Ontario's Rent Increase Guideline Step by Step: 2027 Rate, Exempt Units and N1 Timing

Ontario sets its rent increase guideline once a year, using the power in section 120 of the Residential Tenancies Act, 2006 (the RTA, the main law for residential rentals). It is the largest increase a landlord can normally give a current tenant in a 12-month stretch without the Landlord and Tenant Board (LTB) signing off. Increases starting in 2027 use 1.9%; those that started in 2026 used 2.1%.

What it does for each side:

• Landlords use it to figure out a lawful new rent and when the notice must go out.
• Tenants use it to test a notice they were handed: is the amount allowed, is the timing right, and does the cap reach their unit at all?

The rules in one table

Step 1: Know how the figure is produced

The formula in s. 120(2) follows inflation. The province measures the yearly change in the Ontario Consumer Price Index, averages it over the year that ends in May before the guideline year, and rounds to one decimal. Whatever the result, 2.5% is the ceiling.

Section 120(3) requires the Minister to publish it in The Ontario Gazette no later than August 31 of the preceding year. After that, the ministry posts the figure on its residential rent increases page.

Which year's figure counts? The year in which the higher rent begins. The province's own illustration: $1,000 rent in a tenancy that began June 1, 2026 can become $1,019 on June 1, 2027, using the 2027 figure of 1.9%.

Another example: rent of $1,650 since September 1, 2026 can go up on September 1, 2027. At 1.9% the raise is $31.35, so the new rent is $1,681.35.

Step 2: Find the right year

Grouped by percentage, newest years first:

Notes on the table:

• Every year since 1991 appears on the ministry page.
• Section 120(3.1) of the Act itself imposed the 2021 freeze.
• S.O. 2012, c. 6 put the 2.5% ceiling into s. 120. The 2012 figure was fixed before it applied, which explains the 3.1%.

Step 3: Decide whether the unit is covered

Usually covered

Most private rentals governed by the RTA, including houses, apartments, basement units, condos, mobile homes and land lease homes, plus a care home, but only for what is charged as rent. The cap protects the tenant in place and anyone who took the tenancy over by assignment (s. 120(1)).

Not controlled by the guideline

1. Rent for an incoming tenant. Section 113 makes the first rent charged the lawful rent, so at turnover the two parties simply agree on a figure.
2. Section 6.1 units, in two forms: - Whole-building: exempt from the guideline and from the above-guideline rules where nobody lived in any part of the building, park or community (or the addition holding the unit) on or before November 15, 2018. - Small house: certain new units in a detached, semi-detached or row house that had at most two units on that date. The new unit must be completed after November 15, 2018 and either sit in space that used to be unfinished, or have had an owner living elsewhere in the house at the time it was first occupied. - Neither exemption covers a tenancy agreed to on or before November 15, 2018 (s. 6.1(4)).
3. Social and care housing: community housing, RGI (rent-geared-to-income) units and long-term care homes each follow separate rules.

Landlords claiming an exemption must prove it if challenged. The province suggests keeping:

• [ ] building permits and occupancy permits
• [ ] the plans
• [ ] warranty documents for the new home
• [ ] invoices from builders and contractors
• [ ] photos from before and after

It also recommends noting the exemption under the lease's additional terms.

Tenants doubting an exemption can ask which version the landlord relies on and what records back it up. Remember that it never applies to a tenancy that existed by November 15, 2018.

Step 4: Check the three requirements that never go away

These apply to exempt and covered units alike.

1. A year between raises (s. 119). Measure from the last increase, or from move-in. After an assignment inside that year, measure from the prior tenant's last increase instead.
2. Ninety days, in writing (s. 116). The approved LTB form must be used and must show the new rent. Missing or defective notice makes the increase void, and the landlord has to start again with a new one (s. 116(4)).
3. The right notice form. - N1: the standard choice. - N2: for units outside the limits on increases; its instructions describe partial exemptions like non-profit and social housing. - N3: care homes. - Caution: s. 6.1 is newer than the N2 instructions, which were written in May 2017, and the LTB has not said which notice it wants for a s. 6.1 unit. Ask the LTB before serving.

According to the LTB's hearing-process page, a unit first occupied after November 15, 2018 has no limit on the size of the increase, but the landlord must still give the tenant 90 days of written notice using the proper form.

