Ontario Lawmakers Seek to Cap Rent Increases

by Chris on December 19, 2011

Future rent increases in Ontario will be capped at not more than 2.5 per cent, and not less than 1 per cent annually, if lawmakers there accept a proposal now before the legislature.

In 2012, the Guideline calculation rose to 3.1 per cent. The 2011 increase was set at 0.7 per cent, the lowest increase in 35 years. Some lawmakers say that the 2012 increase was simply too high of a jump. Such fluctuation in rents, they say, causes instability and makes tenants insecure.

Housing Ministry officials feel that tenants would benefit from greater certainty that would ensure affordable and stable rents, and that the proposed increases would provide landlords a fair return so they can properly maintain rental properties.

The Guideline would continue to be based on the Ontario Consumer Price Index, but could not rise above 2.5 per cent in any one year. The average annual Rent Increase Guideline from 2004 to 2011 was 1.89 per cent. The average annual Rent Increase Guideline from 1993 to 2003 was 3.17 per cent.

The Rent Increase Guideline is the maximum amount that most landlords can increase a tenant’s rent during the year without making an application to the Landlord and Tenant Board. The Rent Increase Guideline is based on the Ontario Consumer Price Index (CPI), which is a measure of inflation compiled monthly by Statistics Canada. The Guideline is calculated by averaging the percentage change in the CPI during the previous months from June to May.This Guideline impacts nearly¬†one million tenant households in Ontario.

Kathleen Wynne, Minister of Municipal Affairs and Housing supports the measure. “Capping rent increases would provide greater certainty and reduce year-to-year volatility in housing costs so that Ontario families continue to have access to affordable housing.”

The proposal is slated for discussion during the Spring legislative session. Should the bill move to committee review, there may be opportunity for landlords to present their comments to lawmakers prior to final passage.

If passed by the legislature during the Spring 2012 legislative session, the revised formula would be used to calculate the Rent Increase Guideline beginning in 2013.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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