06/27/2016 12:05 EDT | Updated 06/27/2016 12:59 EDT

Ontario Rent Goes Up Amid Record Housing Prices

'For, rent, sign, in, front, of, apartment, buildings'
"Design, Pics" via Getty Images
'For, rent, sign, in, front, of, apartment, buildings'

Written by Elisa Krovblit

The 2017 rent increase has been released for Ontario -- and it's only 1.5 per cent. That means if you rent in Ontario, your rent can only be raised by 1.5 per cent in 2017. Some years have been higher, some lower. This is a relatively low rental increase.

With talk of Toronto being one of the most expensive cities in Canada to live in, and housing prices at astronomical record highs and still steadily rising, it seems surprising.

It's interesting to note that as we're seeing record-high prices and pricing increases in the buying and selling of residential real estate, we didn't see a translation of that to the maximum rent increase allowable. Instead we saw something towards the middle of the possible 2.5 per cent.

The province of Ontario sets the rent increase each year, basing it on the Ontario Consumer Price Index. It's basically a reflection of inflation.

If only our rent could stay the same and never change. It would be nice -- but most landlords wouldn't be happy. The rent has to increase to allow landlords and property owners to have their investments give them a financial return in keeping with current economics. The province of Ontario sets the rent increase each year, basing it on the Ontario Consumer Price Index. It's basically a reflection of inflation. But even were there to be dramatic inflation, the increase has a cap -- the maximum increase is 2.5 per cent.

It's significant to note that there are many exclusions to the rent increase cap.

  • Apartments created after November 1991
  • Commercially zoned spaces
  • Social housing
  • Nursing/assisted living homes
  • Vacant properties

If you live in any of these types of properties -- whether it be a hard loft conversion, a brand-new rental building or a condo that was built in the last 25 years -- this one provision of the Residential Tenancies Act does not apply. This provision was removed in order to stimulate development of new rental properties because new, purpose-built rentals were lacking and developers and property management companies needed financial incentives to motivate new purpose-built rental building growth.

With this provision, it often encourages those who will be renting over the long term to stay in one place, because rent over years -- and decades -- remains very low, and eventually far under market value.

Once exception to the 1.5 per cent cap that could potentially cause a higher rent increase is if the landlord or property management were to successfully apply to the Landlord Tenant Board for an increase over and above this cap. The Landlord Tenant Board does grant increases above the guideline, and this is decided on a case-by-case basis with each application.

An application can be made for an above-guideline increase for a number of reasons, but the most common are: significant capital expenditures and improvements, an extraordinary increase in taxes and/or utilities, an increase or installation of security services. The increase is based on "extraordinary" expenses over-and-above normal operating and maintenance expenses, as defined by the Landlord Tenant Board.

If you've ever got questions about your rent and how much it can be raised, you can always contact the Landlord Tenant Board.

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