Ontario’s Rent Increase Guidelines for 2025: What Tenants and Landlords Need to Know
Ontario set its rent increase guideline for 2025 back in June of 2024, and we can expect a formal announcement for 2026 any day now.
The number itself is important, but the rules behind it—and the exceptions—matter just as much. Rent control in Ontario isn’t always straightforward, and if you don’t know how the law applies to your unit, it’s easy to get caught off guard.
Let’s unpack what the 2.5% guideline really means, who it applies to, and what to do if you’re on the receiving end of a rent hike that doesn’t seem quite right.
What Exactly Is the Rent Increase Guideline?
In 2025, Ontario’s rent increase guideline is 2.5%. That’s the highest it can go under current law, even if inflation goes beyond that. The guideline is based on the Ontario Consumer Price Index, but there’s a ceiling—and 2.5% is it.
This rule comes from the Residential Tenancies Act, and it applies to most private residential units. But not all. A lot depends on when the building was first occupied and what type of property it is.
Tenants often assume their rent is protected. Landlords sometimes assume they can raise rent as needed. Both can be wrong—and it helps to know the difference. If you’re unsure how the rules apply to your property, it’s worth checking with a landlord and tenant lawyer.
Is Your Unit Covered? Not Always.
This guideline only applies to units that were first rented out before November 15, 2018. If your place was built and first occupied after that date, it’s exempt. That means your landlord doesn’t have to follow the 2.5% limit—they can raise rent by more, as long as they provide 90 days’ written notice and haven’t raised it within the last 12 months.
This exemption was part of the More Homes, More Choice Act, aimed at encouraging developers to build more rental housing. But from a tenant’s point of view, it’s not ideal. In some cases, people have seen their rent go up by hundreds of dollars overnight.
Whether you’re a landlord or a renter, it’s worth knowing whether your unit qualifies for rent control. If you’re in doubt, a landlord tenant dispute lawyer can help you make sense of it.
What Has to Happen for a Rent Increase to Be Legal?
For units that fall under rent control, the law sets out a clear process for raising rent. If the landlord doesn’t follow every step, the increase may not hold up legally.
Here’s what needs to happen:
- It’s been at least 12 months since the last rent increase.
- The landlord gives 90 days’ notice—and it has to be in writing using the Landlord and Tenant Board’s Form N1.
- The increase follows the guideline—meaning no more than 2.5% unless approved through a formal application.
If your landlord skips one of these steps, the increase could be challenged. And tenants are often surprised to learn they’re allowed to keep paying the original rent until the issue is resolved. If you’ve received a notice and something seems off, reaching out to a Toronto landlord lawyer can help clarify next steps.
What About Above Guideline Increases?
Sometimes, landlords want to raise rent by more than the set limit. This is called an Above Guideline Increase (AGI), and it’s only allowed in a few specific situations—like when the landlord has made major capital repairs or seen a steep increase in property taxes.
But it’s not automatic. To get an AGI, landlords must apply through the Landlord and Tenant Board, include full documentation, and wait for approval before charging the new rate.
Tenants have the right to challenge these applications, especially if the claimed expenses aren’t valid or the repairs don’t qualify. Before agreeing to an AGI, it’s smart to check with a landlord and tenant lawyer in Toronto to make sure everything’s above board.
Recent Legal Trends Affecting Rent Increases in 2025
The 2.5% rent increase guideline may sound simple—but the way it’s interpreted by the Landlord and Tenant Board (LTB) in 2025 has made for some important real-world lessons. If you’re a landlord considering an increase—or a tenant who’s received one—it pays to understand how these rules are being enforced.
Above Guideline Increases (AGIs) and Capital Work
In several recent decisions, landlords applied for Above Guideline Increases (AGIs) tied to capital expenditures such as roof repairs, window replacements, and HVAC system upgrades. These applications were approved—but only when landlords provided full documentation, including timelines, receipts, and contractor information.
