Ontario rent increase guideline 2026: the full landlord & tenant playbook

Every June, Ontario’s Ministry of Municipal Affairs and Housing announces the next year’s rent increase guideline — the maximum amount most landlords can raise rent without applying to the Landlord and Tenant Board (LTB). For 2026, the guideline is 2.5%. That sounds simple, but in practice three out of four landlords get something wrong: who it applies to, when notice has to be served, or how the math works on a unit that’s exempt.

This guide is the plain-English version, with every claim referenced to the actual section of the Residential Tenancies Act, 2006 (the “RTA”). It’s written for both sides — landlords who want to charge the increase legally, and tenants who want to know when an increase is illegal.

What the guideline actually means

The guideline is set under RTA s.120(2) using the Ontario Consumer Price Index (CPI) for the previous year, capped at 2.5%. It applies to most rental units built before November 15, 2018 and covered by the RTA — so most Ontario apartments, condos rented out, basement suites, and rooming houses.

It is not a default amount. A landlord doesn’t have to raise the rent at all. But if they do raise it on a covered unit, the amount can’t exceed the guideline — and they can only raise it once per 12 months (RTA s.119) with a minimum of 90 days’ written notice (RTA s.116).

Who’s exempt from the guideline

Three big categories of unit are not capped at the guideline. If yours falls in any of these, the landlord can charge more — sometimes much more:

• Units first occupied after November 15, 2018. New construction (purpose-built rentals, new condo conversions) is permanently exempt under RTA s.6.1. The landlord can raise rent by any amount with the same 90-day N1 notice — but they still have to serve the notice.
• Vacancy decontrol: when a tenant moves out and a new one moves in, the landlord can negotiate any rent for the new tenancy (RTA s.113). Once that tenant is in, the guideline applies again to their tenancy going forward.
• Above-guideline increase (AGI) applications: a landlord can apply to the LTB for a higher increase if there’s been an extraordinary increase in property tax, utilities, or documented capital expenditures (RTA s.126). These take months to process and often face tenant pushback.

Some unit types are excluded from the RTA entirely — co-op housing, most retirement-home units that include care, and short-term rentals. If you’re not sure whether your unit is covered, the test is whether you have a tenancy agreement under the RTA, not just where you live.

How to calculate the increase

The math is straightforward but trips people up because the guideline is rounded to the nearest cent, not the nearest dollar.

Example: rent is currently $2,400.00 / month. The 2026 guideline is 2.5%.

• $2,400.00 × 2.5% = $60.00
• New rent: $2,400.00 + $60.00 = $2,460.00 / month

On a $1,832.45 rent the increase would be $1,832.45 × 0.025 = $45.81 — the cents matter at LTB hearings, so don’t round up.

The 90-day N1 notice rule

Under RTA s.116, the landlord must give written notice of the rent increase at least 90 days before it takes effect — and the increase can’t take effect any sooner than 12 months after the previous increase or the start of the tenancy (whichever is later).

The notice has to be on the official Form N1 (or N2 if the unit is in the partially-exempt category) — not just an email. The form is available from Tribunals Ontario and looks identical for both landlord and tenant copies.

Critically, the N1 has to include:

• The current rent and the new rent (in dollars, not just “guideline amount”)
• The exact effective date — first day of a rental period, usually the 1st of the month
• The landlord’s name, signature, and contact info matching the lease

Miss any of those and the notice is invalid — the tenant can keep paying the old rent until a corrected notice is served and another 90 days have passed.

What the tenant can do if it’s wrong

Tenants have three different responses depending on what’s wrong:

1. The form is incomplete or wrong. Just keep paying the old rent. The landlord has to re-serve a corrected N1 and the 90-day clock starts over.
2. The increase is over the guideline (and the unit isn’t exempt). Same as above — keep paying the old rent. If the landlord pushes back, file a Form T1 application at the LTB to recover any overpayment (RTA s.135). T1 must be filed within one year of the illegal payment.
3. It’s less than 12 months since the last increase. The notice is invalid under RTA s.119. Pay the old rent; the landlord can re-serve once a full 12 months have passed.

Tenants don’t need a lawyer to dispute a wrong N1. The starting move is always the same: keep paying the old rent and write to the landlord (in writing — text or email is fine) explaining which part of the notice is wrong.

Above-guideline increases (AGI)

Some landlords apply for an increase above 2.5% under RTA s.126. Three reasons qualify:

• Extraordinary increase in municipal taxes / charges (above the guideline)
• Eligible capital expenditures — major repairs, replacements, or accessibility improvements
• Operating costs related to security services

AGI applications are filed on Form L5. The LTB schedules a hearing where the landlord must produce receipts and contractor invoices, and tenants can attend to dispute. An approved AGI is capped at 3% above the guideline per year for capital work (and only up to 9% over three years). The full process takes roughly 6–12 months.

The annual cycle: when to expect this

If you’re a landlord planning to charge the 2026 guideline:

• Earliest serve date: 90 days before the effective date. To take effect on January 1, 2026, the N1 must be served by October 3, 2025.
• Latest serve date: there’s no deadline — but the increase only takes effect after the 90-day clock and the 12-month-since-last-increase rule are both satisfied.

Where to find the official source

The 2026 guideline is published annually by the Ministry of Municipal Affairs and Housing in late June. Tribunals Ontario also publishes guideline rates going back to 1991 at tribunalsontario.ca/ltb. The RTA full text is at ontario.ca/laws/statute/06r17.

Important: Nest Mate is not a law firm and this guide isn’t legal advice. For specific situations — especially AGI disputes or if you suspect retaliation — contact ACTO or your local legal aid clinic.