Most Ontario tenants know that their landlord cannot raise their rent by whatever amount they choose. What fewer people understand is exactly how the system works, what limits apply, and under what circumstances a landlord can apply to exceed those limits through a process known as an Above Guideline Increase. For both landlords and tenants in Kitchener, Waterloo, Cambridge, Guelph, Hamilton, and Southwestern Ontario, understanding how rent increase rules actually operate is essential to protecting their respective interests.

MTS Paralegal Services P.C. represents both landlords and tenants before the Landlord and Tenant Board and regularly assists clients in navigating rent increase disputes. This overview covers the key rules every Ontario landlord and tenant should know.

What Is the Rent Increase Guideline in Ontario?

Each year, the Ontario government sets a rent increase guideline under the Residential Tenancies Act, 2006. This guideline represents the maximum percentage by which a landlord may increase the rent for most eligible tenants without seeking approval from the Landlord and Tenant Board. The guideline is calculated annually based on the Ontario Consumer Price Index and reflects general inflation and cost of living changes over the prior year.

For 2026, the rent increase guideline is set at 2.1%, down from 2.5% in 2025. It is important to understand that the guideline applies only to units that were first occupied for residential purposes on or before November 15, 2018. Residential units first occupied after that date are exempt from rent control, meaning the guideline does not cap increases for those properties. For covered units, a landlord who raises rent above the guideline without LTB approval risks having the excess portion of the increase declared void and unenforceable.

Notice Requirements Every Landlord Must Follow

A rent increase, even one that falls within the guideline, is only valid if the landlord provides the tenant with at least 90 days written notice using the proper LTB Form N1. Verbal notices, text messages, emails, and informal letters are not valid notice for the purposes of a rent increase under the Residential Tenancies Act, 2006. A notice that is not served using the correct form may be unenforceable regardless of whether the amount of the increase is within the guideline.

Rent can only be increased once every 12 months, and at least 12 months must have passed since the tenant moved in or since the last lawful rent increase, whichever is more recent. These timing rules are strictly applied by the Landlord and Tenant Board. A landlord who raises rent too soon, without proper notice, or using an incorrect form may find the increase challenged and set aside at a hearing.

What Is an Above Guideline Increase and When Does It Apply?

An Above Guideline Increase, commonly referred to as an AGI, is an application by a landlord to the Landlord and Tenant Board for permission to increase rent beyond the annual guideline amount. An AGI is not automatic and is not available simply because a landlord wants a higher increase. It requires a formal application, documentary evidence of qualifying costs, and in most cases a hearing before an adjudicator who will determine whether the increase is warranted.

AGIs are available to landlords in three specific circumstances under the Residential Tenancies Act, 2006: significant capital expenditures on the property, such as roof replacement, new windows, plumbing upgrades, or other major repairs; significant increases in municipal taxes or charges; and extraordinary increases in the cost of utilities such as gas, oil, or electricity. Not every repair or cost increase qualifies, and the evidence required to support an AGI application must directly connect the claimed costs to the specific grounds permitted under the legislation.

How the AGI Process Works at the LTB

To apply for an Above Guideline Increase, a landlord must file Form L5 with the Landlord and Tenant Board and notify all affected tenants of the application before any increase above the guideline can be collected. The application triggers a hearing at which the landlord must present documented evidence of the qualifying costs being claimed. Tenants have the right to attend the hearing, challenge the landlord’s evidence, and make submissions opposing the application or the amount being sought.

AGIs are typically capped at 3% above the applicable guideline per year and are often ordered to be phased in over a three-year period rather than applied all at once. The increase is not guaranteed simply because a qualifying reason exists. The Board exercises discretion in determining what amount, if any, is justified based on the evidence presented. A landlord who files an AGI without thorough documentation of the claimed costs is unlikely to succeed, and a tenant who attends the hearing with organized evidence challenging the landlord’s position is in a significantly stronger position than one who does not appear.

What Tenants Can Do When Facing an AGI Application

Receiving notice of an AGI application can be unsettling, particularly for tenants already managing tight budgets in a challenging rental market. The important thing to understand is that an AGI application is not a final decision. It is the beginning of a legal process at the Landlord and Tenant Board in which tenants have a meaningful right to participate. Tenants who receive notice of an AGI application should review the documentation provided, gather any evidence that challenges the landlord’s claimed costs or the necessity of the works described, and attend the hearing prepared to make submissions.

Timothy Ellis of MTS Paralegal Services P.C. represents both landlords filing AGI applications and tenants challenging them before the Landlord and Tenant Board across Southwestern Ontario. Whether the matter involves ensuring a landlord’s application is properly documented and presented, or ensuring a tenant’s rights are fully protected at the hearing, the firm provides experienced representation at every stage. Reach out through the contact page or call (226) 444-4882 to discuss any rent increase matter before the hearing date arrives.

Whether you are the one raising the rent or the one receiving the notice, knowing the rules changes everything.

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