Every year the Ontario government sets a number called the rent increase guideline. For most tenants it is the single most important figure in their tenancy — it decides how much their rent can legally go up at the next renewal. Yet it is widely misunderstood, by landlords and tenants alike, and that misunderstanding is expensive on both sides.
Here is how the guideline actually works, what it doesn't cover, and what to do when an increase doesn't follow the rules.
What the guideline is
The rent increase guideline is the maximum percentage a landlord can raise the rent for an existing tenant in a given year, without applying to the Landlord and Tenant Board for permission. It is set province-wide and announced in advance for the following calendar year, based largely on the Ontario Consumer Price Index — a measure of inflation.
Because it tracks inflation, the guideline changes from year to year. The number that applies to your increase is the one in effect for the year the increase takes effect — so always check the current year's figure on the Government of Ontario website rather than relying on last year's.
The three rules every increase must follow
A lawful rent increase isn't just about the percentage. For most tenancies, three rules apply at once:
1. Once every 12 months. Your rent can only be increased once in any twelve-month period. A landlord cannot raise it in January and again in June.
2. No more than the guideline. The increase cannot exceed the guideline percentage for that year — unless the landlord has Board approval for an above-guideline increase (more on that below).
3. 90 days' written notice. The landlord must give at least 90 days' written notice of the increase, on the proper form (the N1). A verbal heads-up, a text, or a note that skips the form doesn't count.
If any one of these three is broken, the increase isn't valid — even if the percentage itself was within the guideline.
When a landlord can go above the guideline
The guideline is a cap, but not an absolute one. A landlord can apply to the Landlord and Tenant Board for an above-guideline increase (an AGI) in specific situations — most commonly after eligible capital work on the building, an extraordinary jump in municipal taxes, or new security costs.
An AGI isn't automatic. The landlord has to file the application, prove the costs with invoices and contracts, and the increase is phased in within annual limits. Tenants are served with the application and can dispute whether the work really qualifies. It is a formal process, not a way to sidestep the cap on a whim.
The big exception: newer buildings
Here is the part that surprises the most people. Units that were first occupied as a residence after November 15, 2018 are generally exempt from the guideline. For these units, there is no percentage cap on the increase.
The once-a-year rule and the 90-day notice rule still apply — so the increase still can't come early or without proper notice — but the amount is not limited by the guideline. If you live in a newer building and received a large increase, this exemption is very likely the reason, and it may well be lawful. Confirming whether your unit falls into this category is always the first step.
What to do about an increase that breaks the rules
If your rent was raised above the guideline without Board approval, less than twelve months after the last increase, or without proper 90-day notice on the right form, the increase is not legal — and you may have been overpaying.
You can apply to the Landlord and Tenant Board to recover an illegal rent increase. The Board can order the landlord to repay the amount you overpaid. There is a one-year limitation period running from each overpayment, so older overcharges can fall out of reach — which is why it pays to check an increase as soon as you receive notice, not months later.
The bottom line
For tenants, the guideline is a protection — but only if you know the three rules and the newer-building exception well enough to spot when an increase doesn't fit. For landlords, getting the percentage, the timing, and the notice exactly right is what keeps an increase enforceable and avoids a repayment order down the line.
Either way, the rules reward attention to detail. If you've received a rent increase and aren't sure whether it's lawful — or you're a landlord planning one and want it done right — a short conversation can save a lot. Point Duty represents both landlords and tenants at the Landlord and Tenant Board, and the first call is free.
This article is general information about Ontario residential tenancy law, not legal advice, and it does not create a paralegal-client relationship. The rent increase guideline changes annually and the rules can be amended — confirm the current figures and your own circumstances before relying on them.