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Every year in Ontario, the province sets a rent increase guideline — the maximum percentage landlords can raise rent for existing tenants without applying to the Landlord and Tenant Board.
For 2026, the guideline is 2.5%.
But knowing the number is only part of the picture. There are rules about who the guideline applies to, when you can give notice, how much notice you need to give, and what happens if you get the process wrong. This guide covers all of it.
What Is the Ontario Rent Increase Guideline?
The rent increase guideline is set by the province under the Residential Tenancies Act, 2006 (RTA). It caps how much a landlord can increase rent for an existing tenant in a 12-month period — without getting LTB approval.
The guideline applies to most residential rental units in Ontario, but not all. There is a significant exemption that has been in place since 2018.
The 2026 guideline rate is 2.5%.
The provincial government announces the guideline for the following year in August. The guideline is tied to the Ontario Consumer Price Index (CPI), capped at 2.5%.
| Year | Guideline |
|---|---|
| 2022 | 1.2% |
| 2023 | 2.5% |
| 2024 | 2.5% |
| 2025 | 2.5% |
| 2026 | 2.5% |
Always confirm the current year's guideline at ontario.ca before serving a notice.
Which Units Are Subject to the Guideline?
Not all rental units in Ontario are rent-controlled. This is where most landlords get confused.
Rent-controlled units — the guideline applies:
- Units first occupied as a residential rental before November 15, 2018
- Most older rental apartments, houses, and basement suites
Exempt units — the guideline does NOT apply:
- Units first occupied as a residential rental on or after November 15, 2018
- New builds, new basement suites, and newly converted units from that date forward
The exemption came in under Bill 57 (2018). It means if your unit was brand-new and first rented on or after November 15, 2018, you can raise rent by any amount with proper notice — there is no cap. The N1 notice process and 90-day minimum still apply.
The key date is first occupied, not when you bought the property or when the unit was built. An older house where the basement was converted to a rental suite in 2021 — that suite is exempt. A new condo first occupied in 2019 is exempt.
If you are not sure whether your unit is exempt, check the occupancy permit date or the first rental date in your records. When in doubt, treat it as rent-controlled and serve a proper N1 notice.
For a full breakdown of how the exemption works — including the common mistakes landlords make when tracking exemption status across multiple units — read Ontario Rent Control Exempt Properties: What Landlords Need to Know.
The Rules That Apply to Every Landlord
Whether your unit is rent-controlled or exempt, three rules always apply:
1. You can only raise rent once every 12 months.
You cannot raise rent more than once in any 12-month period for the same tenant. The clock starts from when the last increase (or the tenancy itself) began.
2. You must give at least 90 days' written notice.
The notice must be in writing using Form N1 from the LTB. You cannot give verbal notice. You cannot give less than 90 days' notice. If you miss the 90-day window, the rent increase cannot take effect on the intended date — you will need to re-serve with a new start date.
3. The increase must be a fixed amount or percentage.
The N1 notice must state the new rent amount and the effective date. A vague notice like "rent goes up in January" is not valid.
How to Calculate a 2.5% Increase
The calculation is straightforward:
New Rent = Current Rent × 1.025
| Current Rent | 2.5% Increase | New Rent |
|---|---|---|
| $1,400/month | +$35.00 | $1,435.00 |
| $1,800/month | +$45.00 | $1,845.00 |
| $2,100/month | +$52.50 | $2,152.50 |
| $2,400/month | +$60.00 | $2,460.00 |
| $2,800/month | +$70.00 | $2,870.00 |
Round to the nearest cent. There is no requirement to round to the nearest dollar, but most landlords do.
In London, where a 2-bedroom apartment typically rents at $2,100/month, the 2026 guideline increase adds $52.50 per month — $630 per year. That amount adds up, and missing it entirely means leaving hundreds of dollars uncollected that you are legally entitled to.
The N1 Notice: How to Serve It Correctly
To raise rent in Ontario, you must use Form N1 — Notice of Rent Increase. The form is available for free on the LTB website.
