Every year, Ontario sets a rent increase guideline — the maximum percentage landlords can raise rent without LTB approval. For 2026, that guideline is 2.1%. Whether you're a landlord planning an increase or a tenant wondering if yours is legal, this guide covers everything you need to know.
The 2026 Guideline: 2.1%
The Ontario government calculates the annual rent increase guideline based on the Ontario Consumer Price Index (CPI). For 2026, it's set at 2.1%. This means most landlords cannot raise rent by more than 2.1% without applying to the Landlord and Tenant Board for approval.
This guideline applies to:
- Most private residential rental units in Ontario
- Units first occupied for residential purposes before November 15, 2018
- Tenants in ongoing month-to-month or fixed-term tenancies
It does not apply to units first occupied after November 15, 2018 — those are exempt from rent control entirely.
How to Legally Increase Rent (For Landlords)
Ontario law has strict requirements for rent increases. You can't just send a text message — there's a formal process:
- Give 90 days' written notice. Use the N1 (for guideline increases) or N2 (for above-guideline increases) form. Less than 90 days means the increase is void.
- State the new rent amount and effective date. The effective date must fall at least 12 months after the last increase or the beginning of the tenancy.
- Increases are limited to once per 12 months. Even if you didn't raise rent last year, you cannot "catch up" with a double increase.
- The increase must not exceed 2.1% unless you've received LTB approval for an above-guideline increase.
Common mistakes: giving notice by text or email without prior written consent, failing to use the correct form, or not waiting 12 months between increases. Any of these errors can void the increase.
Above-Guideline Increases (AGI)
What if your costs have spiked and 2.1% doesn't cover them? Landlords can apply to the LTB for an above-guideline increase (AGI) by filing an L5 Application. The LTB will grant an AGI only if you can prove costs rose due to:
- Capital expenditures — major repairs, renovations, or replacements (e.g., new roof, plumbing overhaul, elevator modernization)
- Extraordinary municipal tax increases — property tax hikes that exceed the guideline
- Extraordinary operating cost increases — significant spikes in insurance, utilities, or maintenance costs
AGI applications are not rubber-stamped. Tenants receive notice and can dispute the application at a hearing. The LTB examines receipts, invoices, and whether the work was necessary. AGIs can take months to resolve and are capped at a maximum of 3% above the guideline per year (though amounts can be phased over multiple years).
Important: you cannot collect above-guideline rent until the LTB approves the application. Charging it in advance is illegal.
Exempt Units: No Rent Control
Units first occupied for residential purposes after November 15, 2018 are exempt from the rent increase guideline. This was established by the Restoring Ontario's Competitiveness Act, 2018 (Bill 47) and remains in effect as of 2026.
For these units:
- Landlords can increase rent by any amount
- 90 days' written notice is still required
- Increases are still limited to once per 12 months
- The unit's exemption status is based on its first residential occupancy date, not when the current tenant moved in
If you're a tenant unsure whether your unit is exempt, check your lease for the building's first occupancy date, or ask your landlord to confirm in writing.
What Tenants Can Do About Illegal Increases
Not every rent increase is legal. If your landlord raised your rent without proper notice, exceeded the guideline without LTB approval, or increased rent more than once in 12 months, you have options:
- Don't pay the illegal portion. You are only obligated to pay the legal rent amount. However, document everything and communicate in writing.
- File a T1 Application for a Rent Rebate. The T1 form allows you to apply to the LTB for a rebate of any rent you've overpaid. You can file within one year of the illegal increase.
- Attend the hearing with evidence. Bring your lease, rent receipts, the notice (or lack thereof), and any communications with your landlord.
The LTB can order the landlord to rebate the difference between what you paid and what was legally owed, plus interest.
Generate a T1 rebate application with LTB Ready — $9 →
Fixed-Term Lease Tenants
If you're on a one-year lease, your landlord cannot increase rent during the fixed term. The increase can only take effect after the lease expires and the tenancy converts to month-to-month. Even then, 90 days' notice is required.
Tenants sometimes receive an increase notice months before their lease ends. This is legal as long as the effective date falls after the lease term and is at least 90 days from the notice date.
What Happens If the Tenant Doesn't Pay?
A properly noticed rent increase is automatic — it doesn't require the tenant's agreement. If the tenant refuses to pay the new amount and falls into arrears, the landlord can serve an N4 Notice for non-payment of rent. If the tenant still doesn't pay within 14 days, the landlord can file an L1 Application with the LTB.
Key Takeaways
- The 2026 guideline is 2.1% for most rent-controlled units
- Landlords must give 90 days' written notice using the correct form
- Increases are limited to once per 12 months
- Post-November 2018 units are exempt from the guideline
- Tenants can file a T1 for a rebate if the increase is illegal
- Above-guideline increases require an L5 application and LTB approval
Need Help?
Not sure if your rent increase is legal? Take our form quiz to find out which form you need, or browse all LTB Ready forms starting at $9.