Hello Landlords,
Ontario Landlords are bound by the Residential Tenancies Act, 2006 (RTA), which regulates rent increases for residential tenancies. The RTA permits landlords to raise the rent once every 12 months, provided that they adhere to the annual rent increase guideline set by the Ontario government. However, in certain circumstances, landlords may apply for an Above-Guideline Increase (AGI), which allows for a rent increase beyond the annual guideline.
Under the RTA, an AGI can be justified in specific situations, including:
1.Capital Expenditures: Significant renovations, repairs, or replacements that are deemed necessary to maintain the rental property in good condition. This includes major structural changes, such as bathroom renovations.
2.Increased Operating Costs: A substantial increase in the landlord’s operating costs, which could include an 8% tax increase.
Steps to Proceed with an AGI
1.Prepare Documentation:
A. Bathroom Renovation: Collect all receipts, invoices, and contracts related to the major bathroom renovation. Document the nature and extent of the renovation, explaining why it was necessary and how it benefits the tenants by improving the property.
B. Tax Increase: Obtain documentation of the 8% property tax increase. Ensure that this is clearly linked to the rental property in question.
2.File an Application with the Landlord and Tenant Board (LTB):
A. Submit an “Application for a Rent Increase Above the Guideline” (Form L5) to the LTB. The application must include detailed information about the capital expenditures (e.g., the bathroom renovation) and the operating cost increase (e.g., the property tax hike).
B. The LTB will require evidence to support your claim, so ensure all documentation is comprehensive and well-organized.
3.Serve Notice to Tenants:
A. You must serve a Notice of Rent Increase (Form N1) to the tenants at least 90 days before the rent increase is intended to take effect. This notice must comply with the requirements set out in the RTA and include details about the AGI application.
4.LTB Decision:
A. The LTB will assess whether the AGI is justified based on the evidence presented. If approved, the LTB will determine the amount of the rent increase and the effective date. The increase may be spread over multiple years to minimize the financial burden on tenants.
B. The LTB will consider whether the rent increase is fair and reasonable, taking into account the benefit to the tenants and the landlord’s ability to recover costs without unduly burdening tenants.
Pursuing an Above-Guideline Rent Increase in Ontario requires careful preparation and adherence to the legal framework established by the RTA. By thoroughly documenting the major bathroom renovation and the 8% tax increase, and by following the proper procedures, you can present a strong case to the Landlord and Tenant Board. This approach not only ensures compliance with the law but also provides a fair opportunity for tenants to understand and respond to the proposed rent increase.
— Landlord Pro Legal SPC
Ph: 226-620-1324
Email: ze@landlordprolegal.ca
Website: http://landlordprolegal.ca\
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