Step-by-step:
- Download the current N1 form from tribunalsontario.ca
- Fill in the tenant's name, address, your name, the current rent amount, the new rent amount, and the effective date
- Calculate the effective date: it must be at least 90 days from the date you serve the notice, AND it must be the first day of a rental period (usually the first of the month)
- Serve the notice using an approved method under the RTA: in-person, mail (add 5 days to the timeline), or email if the tenant has consented in writing
- Keep a copy and note the date of service in your records
The 90-day minimum is strict. If your tenant pays rent on the 1st of each month and you want the increase to take effect June 1, you need to serve the N1 by March 3 at the latest (90 days before June 1, with weekends counted). If you are using mail, you need to send it even earlier to account for the 5-day deemed-received delay.
For a complete walkthrough of the N1 form fields and common filing errors, see How to Increase Rent in Ontario: Step-by-Step Guide.
What If You Want to Raise Rent More Than 2.5%?
For rent-controlled units, raising rent above the 2.5% guideline requires an Above Guideline Increase (AGI) application through the LTB.
AGIs are only approved for specific reasons:
- Extraordinary increases in municipal taxes or utilities
- Capital expenditures (major repairs to the building's structure, mechanical, or electrical systems)
- Operating costs that have increased above the guideline
An AGI application involves an LTB hearing, documentation of the qualifying costs, and advance notice to tenants. Tenants can dispute AGI applications. The process takes months, and approval is not guaranteed.
For most small landlords with 1–5 units in London and southwest Ontario, an AGI is not a practical route. If your costs have risen significantly, the better approach is typically to price your next unit at market rent when the tenancy ends, especially if the unit is exempt from rent control.
Learn more about the AGI process at Above Guideline Rent Increases in Ontario: What Landlords Need to Know.
Rent Control and Last Month's Rent Deposit
When you raise rent, your last month's rent deposit does not automatically increase to match. The deposit stays at whatever amount it was when you collected it.
However, there is a separate rule: you must pay annual interest on the deposit at the guideline rate each year. You cannot demand additional top-up money for the deposit unless the tenant agrees.
If your tenant's deposit is lower than the current rent, that difference is not recoverable until the tenant moves out and you apply their deposit to their last month's rent. You will still need a proper notice for any difference.
Before you keep reading
This is exactly the kind of thing Almost Passive covers every week.
Local market shifts, RTA/LTB changes that actually affect your properties, and real lessons from managing rentals. One short email. No fluff.
Read the full breakdown at Last Month's Rent Deposit Interest in Ontario.
London and Southwest Ontario Context
In London, the rental market has tightened considerably over the past several years. Average asking rents for 2-bedroom units in the city have climbed from around $1,500 in 2020 to over $2,100 today. Most existing tenants are paying below current market rates — which is why annual rent increases matter.
A few local notes:
London rental housing licence: If you rent a unit in the City of London, you need a Rental Housing Licence. The licence renewal requires no outstanding property standards orders. Serving a valid N1 notice and keeping your unit in good repair are connected — a maintenance dispute with a tenant can affect your licence standing. Keep records of repairs and communications alongside your rent increase notices.
St. Thomas and Strathroy: Both municipalities operate without a rental licensing program (unlike London), but the RTA applies in full. The same N1 process, 90-day notice rule, and guideline cap apply to all of Elgin and Middlesex Counties.
LTB hearings: If a tenant disputes a rent increase or files a T1 application (e.g., claiming you charged above-guideline rent), LTB hearings for the London Regional office are conducted by video. Typical timelines for disputed applications run 6–10 months. Clear records of the N1 notice, the date served, and the method of service are essential.
Common Mistakes
1. Serving the N1 with less than 90 days' notice. The most common error. Count carefully from the intended effective date. Use mail? Add 5 days. One short day makes the notice invalid.
2. Raising rent twice in 12 months. Even if you missed a previous guideline year, you cannot make up for it by raising rent twice in one year. Each 12-month period allows one increase.
3. Raising a rent-controlled unit above 2.5% without an AGI. A verbal agreement from a tenant does not override the RTA. If the tenant later files a T1 application, the LTB will disregard the informal agreement and calculate the illegal overcharge.