By law, AGIs related to capital work or security services are capped at 3% above the guideline per year, and can only be charged after receiving an LTB order. That means tenants don’t owe the increased amount until the Board approves it.
Takeaway: Want to charge more than the guideline? Follow the LTB’s process and provide documentation. Tenants facing an AGI can challenge the increase, especially if depreciation isn’t considered or the repairs don’t qualify. Full details are in Tribunals Ontario’s brochure on rent increases above the guideline and Interpretation Guideline 14.
Informal Rent Increases Continue to Be Rejected
The LTB has also handled several cases in 2025 where landlords tried to raise rent through informal methods—like text messages, emails, or verbal conversations. These increases are consistently found invalid, even when tenants paid the new amount for several months.
Under Ontario law, rent increases must be delivered using Form N1, served properly, and issued at least 90 days in advance. If a landlord fails to follow those steps, the increase has no legal standing.
Takeaway: Paying an invalid increase doesn’t make it legal. Tenants can apply to the LTB for a rent refund and should consider speaking with a landlord tenant dispute lawyer if they’ve been overcharged.
AGIs Require Approval—Not Just an Application
Another recurring trend this year is landlords telling tenants that an AGI is “pending” and demanding payment before the Board has made a decision. That’s not how the process works.
According to the LTB’s application and hearing process, landlords must wait until an official order is issued. Until then, tenants are only required to pay the legal guideline amount (2.5% in 2025).
Takeaway: Tenants should not be paying more than the guideline unless the LTB has already approved it in writing. If your landlord is collecting early, that increase may be unlawful.
Renovictions Are Still Happening—Here’s What You Should Know
Some landlords sidestep rent control by trying to evict tenants under the claim they need to renovate. These “renovictions” are becoming more common in cities like Toronto and Hamilton.
In theory, landlords can ask a tenant to leave if they need to perform serious renovations that require the unit to be vacant. But too often, that reason is used as a cover to evict tenants and re-rent the unit at a much higher price.
To combat this, Ontario has introduced rules around protecting tenants from renovictions, including stricter requirements for landlords to prove the need for vacant possession.
If you receive an eviction notice tied to renovations, don’t move out without checking your rights first. It may not be legitimate.
What About Shared Houses or Rooming Units?
In places like Toronto, where shared housing is common, there’s another layer to all this: licensing.
Under the new Toronto Houses Licensing By-law, landlords who rent out multiple rooms in a single home now need a licence. This applies to rooming houses, student housing, and other shared arrangements.
Tenants in these situations often don’t realize they’re entitled to the same rent protections as any other renter. If you live in shared housing and get hit with an unexpected rent increase or eviction notice, it may violate both provincial law and city bylaws. In that case, a landlord tenant dispute lawyer can help determine if your landlord is compliant.
Tips for Landlords: Don’t Skip the Paperwork
It’s not just tenants who need to be cautious. Landlords also need to make sure they’re following the rules to avoid LTB hearings, fines, or reversal of the rent increase.
Here’s what landlords should keep in mind:
- Always give 90 days’ written notice (and use Form N1).
- Track when the last rent increase was issued.
- Double-check whether your unit is subject to rent control.
- Don’t rely on verbal agreements—keep everything in writing.
- If planning an AGI, gather all receipts and submit a proper application.
If you’re unsure about your obligations, consulting a landlord and tenant lawyer is a smart move.
Final Word: Know the Rules Before You Act
With the 2025 guideline set, both tenants and landlords now have the chance to plan ahead. But planning only works if you understand your rights and responsibilities. Rent control rules in Ontario may seem simple on the surface, but the details—and the exceptions—can make all the difference.
Whether you’re disputing a sudden rent hike or preparing to issue one, the legal team at Unified LLP is here to help. We’ve supported countless clients through LTB disputes, rent reviews, and landlord-tenant conflicts of every kind. If you’re navigating a tricky rent situation, don’t guess. Talk to a landlord tenant dispute lawyer who knows the law—and knows how to protect your interests.
