The guideline number changes every year and two building categories fall outside it entirely. Getting either wrong produces a notice, or an AGI application, that will not hold up if challenged.
Key takeaways
Ontario’s rent increase guideline is recalculated every year, not set once, and the mechanism is published rather than discretionary: “the rent increase guideline is capped at 2.5% to prevent significant one-time rent increases to tenants” and is calculated using the Ontario Consumer Price Index, with data from June to May used to determine the following year’s guideline The published table shows the guideline moving with inflation rather than sitting at a round number — 2.1% for 2026 and 1.9% for 2027, both below the 2.5% statutory cap that applied every year from 2013 through 2025 when calculated inflation exceeded it. A landlord administering increases across a multi-year portfolio needs to pull the current year’s published figure each time, not carry forward whatever number applied to a previous increase.
A guideline increase requires notice at least 90 days before the increase date, in the proper LTB form — not a verbal heads-up or an informal email, regardless of how much advance warning that email actually gives. Two categories fall outside the guideline system entirely: new buildings, additions to existing buildings and most new basement apartments first occupied for residential purposes after November 15, 2018 are exempt from rent control and care homes, where the guideline applies only to the rent portion of the bill, not to services such as nursing, food or cleaning. Getting the exemption wrong in either direction — applying rent control to an exempt new building, or assuming an older building is exempt when it is not — produces a notice that will not hold up if challenged.
An Above Guideline Increase (AGI) application is not a general escape hatch for rising costs — the LTB’s Interpretation Guideline on the topic sets out three specific grounds and nothing else: a municipal tax and charges increase exceeding the guideline plus 50% of the guideline, extraordinary or significant capital expenditure — renovation, repair, replacement or a new addition — with a benefit lasting at least five years, and increased security service costs. Capital expenditure and security-cost grounds share a cap — a maximum of 3% above the guideline per year, with any remaining justified increase spread over up to two further years at 3% each — while the municipal-tax ground does not share that cap and can be taken in full in a single year. Tenants are not passive in this process either: tenants may raise evidence that the landlord is in serious breach of its maintenance obligations, which can affect the outcome regardless of the AGI application’s own merits.
The application fee for an AGI (form L5) is not flat — it scales with unit count, and the scaling itself is capped: $233 for the first ten units plus $10 for each additional unit, to a maximum of $1,000 A landlord filing across a large building needs to run the actual arithmetic rather than assume the fee keeps climbing linearly with size, because past a certain point it does not.
Ontario’s published table shows a pattern worth understanding rather than treating as noise: from 2013 through 2025, the guideline sat at the 2.5% statutory ceiling every single year, meaning calculated inflation over the relevant CPI window met or exceeded 2.5% for more than a decade straight. 2026’s 2.1% and 2027’s 1.9% break that run — the first two consecutive years below the cap in over ten years, reflecting cooling inflation in the underlying CPI data rather than any change to the formula or the cap itself. A landlord who assumed “the guideline is always 2.5%” because that had been true for over a decade would now be overstating a lawful increase two years running.
A portfolio running guideline increases across many units benefits from working backward from the 90-day minimum rather than treating each notice as a one-off task. Once the new calendar year’s guideline is published, the practical sequence is: confirm each unit’s last increase date, since the LTB’s own guide confirms rent can generally only be increased once at least 12 months have passed since the tenant moved in or since the last increase; confirm the unit is not exempt under the post-November 2018 new-building rule; calculate the new rent using the current year’s published percentage; and issue notice on the proper LTB form at least 90 days before the intended effective date — with enough buffer built in that a mailing delay or a tenant dispute over service does not push the notice under the 90-day floor. An AGI application, where one of the three grounds genuinely applies, runs on a separate and longer timeline and should be planned as its own project rather than folded into the routine annual notice cycle.
Worked example — a 100-unit building’s L5 fee, computed both ways
A 100-unit building is pursuing an AGI application for a major capital expenditure with a benefit period well past five years. Applying the formula on the fee schedule directly: $233 for the first ten units, plus $10 for each of the remaining 90 units.
$233 + ($10 × 90) = $1,133 before any cap is applied.
The published fee schedule caps the L5 application at $1,000 regardless of unit count, so the building files at $1,000, not $1,133 — a landlord who applies the formula without checking for the cap overpays by $133 on the filing alone, an easy and entirely avoidable arithmetic error at this scale.
Related reading: the other major LTB-governed process a portfolio administers regularly, the capital and operating cost data an AGI application often draws on and keeping a rent-increase and AGI history intact through a manager transition.
No. It is recalculated annually from Ontario Consumer Price Index data covering June to May, capped at 2.5% — the published figures are 2.1% for 2026 and 1.9% for 2027.
Not in a form that satisfies the requirement on its own. Notice must be at least 90 days before the increase date and in the proper form available from the Landlord and Tenant Board.
No. New buildings, additions, and most new basement apartments first occupied for residential purposes after November 15, 2018 are exempt from rent control entirely.
Only three: an extraordinary municipal tax and charges increase, an extraordinary or significant capital expenditure with a benefit lasting at least five years, or new or increased costs for non-employee security services.
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