Ontario Rent Increase Guideline 2027: How It Works

This guide is for Toronto landlords, investors and buyers of tenanted property. The key question: how much can rent legally go up each year in Ontario? Short answer: for most rent-controlled units, the ordinary annual limit is the provincial guideline: 2.1% for 2026 and 1.9% for 2027. Qualifying newer units are exempt.

That headline number is only part of the picture. Timing, notice and exemptions decide what a rental property actually earns, and deserve careful review. Below is how the system works, as it stands in September 2026.

What is Ontario's rent increase guideline?

The guideline is the ordinary annual limit for a sitting tenant in a rent-controlled unit. The Landlord and Tenant Board (LTB) decides residential tenancy disputes and can approve higher increases. Sections 121 and 123 also allow specific agreed increases for capital work or added services.

The province describes it as "the maximum a landlord can increase most tenants' rent during a year."

It applies to most private units covered by the Residential Tenancies Act, 2006 (the RTA, Ontario's main landlord and tenant law). That includes rented houses, condos, apartments and basement suites, provided they are not exempt. I cover the exemptions below, because they matter more than most people expect.

How is the rent increase guideline calculated?

The formula is written into section 120 of the RTA. Subject to the 2.5% ceiling, the guideline equals the year-over-year change in the Ontario Consumer Price Index (CPI, the Statistics Canada measure of inflation), averaged over the 12 months ending in May of the previous year, and rounded to one decimal place.

In practice, CPI data from June to May sets the next year's number. The 2027 guideline of 1.9% was published on the province's rent increase page, updated June 23, 2026. The statute requires the Minister to publish each year's guideline in The Ontario Gazette no later than August 31 of the preceding year.

Why is the guideline capped at 2.5%?

The RTA states that the guideline for a calendar year "shall be not more than 2.5 per cent." This ceiling was added in 2012. The province says the cap exists "to prevent significant one-time rent increases to tenants."

When inflation runs hot, controlled rents can fall behind costs. From 2023 to 2025, the guideline sat at 2.5%, the maximum allowed, three years running. When inflation cools, as it has, the guideline drops with it: 2.1% for 2026 and 1.9% for 2027.

For 2021, the province imposed a 0% rent freeze; the province notes the guideline would otherwise have been 1.5%. It is a useful reminder that the number is a policy tool, not only a formula.

When can a landlord raise the rent, and how much notice is required?

Two timing rules generally apply to ordinary annual increases under the RTA. Specific exceptions include agreed increases for added parking or prescribed services under section 123; section 121 agreements also do not require the usual 90-day notice.

• The 12-month rule. Under section 119 of the RTA, at least 12 months must pass since the last increase for that tenant, or since the tenancy began if there has been no increase.
• The 90-day notice. Under section 116, the landlord must give at least 90 days' written notice, in a form approved by the LTB. For most rent-controlled units this is the N1 Notice of Rent Increase. Exempt units generally use N2.

The penalty for getting notice wrong is strict. The RTA says an increase "is void" without proper notice, and the landlord must serve a new one. Late notice delays the lawful increase; it does not automatically require waiting another full year.

Which year's guideline applies? The one for the calendar year in which the increase takes effect. An increase effective January 1, 2027 uses the 2027 guideline of 1.9%, and 90 days before that date is October 3, 2026.

October 3 assumes notice is handed to the tenant that day. Mailing requires extra time under section 191. I recommend serving well ahead of the deadline.

Worked example: what the guideline means in dollars

Consider a hypothetical luxury condo first occupied in 2015, so it is covered by the guideline. The tenant moved in on January 1, 2025 at $4,500 a month. Assuming proper notice and no special agreed increases, here is the guideline-only path.

Over two years, the controlled rent rises about 4%. If the same tenant had moved into a building first occupied for residential purposes in 2020, there would be no percentage cap. The 12-month rule and the 90-day notice would still apply, and the landlord could set the increase without a percentage limit under the RTA.

Which rental units are exempt from rent control?

The guideline does not apply to:

• New buildings, additions and most new basement apartments occupied for residential purposes for the first time after November 15, 2018
• A unit on turnover, where the landlord and a new tenant agree on a new rent
• Community housing units, long-term care homes and commercial properties

The November 15, 2018 exemption comes from section 6.1 of the RTA. It switches off the guideline and AGI provisions, but preserves ordinary notice and timing rules. For a building or addition, no part may have been occupied for residential purposes on or before that date.

