So you've been in your Toronto rental condo for a year, and everything's going well: well enough to sign next year's lease and settle in for the long haul, or at least the medium haul. But before setting that meeting with your landlord or property management company, it's important to know what to expect from the little blank that's labeled "annual rent increase"—because it's not what most of us think.
Suite interior at Reve Condos, image courtesy of Del Rentals
So here's your quick guide to your next condo unit rent increase, what's legal, and what's out of bounds.
It's not what you expected
Most of us are used to our rent increases being capped: Every year the Ontario Ministry of Municipal Affairs and Housing issues a maximum rent increase guideline—this year's is 1.5%—and most landlords use that as the number in the blank on your new lease. It's possible to see an above-guideline increase, but in order to make that happen, landlords have to apply to the Landlord and Tenant Board and make a case, and most everyone doesn't bother unless there have been extensive renovations or another obvious sign that the rent's going up.
But this all goes out the window when renting in a newer building—and by newer, we mean one that saw its first occupant after June 17, 1998, or which was converted to residential purposes after November 1, 1991. Those are the guidelines for when rent control stops applying—which means that all goes out the window for pretty much every condominium unit on the market.
If you're in a rental condo unit, the reality is that your rent increase will be at your landlord's discretion, just because of how the rent control legislation is built in Ontario.
But you still need to receive notice
Lack of rent control or not, your landlord has to issue you the legal notice for any rent increase: 90 days before the increase takes effect. The form you get for your annual rent increase should be titled N1 or N2 and fully filled out. No form 90 days before the rent increase—which leaves you enough time, by the way, to decide if you want to give notice 60 days before the end of the lease? No rent increase.
And there's still only one shot at that rent increase
Even though condo rental units aren't rent-controlled, landlords can only legally increase rent once during a 12-month period. So if your rent is increased this week, the landlord has to wait another 12 months from this week for the next one.
So what do I do if my rent increase is sky-high?
Unfortunately, there aren't currently a lot of legal options. If you find yourself facing a rent increase notice that's far more than the guideline would be—and far more than you can afford—it's worth discussing with your landlord.
Conscientious tenants who take good care of the space they're in make life a lot easier for the landlord, and if you're both a great tenant and in it for the long haul, there's an argument to be made that a lower rent increase this year is worth the long-term security, upkeep, and calm they'll be getting with you in the property. With a reasonable landlord who's got an eye to the long term, you've got a good chance of meeting in the middle on the question of the rent for next year.
Suite interior at Reve Condos, image courtesy of Del Rentals
But, a good way to avoid a rent increase scare…
…is to rent in a building that's at least a few years old. By the time a condominium complex has reached its fourth or fifth birthday, the maintenance kinks have worked out, the costs have stabilized, and your landlord will be working with predictable figures when they set a rent to meet their own monthly budget.
A lot of ridiculous rent increases usually come in when costs aren't what the landlord was expecting and they find themselves losing money on what was supposed to be a stable investment. A slightly older building neatly sidesteps a lot of those issues.
And plan ahead for your rent increases
While budgeting forward in Toronto can frequently be tight, rent increases are one of those parts of life we know are coming. Put a little slack in your budget every year around rent increase time, just like you plan for taxes every spring. When it's already in your budget, you'll be surprised at how little a reasonable rent increase stings.
Best of luck!