4. Assuming all units are exempt. The November 15, 2018 date is the cut-off. Do not assume a unit is exempt because it was recently renovated or because you recently bought the property. The exemption follows the unit, not the owner.
5. Forgetting to serve the N1 for an exempt unit. Exempt means no guideline cap, not no process. You still need 90 days' written notice on Form N1, and you still can only raise rent once per 12 months.
6. Not keeping the Certificate of Service. If a tenant disputes the rent increase and claims they never received the N1, you need documentation of how and when you served it. A dated copy and a Certificate of Service protect you.
7. Serving the N1 to the wrong person. The notice must be served to every tenant on the lease. If two people signed, both must receive the N1. Serving only one co-tenant may leave the notice partially void.
Frequently Asked Questions
Can I raise rent in 2026 if I never raised it in 2024 or 2025?
No. Missed guideline years do not accumulate. If you did not raise rent in previous years, you cannot add those percentages to a future increase. You can only raise rent by the current year's guideline — 2.5% — in a single 12-month period.
Can a tenant refuse a rent increase?
No. If the N1 notice is properly served and the amount is within the guideline, the tenant cannot legally refuse the increase. They can dispute a rent increase at the LTB only if they believe the increase is above-guideline or the notice was invalid.
Do I need to file the N1 with the LTB?
No. The N1 goes directly to the tenant. You do not file it with the LTB — unless the tenant disputes it and a hearing is scheduled, in which case you bring your copy and proof of service.
What happens if I charge above-guideline rent without an approved AGI?
The tenant can file a T1 application (Tenant Application for a Rebate of Money the Landlord Owes). If approved, the LTB can order you to repay the illegal overcharge with interest. Fines under the RTA can also apply.
My tenant's rent is already well below market. Can I raise it by more than 2.5%?
For a rent-controlled unit, no — not without an approved AGI. If the unit is exempt (first occupied after November 15, 2018), you can raise by any amount with 90 days' written notice. If the unit is rent-controlled and you want market rent, the only option is to wait for the tenancy to end naturally and price the next tenancy at market rates.
Can I raise rent during a fixed-term lease?
Yes, provided the increase takes effect after the minimum 90-day notice period and more than 12 months have passed since the last increase (or since the start of the tenancy). The fixed-term does not block a rent increase if the other conditions are met.
What if my tenant moved in mid-year? When can I first raise their rent?
You can raise rent once 12 months have passed since the start of the tenancy, with proper 90-day notice. So a tenant who moved in on March 1, 2025 can have their rent increased effective March 1, 2026 — as long as you serve the N1 by December 1, 2025 at the latest.
Where do I get the official N1 form?
The current N1 form is available at tribunalsontario.ca/ltb/forms/. Download it fresh before each use — the LTB updates its forms periodically, and an outdated form may be returned or cause delays.
The Right Record-Keeping Approach
Every N1 you serve should be tracked in a simple rent ledger for each unit:
- Date the N1 was served
- Method of service (in-person, mail, email with tenant consent)
- Current rent amount at time of service
- New rent amount and effective date
- Whether the tenant acknowledged receipt
This record takes five minutes to create and protects you completely if a tenant later disputes the increase or claims it was never served. For a full record-keeping system, see Landlord Record-Keeping in Ontario.
A Note on Lease Renewals
A rent increase does not require a lease renewal, and a lease renewal does not automatically mean a rent increase. Many landlords confuse the two.
If a fixed-term lease ends and converts to a month-to-month tenancy under the RTA, the existing rent amount continues. You must serve a separate N1 notice to increase it — the renewal itself is not a vehicle for a rent increase.
Read more at Lease Renewal in Ontario: A Landlord's Guide.
Prospera Properties
If you own rental property in London, St. Thomas, Strathroy, or the surrounding area and want to make sure your rent increases, N1 notices, and compliance obligations are tracked properly, Prospera Properties manages the process for you — including annual rent increase notices and lease administration.
Visit our services page or view our pricing to see what full-service management covers.
This post reflects the Ontario rent increase rules as of October 2026. Verify the current year's guideline at ontario.ca/page/rent-increase-guideline before serving any notice.