rent increase takes effect, whichever date applies later.
- 90-day notice rule: A landlord must give the tenant written notice at least 90 days before the increase takes effect.
In addition, landlords must use the correct Landlord and Tenant Board (LTB) form. A text message, verbal conversation, or ordinary letter alone does not replace the required notice form.
Therefore, even if the proposed increase falls within the 1.9% limit, tenants do not have to pay the higher amount when the landlord fails to follow the required notice rules.
Which Rental Units Are Exempt From the 1.9% Limit?
Not every rental property in Ontario falls under rent control.
Generally, the guideline does not apply to units in buildings or additions first occupied for residential purposes after November 15, 2018. Certain new self-contained units in existing houses may also qualify, depending on the legal conditions.
If a unit qualifies for this exemption, the landlord can increase the rent by more than 1.9%. However, the landlord must still follow the applicable rules, including the 12-month waiting period and 90-day written notice requirement.
For these exempt units, landlords generally use Form N2 instead of Form N1. If there is a dispute, the landlord must prove that the unit qualifies for the exemption.
Which Forms Must Landlords Use for Rent Increases?
The Landlord and Tenant Board provides different forms for different rent increase situations.
- Form N1: Used for most rent-controlled units.
- Form N2: Used for qualifying units that are partially exempt from rent increase limits.
- Form L5: Used by landlords who apply for an above-guideline rent increase.
- Form N10: Used when a landlord and tenant voluntarily agree to a rent increase above the guideline in exchange for a specified capital expenditure or a new or additional service.
Therefore, tenants should check the form carefully before accepting a rent increase. If the landlord uses the wrong form, tenants may be able to challenge the increase through the Landlord and Tenant Board.
Can Landlords Increase Rent by More Than 1.9%?
Yes, in certain situations.
A landlord can apply to the Landlord and Tenant Board for an above-guideline increase (AGI). The application may involve eligible major repairs or renovations, security service costs, or extraordinary increases in municipal property taxes.
However, the landlord cannot simply assume that the Board will approve the request. The Board must consider the application.
For eligible capital expenditures and security service costs, the additional increase generally cannot exceed three percentage points in a 12-month period. Therefore, with the 2027 guideline at 1.9%, the relevant increase could reach 4.9% in some cases. Extraordinary municipal tax increases follow separate calculations.
How Does the 2027 Guideline Affect the Last-Month Rent Deposit?
The 1.9% guideline also affects the interest that landlords must pay on a tenant’s last-month rent deposit.
Under Ontario law, landlords must pay annual interest on this deposit at the applicable guideline rate. For 2027, that rate is 1.9%.
When a lawful rent increase requires the tenant to top up the deposit, the landlord can apply the interest owed toward that amount. As a result, tenants may not need to pay the full difference themselves.
What Can Tenants Do If a Rent Increase Seems Illegal?
Tenants should check a rent increase notice before paying the higher amount.
Here are four important things to review:
- Check the form: Confirm that the landlord used the correct LTB form.
- Check the amount: Calculate 1.9% of your current lawful rent if the unit falls under the guideline.
- Check the notice period: Make sure the landlord provided at least 90 days’ written notice and waited at least 12 months between increases.
- Check rent-control status: Confirm whether your unit qualifies for an exemption.
If something appears incorrect, you may be able to challenge the increase through the Landlord and Tenant Board. The source notes that tenants may file a T1 application within 12 months after the landlord first charges the higher amount.
In addition, eligible tenants may qualify for free help from community legal clinics funded by Legal Aid Ontario.
How Does the 2027 Guideline Compare With Previous Years?
Ontario’s rent increase guideline has decreased over the past few years.
| Year | Rent increase guideline |
|---|---|
| 2027 | 1.9% |
| 2026 | 2.1% |
| 2025 | 2.5% |
| 2024 | 2.5% |
| 2023 | 2.5% |
| 2022 | 1.2% |
| 2021 | 0% |
The province calculates the guideline using the Ontario Consumer Price Index, which measures changes in consumer prices. However, the guideline cannot exceed 2.5% under the current formula.
What Should Ontario Tenants Do Before 2027?
As the new guideline approaches, tenants should review their rental agreements and understand whether their homes fall under rent control.
They should also keep copies of their leases, rent receipts, notices, and written communication with their landlords. If a landlord announces an increase, tenants should check the amount, the notice period, and the form used.
If you believe the increase breaks Ontario’s rental rules, seek advice early rather than waiting until the deadline to challenge it passes. This can help you understand your options and protect your rights.
Final Takeaway
Ontario’s 1.9% rent increase guideline for 2027 offers some relief to tenants in rent-controlled homes because it is lower than the rates for recent years.
However, the limit does not cover every rental unit. Certain newer units may qualify for an exemption, and landlords can apply for above-guideline increases in specific circumstances.
Therefore, tenants should check their unit’s status, review every rent increase notice carefully, and understand the rules before agreeing to pay more rent.
Get in touch with SPS Global
Receive advice on any of your questions regarding immigration. Get in touch with us, experienced immigration consultants from SPS Global. For additional information, contact support@spscanada.com (Canada) or support.amd@spscanada.com (Ahmedabad), or by phone at (1) 905-362-9393 (Canada) or +919586226232 (Ahmedabad).
