Every year, the Ontario government sets a rent increase guideline that caps how much you can raise rent on an existing tenancy without applying to the Landlord and Tenant Board for an above-guideline increase. For 2026, that guideline is 2.1% — the lowest cap in four years, down from 2.5% in each of the previous three years. Here's exactly what that means, and how to implement it correctly.
The 2.1% Number, in Real Terms
The guideline is calculated by the Ministry of Municipal Affairs and Housing based on Ontario's Consumer Price Index over a set 12-month window, and is capped by law at a maximum of 2.5% regardless of how high actual inflation runs. At $2,000 a month, a 2.1% increase works out to $42, bringing rent to $2,042. At $2,500, the maximum increase is $52.50. Multiply your tenant's current rent by 1.021 to get the maximum new rent you can legally charge.
What the Guideline Actually Governs
The rent increase guideline applies to most existing residential tenancies in Ontario — it does not apply to a new tenancy with a new tenant, where you're free to set the opening rent at whatever the market supports. It's specifically the cap on how much you can raise rent for a tenant who's already in place.
Buildings first occupied for residential purposes after November 15, 2018 are exempt from the guideline entirely under current provincial rules — a detail landlords with newer purpose-built or condo rentals should confirm applies to their specific property before assuming the cap applies.
How Often You Can Raise Rent
Even within the guideline, you can only increase rent:
Once every 12 months, at minimum, from the tenant's last increase (or from the start of the tenancy).
With proper written notice — a minimum of 90 days before the increase takes effect, using the correct form.
The Correct Way to Notify Your Tenant
Use Form N1: Notice of Rent Increase for a standard guideline increase, or Form N2 if the increase is tied to specific circumstances outlined by the Board. Both must be given at least 90 days before the new rent takes effect, and must clearly state the new rent amount and the date it starts.
If you've read our breakdown of N4, N8, N12, and N11 forms, you know Ontario's Landlord and Tenant Board is precise about which form applies to which situation — a rent increase notice is no exception, and using the wrong form can invalidate the increase entirely.
What If You Want to Raise Rent Above the Guideline?
You can apply to the Landlord and Tenant Board for an Above Guideline Increase (AGI) in specific circumstances — most commonly for significant capital expenditures (major renovations, system replacements) or a significant increase in municipal taxes. This requires a formal application and supporting documentation, and given current LTB timelines, landlords should expect this process to take meaningfully longer than a standard guideline increase.
Common Mistakes Landlords Make
Forgetting the 90-day notice window and trying to implement an increase too soon.
Applying the guideline increase to a brand-new tenant's opening rent — unnecessary, since new tenancies aren't capped.
Increasing rent more than once in a 12-month period, even by a small amount, which invalidates the notice.
Assuming a post-2018 building is automatically exempt without confirming the exact first-occupancy date against provincial records.
Why Getting This Right Matters
An improperly issued rent increase can be challenged and reversed at the Landlord and Tenant Board, potentially forcing you to refund the difference and start the notice period over — costing you months of the increase you were trying to implement in the first place. Given how backed up LTB timelines currently are, avoiding a dispute in the first place is far more valuable than winning one after the fact.
The Bottom Line
The rent increase guideline is one of the more mechanical parts of being a landlord in Ontario, but the paperwork details — correct form, correct notice period, correct exemption checks — are exactly where landlords most often trip themselves up.
Not sure whether your property is exempt, or want help applying a rent increase correctly? Contact our team or check our rental forms library for the current notice templates.
