As Ontario’s rental market begins to soften in some areas, the decision to increase rent has become less straightforward.
Rising operating costs, tighter cash flow, and greater sensitivity around tenant relationships have led many landlords to hesitate—even when rent increases are legally permitted. However, holding rent steady without a clear strategy can create long-term consequences, particularly when it comes time to sell, reclaim the property, or restructure an investment portfolio.
Understanding how Ontario’s 2026 rent increase rules work—and how to apply them strategically—has become increasingly important for landlords who want to protect both cash flow and long-term flexibility.
1. The Key Number You Must Know
For 2026, Ontario’s rent increase guideline is 2.1%.
This figure is critical. It determines how much rent can be increased for most rent-controlled properties without additional approval.
2. The Three Most Common Questions Landlords Ask
Question 1: What Is the Proper Process to Increase Rent?
Ontario’s rules are strict, but straightforward. Three requirements must be met:
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Provide at least 90 days’ written notice to the tenant
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Use the government-issued N1 form (verbal notice or informal messages are not valid)
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Rent can only be increased once every 12 months
If the process is not followed correctly, even a small increase can be legally rejected by the tenant.
Question 2: Should You Increase the Rent at All?
The answer depends on how your current rent compares to the market.
Scenario A: Your Rent Is Clearly Below Market
In this case, an increase is strongly recommended.
Some landlords choose not to raise rent in order to preserve a positive tenant relationship. However, it is important to recognize the trade-off being made.
By not increasing rent today, you are often giving up future flexibility—whether that means selling the property, moving back in, or refinancing. The cost of that decision typically becomes clear later, not immediately.
Choosing stability now is valid, but it should be a conscious, strategic decision, not an emotional one.
Scenario B: Your Rent Is At or Near Market Level
In this situation, raising rent may not be advisable.
The potential costs of tenant turnover—vacancy, advertising, screening, and risk—often outweigh the benefit of a modest 2.1% increase. In these cases, retaining a reliable tenant can be a form of financial return in itself.
Question 3: How Much Should You Increase the Rent?
This depends on the age of the property.
Properties Built Before November 15, 2018
These properties are subject to the 2.1% rent increase guideline.
Practical approach:
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If rent is significantly below market, you may discuss a higher voluntary increase with the tenant
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If the tenant does not agree, you should apply the 2.1% increase legally and properly
Non-compliance carries serious consequences and is not worth the risk.
Properties Built On or After November 15, 2018
These properties are not subject to the rent increase guideline.
In theory, rent can be increased to the market level. In practice, a more balanced approach is often better.
A useful question to ask is:
How important is it to retain this tenant?
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If tenant retention is a priority, a moderate increase may be appropriate
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If not, aligning rent closer to market levels may make sense
This is a business decision, not a moral one.
Final Thoughts
Decisions about rent increases are ultimately decisions about:
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cash flow
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risk management
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long-term exit strategy
There is no single “correct” answer, but there are costly mistakes.
For Ontario’s small landlords, planning ahead and applying the rules correctly is far more effective than fixing issues after the fact.
Contact The Fisher Group – Your Real Estate Experts in Oakville and the GTA
Fisher Yu
📱 647.598.8488
📧 [email protected]
🌐 thefishergroup.ca
