Why can a tenant in one building expect a rent increase capped at a small percentage each year, while a tenant next door in a newer building has no such cap at all? The two units can look nearly identical, but the rules that apply to them are not. Anyone trying to understand how does rent control work in Ontario usually starts with one main dividing line, the date a building was first occupied, which changes almost everything else about how a landlord can set and raise rent.<\/p>\n\n\n\n
For most existing rental units, an owner can raise rent once every twelve months for the same tenant, and the increase cannot exceed a percentage set by the province each year, known as the rent increase guideline. For 2026, that guideline is 2.1 percent. A landlord must give the tenant at least 90 days of written notice before an increase takes effect, using the official form set out by the Landlord and Tenant Board. Skipping the notice period, using the wrong form, or trying to raise rent more than once a year on the same tenant can make an increase unenforceable even if the percentage itself was correct.<\/p>\n\n\n\n
Not every rental unit falls under this cap. Rental units first occupied for residential use after November 15, 2018 are generally exempt, which means a landlord of one of these units can raise rent by any amount, as long as the required notice is still given and the twelve-month rule is still followed. This is the Ontario rent control exemption new buildings rely on, and it has become one of the most consequential lines in Ontario’s rental market, since it separates units where rent is capped from units where it can move freely with the market.<\/p>\n\n\n\n
The percentage itself is not arbitrary. Ontario calculates it each year based on the province’s Consumer Price Index over a defined twelve-month window, then caps the result at 2.5 percent by law even if inflation runs higher than that. The 2026 guideline of 2.1 percent is lower than the 2.5 percent cap used in 2025, and the Government of Ontario<\/a> has already set the 2027 guideline at 1.9 percent. A landlord who wants to raise rent above the guideline on a rent-controlled unit has to apply to the Landlord and Tenant Board for an above-guideline increase, usually tied to a specific capital expense like a major repair, and approval is not automatic.<\/p>\n\n\n\n For anyone evaluating new supply rather than existing stock, this exemption is the more relevant piece. A purpose-built rental tower that reaches first occupancy after the November 2018 cutoff is not subject to the annual guideline at all. That means the rents an owner sets at lease-up, and any increases after that, are governed by what the market will support rather than by a fixed percentage. This is a meaningful part of the underwriting picture for any new rental project in Ontario, since it removes one layer of regulatory uncertainty that applies to older buildings.<\/p>\n\n\n\n The Landlord and Tenant Board is the tribunal that hears disputes under the Residential Tenancies Act, including complaints about improper rent increases, and it is also where a landlord applies for an increase above the standard guideline. A tenant who believes a rent increase was calculated wrong, given without proper notice, or applied more than once in a twelve-month period can file a dispute with the board within a set window after the increase was first charged. For landlords, this means the paperwork behind an increase matters as much as the number itself, since a technical error can undo an otherwise valid increase.<\/p>\n\n\n\n Once a unit turns over to a new tenant, Ontario allows what is often called vacancy decontrol. The outgoing tenant’s rent no longer limits what the landlord can charge the next tenant, even on a unit that is otherwise subject to the guideline. This creates a real gap between in-place rent on long-tenured units and current market rent on the same unit type in the same building, and it is one reason two nearly identical apartments in an older building can rent for very different amounts depending on how long the current tenant has lived there.<\/p>\n\n\n\n For an investor comparing an existing rental building to a new one, these rules change the shape of the underwriting. An older building carries embedded rent growth limits on sitting tenants, offset somewhat by the upside available at turnover. A new purpose-built project carries none of that guideline exposure from day one, which is part of why purpose-built rental has become a preferred structure for new supply in Ontario. Black Creek Group’s Project Vespra<\/a> was underwritten with this distinction in mind, reflecting the regulatory position new purpose-built rental holds relative to older, rent-controlled stock.<\/p>\n\n\n\n Does rent control apply to all rental units in Ontario?<\/strong> Why are new purpose-built rental buildings exempt from rent control in Ontario?<\/strong> How much notice must a landlord give before raising rent in Ontario?<\/strong> Can a landlord raise rent by any amount on an exempt unit?<\/strong> What can a tenant do if they believe a rent increase is unlawful?<\/strong>Purpose-Built Rental Rent Control Exemption<\/strong><\/h2>\n\n\n\n
Landlord and Tenant Board Rent Rules<\/strong><\/h2>\n\n\n\n
Rent Control vs Market Rent in Ontario<\/strong><\/h2>\n\n\n\n
What This Means for Investors<\/strong><\/h2>\n\n\n\n
FAQs<\/strong><\/h2>\n\n\n\n
No. Most units first occupied on or before November 15, 2018 are subject to the annual rent increase guideline. Units first occupied after that date are generally exempt from the guideline.<\/p>\n\n\n\n
The province set November 15, 2018 as a cutoff date to encourage new rental construction, exempting units first occupied after that date from the annual guideline so landlords can set rents based on current market conditions.<\/p>\n\n\n\n
At least 90 days of written notice using the proper Landlord and Tenant Board form, regardless of whether the unit is subject to the guideline or exempt from it.<\/p>\n\n\n\n
Yes, on units exempt from the guideline, a landlord can raise rent by any amount, provided the required 90 days’ notice is given, and rent is not increased more than once in a twelve-month period for the same tenant.<\/p>\n\n\n\n
A tenant can file a dispute with the Landlord and Tenant Board within the applicable time limit after the increase was first charged, particularly if proper notice was not given or the increase exceeded what is legally allowed for that unit.<\/p>\n\n\n\n