“Landlords grow rich in their sleep without working, risking or economizing.” -John Stuart Mill, English philosopher and economist
I get some pretty cool emails now and then. Take for example, Denise who wrote last week: “Stevie, I’m missing your Thursday soup!” My first thoughts—huh? She continued: “You send out emails on Thursdays while am having lunch at my favorite soup spot. Saw nothing last week, so just checking in -:)”
Those kind words made my day AND inspired me to do this going forward: Thursday’s Posts will be re-titled “Thursday Soup #.1, 2..3 etc.”Nothing will change, only thesubject heading. As always, I’m focused on providing useful content that keeps you informed about all things Real Estate & Mortgage Finance. Thank you Denise.
What’s on today’s soup menu? Ontario’s 2015 Rent Increase Guideline:Each year, the Ontario government announces the province’s rent increase guideline for the following year. Ontario’s annual Rent Increase Guideline is based on the Ontario Consumer Price Index (CPI), which is a measure of inflation calculated monthly by Statistics Canada. The rate of allowable
rent increases for 2015 will be 1.6 per cent. The guideline is the maximum amount that most landlords can increase a tenant’s rent during the year without making an application to the Landlord and Tenant Board.
It is based on the CPI, which is regarded as an objective, reliable measure of inflation, charting the change in the price all goods and services in the provincial economy.
In most cases, the rent for a unit can be increased if at least 12 months have passed since the tenant first moved in, or since his or her last rent increase. The tenant must be given proper written notice of the rental increase at least 90 days before the rent increase takes effect.
THE GUIDELINE FORMULA
The 2015 rent increase guideline is calculated by averaging the per cent change in the Ontario Consumer Price Index during the previous 12 months, from June 2013 to May 2014, as required by the Residential Tenancies Act, 2006 (the RTA).
Note: The RTA sets out that the rent increase guideline cannot exceed 2.5 per cent, even if the CPI calculation is higher.
SAMPLE RENT INCREASE GUIDELINE
The monthly rent of an apartment is $800 beginning August 1, 2014. With proper written 90 days notice to the tenant, the landlord could lawfully increase the rent 12 months later on
August 1, 2015.
- The guideline for 2015 is 1.6 per cent.
- The rental increase is 1.6 per cent of $800 = $12.80.
- Therefore, the new rent on August 1, 2015 could be up to $812.80 ($800 + $12.80).
ABOVE GUIDELINE INCREASES
Landlords can apply to the Landlord and Tenant Board for an increase above the guideline, if their costs for the municipal taxes or utilities have increased by more than the guideline plus 50 per cent.
Landlords can also apply for an increase above the guideline for operating costs related to security services and for eligible capital expenditures.
SAMPLE ABOVE GUIDELINE INCREASE
The 2015 rent increase guideline is 1.6 per cent. Fifty per cent of this guideline is 0.8 per cent. To claim an above guideline increase related to municipal taxes, costs should increase by more than 2.4 per cent (1.6 per cent + 0.8 per cent = 2.4 per cent.)
- In 2014, a landlord’s municipal taxes were $10,000.
- In 2015, the landlord’s municipal taxes increased to $10,500 – an increase of five per cent.
- Therefore, the landlord is eligible to apply for an above guideline increase because the landlord’s municipal taxes increased by more than 2.4 per cent.
GUIDELINE AND RENT DEPOSITS
A landlord can collect a rent deposit from a new tenant on or before the start of a new tenancy. The rent deposit can only be used as the rent payment for the last month or week before the tenant moves out. The landlord must pay the tenant interest on the rent deposit every year.
Under the Residential Tenancies Act, 2006, the interest rate is the same as the rent increase guideline.
The Landlord and Tenant Board provides information to the public through a network of offices across Ontario and on the Board website at www. ltb.gov.on.ca.
The Board can also be reached toll-free at: 1-888-332-3234, or at: 416-645-8080.
A copy of the Residential Tenancies Act, 2006, can be ordered from Service Ontario Publications toll-free at: 1-800-668-9938, or at: 416-326-5300. It can also be ordered online at: www.publications.gov.on.ca.
How can I help?