fbpx

I hope you enjoy reading this blog post.

If you want my team to help you find the right home, click here.

Landlords of Newly Constructed Units in Ontario CAN Increase Rent by over 100% – No More Rent Control

Did you know, your landlord may be able to increase your rent next year by 100% (or more) if your unit was first occupied after November 15, 2018?

If you’re not following the Toronto or Ontario real estate market, you may have missed this change in legislation. We’ve decided to break it down so you know exactly what you may be getting yourself into by renting in a newly constructed condo.

What you should know Before Signing A Residential Lease in a newly built condo in ontario

As of November 15, 2018, rent control on new units in Ontario has been removed. 

We’ve noticed over the  past year that a lot of our clients and even fellow realtors simply weren’t aware of this change.

Let’s break this down.

What is Rent Control?

For rental units first occupied BEFORE November 15, 2018:

Your landlords can NOT increase your rent in Ontario by more than the yearly published guideline.

According to the Landlord and Tenant Board of Ontario, the rental increase guideline for 2020 was 2.2% and was to apply to most private residential rental accommodation covered by the Residential Tenancies Act, however this was paused for the year due to Covid-19. Generally, the guideline is the most a landlord can increase the rent without applying to the LTB. 

There are however some exceptions to this rule.

Landlords can apply to the LTB for an increase above the guideline for any of the following reasons:
 
  • Their municipal taxes have increased by more than the guideline plus 50 per cent. (For example, if the guideline is 2.2%, the taxes must have increased by more than 3.3%).
  • They have incurred operating costs related to security services.
  • They have incurred operating costs related to security services.
  • A landlord may also increase the rent at any time if the landlord and the tenant agree that the landlord will add a new service or facility such as a parking space, air conditioner or storage locker. (Landlord and Tenant Board of Ontario, 2019).
 

What Changed?

On November 15, 2018, the province of Ontario introduced Bill 57’s new legislation for rental control which states:

 

What this means is the recommended rental increase rate proposed by the province would not apply to new units, and new unit owners can raise your rent as much as they want.

There is no limit to how much a landlord can increase the rent each year for units which fall under these “newly built” or “first occupied” categories.

 

How Can this affect you?

 Here’s a perfect example,

Let’s say you and your spouse are looking for your next home and stumble across a beautiful newly constructed unit. You immediately fall in love with the amenities. The floor plan is exactly what you’ve been looking for, and to top it off the finishes are to die for!

You’ve been renting in Ontario for the past 5 years and know how the process works, or so you thought. You’re ready to place an offer for full ask, $2,000/month, and your realtor does not advise you of these new rent control changes. 

Your offer is accepted! You pack your things, move in, and begin settling into your new Toronto condo. 

The year flies by and before  you know it, there are 90 days left on your lease. From your experience, you know that you or the landlord must give notice within 60 days of your intentions to stay in the unit, or their intentions of selling/renovating/moving into the unit themselves.

You’re open a new email from your Toronto landlord and notice they’ve decided to increase your rent from $2,000/month to $2,850/month! 

After catching your breath,  you quickly search “what is the rental increase guideline in Ontario?” and discover the rate was 2.2% for 2020.

Confused, you call your real estate agent to clarify what you should do since you were under the interpretation rental increases in Ontario must fall within the rental increase guideline, and sadly at this point is when your now ex-realtor says “the landlord is allowed to increase rent as much as they want since the unit was first occupied after the November 15, 2018 date.

You question why you weren’t advised this and your realtor responds “I thought you knew.” 

You then go digging for further information on the topic and stumble across this blog post.

You learn that landlords of newly constructed condos in Ontario do not have to follow any rental increase guideline, and to top it off – they don’t need ANY reason to justify the increase in rent.

Now What?

Your landlord may be able to increase your rent next year by 100% or more.

Since the landlord does not need any reason to increase rent, and it may be in their best interest to increase it to be in line with fair market value, and you’re left with two choices:

  1. You agree to the rental increase, whether it’s 2% or 200% and continue living in your Toronto condo rental, or
  2. You begin your search for a new home and vacate the property at the end of your one year lease term.

How do I Avoid steep rent hikes?

You don’t want to be in this situation again, so what do you do to avoid your landlord fiscally evicting you?

Firstly, search for a condo that was first occupied BEFORE November 15, 2018. It’s best to contact a professional realtor to conduct this search for you, as you may not be able to find all pertinent information, and public information may be outdated.

For example, often occupancy dates get delayed, and you may not be able to discover when occupancy truly took place for a Toronto condominium.

Secondly, when communicating with your real estate agent make sure they understand this is not a situation you want to be in again and let them search for your next home for you. *Remember the landlords pay the realtor, it’s a completely free service to you*

Thirdly, contact us if you need any further clarification or real estate tips – we’re on the Pulse and here to help!

Looking To Buy, Sell, Invest, Or Lease A Condo In Toronto, Or The Greater Toronto Area, or expand your commercial portfolio?

A Pulse Realty Team Specialist Would Be Happy To Assist You in your Toronto condo search.

Contact us today For An Obligation Free Conversation About Your Real Estate Needs.

Related Posts

2 thoughts on “Landlords of Newly Constructed Units in Ontario CAN Increase Rent by over 100% – No More Rent Control”

    1. Is the exemption for residences occupied after 2018, or is it specifically for residences occupied by a tenant, for the first time after 2018? In the latter case, this could be a family residence, built long ago, that is later put on the rental market – by the former resident, who remains the owner.

      • The exemption is for residences FIRST occupied after November 15 2018. If the home was lived in prior to November 15 2018, then it would fall under rent control. If it’s a condominium, it would be the date the building began occupancy.

    Add a Comment

    Your email address will not be published.

    What does your
    dream home
    look like?

    Hey, I’m Justin, and I’m determined to help people find and secure their perfect home. My only question is, will you be next?

    About Justin Wright

    He is the co-founder and team lead of the Pulse Realty team at Royal LePage. After starting his professional career in the digital marketing and cryptocurrency spaces, he found his way into the real estate industry after realizing the potential to disrupt his local market. With his knowledge of copywriting, marketing, digital advertising, and a keen eye for detail, he has built and positioned his team to provide a one of a kind experience to his clients, and has become a go-to real estate agent in Toronto to represent both buyers and sellers of resale and preconstruction condominiums and investment properties.

    Want to Speak
    with an Agent?

    Schedule a chat with one of our Toronto Real Estate Agents to get any of your questions about the market, or the home buying / selling process answered.

    What does your
    dream home
    look like?

    Hey, I’m Justin, and I’m determined to help people find and secure their perfect home. My only question is, will you be next?

    Get an Obligation Free Expert Opinion On Your Properties ValueThe first step to selling your home in the Greater Toronto Area is to get a skilled local Real Estate professional to provide you with a CMA or Comparative Market Analysis

    You’ll find many online resources offering an immediate estimation of how much your home may be worth, but nothing compares to an expert’s opinion. Get a reliable appraisal of your property’s value.