How Often Can a Property Owner Increase the Rent?
In Ontario, you can increase the rent once every 12 months, and you must give your tenants a written notice at least 90 days before you do it. However, there’s more to the story than just that. So if you want to get the full scope of things, dive right in and get all the vital details.
Renting Out a Property
When you rent your property for the first time, you look at the market prices and come up with a price you’re comfortable with. So, the renters come, you sign the rental agreement, and that’s it.
Sure, sometimes they’ll negotiate the price or what bills should be included in the rent, but it’s your call at the end of the day. On top of that, there’s no maximum price you can ask for your property. So, if the rental prices are way up now than your previous tenants paid, you don’t have to stick with the old price when new renters come.
Of course, there are ways to increase your rental income without losing tenants if that’s what you’re after. And as a matter of fact, that’s what we’ll talk about today. But before we get into why you might want to increase the rent, we have a quick disclaimer.
If you have a rental property in Ontario, you should know it’s a rent-controlled province. So, if your renters remain the same, you can only increase the rent for the amount that the officials say is okay. That said, newer buildings aren’t rent-controlled, so the guidelines aren’t the same. But more on that later on.
Why Would You Want to Raise the Rent?
Although some people may think that all the money property owners get goes into their pockets, that’s not the case. On the contrary, they have many expenses, many of which go up each year. And in the bottom line, that’s why most people raise the rent for their tenants — to keep up with the costs.
If you’re not sure if you should do it or not, here are some expenses you should keep track of and adjust your rent accordingly.
- Property maintenance
- House or apartment repairs
- Property taxes
- Property owner insurance
- Mortgage payments
- Property management expenses
- Bills that the owner should pay
If your expenses as a property owner go up, it only makes sense that you’ll want to increase the rent. Furthermore, if the market expands and the rent prices go way up, you’ll want to get a slice of the pie as well. There’s nothing wrong with thinking this way, as long as you do everything by the rules.
Still, if you like your current tenants and want them to stay, you should do your best to help them. Sometimes, you’ll have to ask for more money, but you can help them afford your space by allowing them to save money elsewhere.
For example, if your renters use storage space, you can deal with a storage company to give you a discount and offer this option to your tenants. Their belongings will remain safe, and you’ll keep your favorite renters. You can also consider changing lightbulbs and appliances to energy-efficient versions as they require maintenance.
How Much Can You Increase the Rent?
As we said, the answer to the fundamental question of how often can a property owner increase the rent is simple — every twelve months. So, if your tenants are in your space for a year or more, you can do it. However, you can’t do it arbitrarily. In Ontario, there’s a set of rules you’ll have to understand and follow when it comes to raising rent costs.
Here, we’re talking about the fixed maximum percentage of increase, and here’s how it looks:
- In 2020, the limit was 2.2%
- There were no rent increases in 2021 due to the pandemic
- In 2022, you can go up to 1.2%
If you feel like you need and should raise the rent above the guide limits, you may be able to do it after you apply to the Landlord and Tenant Board (LTB). If you had to deal with extensive repairs or you installed a security system, you can fill in a form, and there’s a chance they’ll approve your idea.
Not All Buildings are Rent-Controlled
If you own and rent out a residential space first occupied as of November 15, 2018, know it’s not rent-controlled. That said, you still have to wait for those 12 months to pass by before you can increase the rent, but you don’t have to stick to any guidelines when it comes to how much it will go up.
Keep in mind that your house doesn’t have to be new for a unit inside of it to fall under this category. Here are some examples of what we’re talking about:
- Apartment addition to an existing building or house
- Newly built basement apartments
- Self-contained unit in a house that already had no more than two residential units
If you own and rent out any of these properties, you have no additional rules to worry about. But of course, if you’re going to charge more for your space, you’ll have to level up your rental process for your tenants. You’ve got to provide a premium if you want them to pay the premium.
To Sum It Up
To sum it up, here’s how things are.
Whether your property was first occupied before or after November 2018, you have to keep your rent the same for 12 months upon the tenants‘ arrival. After that period, you can increase it.
Now, if we’re talking about an older apartment or a house, you’ll have to stick to those 1.2% increases proclaimed by the officials for 2022. But if the place is newer, you can increase the rent as much as renters agree.
If all this seems a bit too much, maybe you could benefit from hiring a professional property manager. That way, you won’t worry about your property at all. You can get in touch with a residential property management company and let them do all the work for you. You’ll pay them a small fee, and in return, they’ll keep your space in good order.
And that’s everything about how often a property owner can increase the rent. Read some of our other blog posts, or contact us if you need more info.
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