For a new suite in an existing detached, semi-detached or row house, section 6.1(3) requires that the house contained no more than two residential units on or before November 15, 2018. The suite must have become a qualifying residential unit after that date, with its own kitchen, bathroom and secured entrances.

It must also have been created in previously unfinished space, or first occupied while an owner lived in another unit in the house. Each entrance needs a door secured from inside, and at least one must lock from outside. Section 6.1 exemptions do not apply to a tenancy agreed on or before November 15, 2018.

The burden sits with the landlord. The province suggests keeping building permits, occupancy permits and new home warranty documents, and adding a lease term under section 15 of the standard lease stating the unit is exempt.

What is an above-guideline increase (AGI)?

An AGI is an LTB order allowing rent to rise beyond the guideline. Under section 126 of the RTA, a landlord can apply on three grounds: an extraordinary increase in municipal taxes and charges, eligible capital expenditures, or the cost of security services provided by people the landlord does not employ.

The LTB's guidance sets the key limits:

• Taxes: an increase is "extraordinary" only if it exceeds the guideline plus 50% of the guideline. Applying that method to 2027 gives a 2.85% threshold. There is no cap on the resulting increase.
• Capital work: significant renovations, repairs, replacements or additions must have an expected benefit of at least five years and meet statutory eligibility criteria, such as protecting the building, maintaining essential systems or improving accessibility, conservation or security. Cosmetic work and work designed to add prestige or luxury do not qualify.
• The 3% limit: for ordinary residential buildings, increases for capital expenditures and security services cannot exceed 3% above the guideline in any one year. Any excess can be spread over the following two 12-month periods, again at up to 3% a year.

For capital work and security services on a $4,500 rent in 2027, the guideline plus the full 3% would allow up to 4.9%, or $220.50 a month, if the LTB approves. Approval is not automatic, and the application must be filed at least 90 days before the first intended increase.

What this means for you

Luxury buyer inheriting a tenant. Confirm the building's residential occupancy history before you price the rent. Buying a tenanted condo does not itself reset the rent to market. I recommend reviewing the lease, any rent increase notices and proof of the last increase date before an offer firms up.

Investor underwriting a rent-controlled asset. I model controlled units at the guideline, not at market growth, and assume no AGI unless eligible capital work is completed and documented. The cap means income can lag costs in inflationary years. I discuss the broader investment case in my article on multifamily returns.

Owner of an exempt rental. You have pricing freedom, but it is not a licence to ignore the market. An aggressive increase can trade a modest raise for a vacancy. I discuss rental income assumptions in The Rent Decline Paradox. Keep your exemption records ready.

Exemption questions and AGI applications have real legal consequences. I recommend reviewing them with your lawyer before serving notice or filing. For broader context on how provincial rules fit together, see my overview of housing policies.

Frequently asked questions

What is the Ontario rent increase guideline for 2027?

It is 1.9%, down from 2.1% for 2026. It applies to increases that take effect during the 2027 calendar year for units covered by rent control.

Can my landlord raise the rent more than once a year?

For ordinary annual increases, at least 12 months must pass since the last increase or the start of the tenancy, with at least 90 days' written notice. Specific statutory exceptions exist, including agreed increases for added parking or prescribed services under section 123.

Does rent control apply to my new condo?

For a condo in a new building, the exemption generally requires that no part of the building was occupied for residential purposes on or before November 15, 2018. A unit's first rental date alone is insufficient. Ordinary notice and timing rules still apply.

Can a landlord charge a new tenant any rent?

Generally, yes. On a genuinely new tenancy, the landlord and new tenant agree on the starting rent, subject to any applicable LTB rent restriction order. An assignment of an existing tenancy does not reset the rent. The guideline then governs increases during that tenancy if the unit is not otherwise exempt.

Sources

• Residential rent increases, Government of Ontario, Ministry of Municipal Affairs and Housing (updated June 23, 2026)
• Residential Tenancies Act, 2006, S.O. 2006, c. 17, Government of Ontario, e-Laws
• Information about Applications for a Rent Increase Above the Guideline, Landlord and Tenant Board, Tribunals Ontario (updated April 2, 2025)
• Forms, filing and fees, Landlord and Tenant Board, Tribunals Ontario