With the New Year arriving many Toronto landlords and property investors across the province are looking to raise the rent in order to cover the ever increasing costs of owning an income property.
Ontario has ‘rent control’ for residential landlords. This means every year the provincial government at Queens Park announces how much the rent can be raised for tenants in the following year.
Ontario’s annual Rent Increase Guideline is created by looking at the Ontario Consumer Price Index (CPI). This measures inflation and is overseen by Stats Canada.
In 2014 residential landlords in Ontario could raise the rent only 0.8 percent.
Due to more inflation in 2015 Toronto landlords can raise the rent by 1.6 percent.
If you want a larger figure you will have to apply for an Above Guideline Increase at the Landlord and Tenant Board and have an adjudicator agree to it.
You have to make sure at least twelve months have passed since your tenants moved in to your property to raise the rent. In addition, you must give your tenants proper notice of the rent increase. This property notice is ninety days until the new rent needs to be paid.
It is calculated under the Residential Tenancies Act, 2006, which caps rental increases at a maximum of 2.5 per cent.
Is 1.6% Fair for Landlords?
Many landlords feel this number is too low for them to cover their costs. However, in 2014 landlords could only raise the rent by 0.8% so 2015 rules are more favourable!
New Condominium Investors
With all the new condos being built many landlords own properties which have special rules when it comes to raising the rent.
I Own A New Condo. Do I Have To Follow The Guideline?
No, you could be exempt. This is good news for Toronto condo landlords.
You do not have to follow the Guideline if your situation in one of the following:
1. The rental was not occupied for any purpose before June 17th, 1998
This means your rental property was built after June 17th, 1998 or you have built a new unit in your property that was never occupied before June 17th, 1998.
2. The rental unit was never previously rented since July 29th, 1975
This means only the owner has lived in the property since the date of July 29th, 1975.
3. No part of the building was occupied for residential purposes before Nov. 1st 1991
This means the property was converted from commercial to residential or was not built or occupied until after November 1st, 1991.
I’m Going To Raise the Rent on My Current Tenants
Make sure you know if you have to follow the Rent Guideline or if you exempt and can raise the rent higher.
Also, make sure you follow the Landlord and Tenant Board rules and give proper notice to your tenants.
Toronto Landlords Are You Going To Raise the Rent in 2015?
If your property was built before November 1991 you should raise the rent by the maximum amount. If you are lucky to have a property built after 1991 you can check prices of comparable properties in your area and make a sound property management judgement based on supply and demand.
Should You Raise the Rent?
If your property is not exempt from the rent increase guideline most experienced landlords will advise you to raise the rent every year.
Tenants can live in a property for a long time and if you don’t increase the rent annually you might find yourself in a situation where the rent is not covering your expenses. And, as you are not exempt, there is nothing you can really do about it unless the tenant moves out. To discuss this and other important issues check out the Ontario Landlords Association forum.