Step 5: Time the N1, or test its timing

Landlords work forward through this list; tenants can use it to audit a notice they received.

1. Pick the start date. It must be a year or more after the last increase or move-in, and is typically day one of a rental period.
2. Subtract 90 days. That gives the last day the tenant can receive the N1.
3. Allow for mail. Mailed notices count as given five days after they are mailed (s. 191(3)), so mail it 95 days or more ahead.
4. Use a permitted delivery method. Under the N1 instructions you may: - give it to the tenant, or to an adult at the unit - leave it in the mailbox or the place mail usually goes - slide it under the door or into a mail slot - send it by courier, mail or fax

Posting it on the unit's door is not an option. 5. Check the math. Current lawful rent times the guideline for the start year. On a covered unit, any extra is unlawful.

Worked example. For the September 1, 2027 increase, 90 days earlier is June 3, 2027. Handing the N1 over by June 2 gives a day of cushion. Mailing it means posting it by May 28, 2027 or earlier.

After the notice

• No move-out notice from the tenant: they are treated as having accepted whatever increase the Act permits (s. 118).
• The one-year clock: under s. 136, once a year has passed since an increase was first charged without the tenant applying, it is deemed lawful. Tenants who think a raise was wrong should not wait.

Step 6: The only ways past the guideline

On a covered unit, a landlord can lawfully charge more in two ways.

Option A: an N10 agreement (s. 121)

• Given in return for particular capital work, or for a service that is added or new.
• Most it can be: the guideline plus 3% of the prior lawful rent.
• A written cancellation by the tenant within five days of signing ends it.
• Earliest start: six days after signing.
• An N1 is not needed.

Option B: an L5 application (s. 126)

• Grounds: unusually large increases in municipal taxes and charges, eligible capital spending, or paying for outside security services.
• The part based on capital spending and security is held to 3% over the guideline per 12-month period. The surplus moves into the following two periods, each also capped at 3%.
• An N1 still has to be served 90 days or more ahead.
• Fees are listed under LTB filing fees; the form itself is covered on the L5 page.

Added services (s. 123)

Both sides can agree to add parking or another prescribed service, raising the rent by the prescribed amount. Neither the 90-day notice nor the 12-month gap applies.

Two related rules people forget

• Deposit interest. A landlord holding a last month's rent deposit pays yearly interest on it, at the guideline in force on the due date (s. 106(6)). At the 2027 rate of 1.9%, a $1,650 deposit earns $31.35. Some or all of that interest may be kept to raise the deposit to match the new rent (s. 106(7)).
• Air conditioners. Since July 1, 2026, in units where the rent includes electricity, landlords may add a seasonal charge for a window or portable unit the tenant installs. Interpretation Guideline 11 has more.

Questions landlords and tenants ask

What percentage applies to a 2027 increase?

The province has set 1.9% for 2027. Increases taking effect during 2026 were limited to 2.1%.

Since the cap is 2.5%, can a landlord always use 2.5%?

No. That number only limits how high the guideline may be set. A covered unit's increase stops at the year's guideline, unless the tenant signed an N10 or the Board allowed more on an L5.

My building opened in 2020. Is my rent capped?

Likely not. Where the building (or the addition your unit is in) had no residents at all on or before November 15, 2018, s. 6.1 removes it from the guideline. Ninety days' written notice on the correct form and one increase per year still apply.

My N1 came with less than 90 days' notice. Does it count?

No; s. 116(4) voids it. A fresh notice giving the full 90 days, with a later start date, is required.

Can rent change between tenants?

Yes. Whatever is first charged to the new tenant is the lawful rent (s. 113), unless an LTB order covering the unit says otherwise.

Official sources

• Residential rent increases (Ontario Ministry of Municipal Affairs and Housing)
• Residential Tenancies Act, 2006, ss. 6.1, 106, 113, 116, 118–121, 123, 126, 136, 191
• N1 Notice of Rent Increase and instructions
• N2 instructions
• Interpretation Guideline 11 (seasonal air conditioner charges)
• LTB Application and hearing process

Last reviewed October 31, 2026. General information, not legal advice for your situation. Always use the current version of the form from the LTB.