Canada Ontario Rent Increase Guideline 2026: 2.1%

The 2026 Ontario rent increase guideline is 2.1%. This is the maximum percentage by which a landlord may increase rent for most rent-controlled units in Ontario in calendar year 2026 without a Landlord and Tenant Board order. This deep-dive explains the legal basis, exceptions, the Form N1 procedure, and what the 2.1% figure does and does not mean.

1. Statutory Basis Under the RTA 2006

Under the Residential Tenancies Act, 2006 (RTA, SO 2006, c. 17) s.120, the Minister of Municipal Affairs and Housing publishes the annual rent increase guideline by 31 August each year for the following calendar year. The guideline applies to most residential tenancies in Ontario subject to the RTA.

For 2026, the published guideline is 2.1%. This is consistent with the cap mechanism added to RTA s.120(2) by the Protecting Tenants and Strengthening Community Housing Act, 2020, which restricts the guideline to a maximum of 2.5% per year.

Primary source: https://www.ontario.ca/page/residential-rent-increases

2. What the 2.1% Applies To

The 2.1% guideline applies to:

• Most private residential rental units occupied for the purpose of residence;
• Rental units where the tenancy began before 15 November 2018, or units in buildings first occupied for residential purposes before that date.

3. What the 2.1% Does Not Apply To (RTA s.6.1)

Under RTA s.6.1 (added by the Rental Fairness Act, 2017 and amended in subsequent reforms), new buildings first occupied for residential purposes on or after 15 November 2018 are exempt from the rent increase guideline for tenancies that began on or after that date. These units are subject to vacant decontrol — the rent can be set at any amount when a new tenant moves in but cannot be increased mid-tenancy beyond what the lease specifies.

Other exemptions under RTA s.5:

• Vacation rentals (less than 21 days);
• Units where tenant shares kitchen or bathroom with the owner or owner’s family;
• Care homes (separate regime);
• Mobile home parks (different rules);
• Public housing (separate provincial program).

4. Frequency: Once Per 12 Months (RTA s.119)

Under RTA s.119, a landlord may increase rent only once in any 12-month period measured from the last rent increase or the start of the tenancy, whichever is later. The 12-month period applies even when the landlord changes (sale of the property does not reset the clock).

5. Notice Requirement: 90 Days, Form N1 (RTA s.116)

Under RTA s.116, a landlord must give the tenant at least 90 days written notice of a rent increase. The notice must be given on Form N1 (Notice of Rent Increase) prescribed by the Landlord and Tenant Board.

Form N1 must specify:

• Current rent;
• New rent (post-increase);
• Effective date of the increase (must be at least 90 days after the notice is given);
• Calculation of the increase as a percentage and dollar amount.

Failure to use Form N1, or failure to provide the full 90 days notice, makes the increase invalid. The tenant continues paying the previous rent until proper notice is given.

Primary source — Form N1: https://tribunalsontario.ca/ltb/forms/

6. Above-Guideline Increases (AGI) Under RTA s.126

A landlord may apply to the Landlord and Tenant Board for an Above-Guideline Increase under RTA s.126 in three categories:

The AGI is granted by Order of the LTB after a hearing. The increase phases in over typically 1–3 years. Tenants may oppose the application and present their own evidence.

7. Sample Calculation

A tenant currently paying CAD $2,200/month receives a Form N1 notice on 1 February 2026 for a rent increase effective 1 May 2026 (90+ days notice).

• Old rent: CAD $2,200
• Guideline: 2.1%
• Increase: $2,200 × 2.1% = $46.20
• New rent: CAD $2,246.20

The landlord cannot impose a higher percentage without an LTB order under s.126.

8. Tenant Rights If Landlord Demands More Than 2.1%

If a Form N1 specifies an increase greater than 2.1% without an accompanying LTB order under s.126, the tenant should:

1. Continue paying the old rent — the demand is invalid;
2. Document the notice — keep the Form N1 as evidence;
3. Apply to the LTB under RTA s.135 for a determination that the rent demanded is illegal;
4. Optionally, if rent has been overpaid, seek reimbursement under s.135(1) — recoverable for up to 12 months of overpayment.

9. Annual Interest on Last Month’s Rent (LMR)

Under RTA s.106(6), the landlord must pay annual interest on the last month’s rent deposit equal to the rent increase guideline for the year. For 2026, this is 2.1%. Calculation:

• LMR held: CAD $2,200
• 2026 interest rate: 2.1%
• Interest owed: $2,200 × 2.1% = $46.20

The interest may either be paid directly to the tenant or applied as a credit toward the next month’s rent. Failure to pay the interest is an offence under RTA s.234.

10. Historical Context

Recent Ontario rent increase guidelines:

The 2026 guideline of 2.1% reflects easing inflation in the Consumer Price Index for Ontario in the calculation period.

11. Landlord’s Practical Checklist for the 2026 Increase

Under RTA s.116 and s.119, a landlord planning a 2026 increase should:

1. ☐ Confirm 12 months have passed since the last increase (s.119);
2. ☐ Confirm the unit is RTA-covered and not exempt under s.6.1 (post-15 November 2018);
3. ☐ Calculate the increase: old rent × 2.1%, rounded to nearest cent;
4. ☐ Complete Form N1 with the calculation;
5. ☐ Serve Form N1 at least 90 days before the effective date (s.116);
6. ☐ Calendar the effective date and update the rent ledger;
7. ☐ Pay LMR interest at 2.1% on the anniversary of the deposit (s.106(6)).

12. Tenant’s Practical Checklist When Receiving Form N1

1. ☐ Verify the notice is on Form N1 (not a generic letter);
2. ☐ Verify the effective date is at least 90 days after the notice date;
3. ☐ Verify 12 months have passed since the last increase;
4. ☐ Verify the percentage matches 2.1% (or check for an attached LTB AGI order under s.126);
5. ☐ Verify the unit is RTA-covered (post-2018 buildings are exempt);
6. ☐ If anything is off, do not pay the higher amount; consider an application under s.135.

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not Canadian lawyers, paralegals, or notaries.

Sources

• Ontario Residential Tenancies Act, 2006 — https://www.ontario.ca/laws/statute/06r17
• Ontario residential rent increases (annual guideline) — https://www.ontario.ca/page/residential-rent-increases
• Landlord and Tenant Board forms — https://tribunalsontario.ca/ltb/forms/
• Tribunals Ontario (LTB) — https://tribunalsontario.ca/ltb/
• Ontario Standard Form of Lease (Form 2229E) — https://forms.mgcs.gov.on.ca/en/dataset/047-2229