Rent control exemption for newer units임대료 규제 면제 (2018년 11월 15일 이후 첫 입주 유닛)

What is it?

In Ontario, most rent increases cannot exceed the yearly guideline set by the government (2.1% for 2026, 1.9% for 2027). But homes first occupied for residential purposes after November 15, 2018 are left out of that cap. The rule is section 6.1 of the Residential Tenancies Act (RTA), in force since December 6, 2018.

In detail, the guideline section (s. 120) and the sections tied to it (ss. 121, 122, 126, 127, 129, 131, 132, 133; for new buildings and additions also ss. 165 and 167, rent rules for mobile home parks and land lease communities) do not apply to these units. In plain words: there is no ceiling on the size of an increase.

Most new condos and new rental apartment buildings completed in Toronto and the GTA since 2019 fall into this group. It is a big difference for tenants and for anyone buying a condo to rent out.

Which homes qualify?

The government sums this up as “new buildings, additions to existing buildings and most new basement apartments”. A home that was already rented out before November 15, 2018 does not become exempt by being renovated.

Rules that still apply

• 90 days’ written notice: an increase must be given on the LTB form (N1) at least 90 days ahead (s. 116). This section is not on the exemption list.
• The 12-month rule: for the same tenant, 12 months must pass since the last increase or the move-in date (s. 119). This section is not on the list either.
• Rent deposit: only one month’s rent for the last month, with interest every year at that year’s guideline rate (ss. 105, 106).
• Every other protection: eviction only for reasons in the Act and with an LTB order, the landlord’s duty to repair, entry rules and the ban on harassment all apply as usual. Only the size of the increase is exempt.

If the increase is too much, the tenant can give 60 days’ notice on Form N9 and move out. A tenant who receives a notice and does nothing is deemed to have accepted the increase (s. 118).

The exception to the exception

A tenancy agreement signed on or before November 15, 2018 is not exempt. The guideline keeps applying for as long as that tenant stays (s. 6.1 (4)), and the exemption starts with the next tenancy after they leave (s. 6.1 (5)).

In a dispute, the landlord must prove the exemption applies (s. 6.1 (6)). If the landlord cannot, the guideline applies.

How do you check whether your unit is exempt?

1. Look at section 15 (additional terms) of the standard lease. The government tells landlords of exempt units to add a term saying the unit is not covered by the rent increase guideline. A unit can still be exempt without that term, and the term has no effect if it is not true.
2. Ask the landlord in writing and request proof. The government tells landlords to keep building permits, occupancy permits, new home warranty (Tarion) documents and builder documents; for a new unit inside a house, contractor invoices, before-and-after photos and permits.
3. Find out when the building was first occupied. For a condo, the registration date, the date occupancy began and Tarion records are clues. If anyone lived in the building on or before November 15, 2018, it is not exempt.
4. If it is still unclear, contact the LTB. The government says tenants and landlords can contact the LTB to determine whether a unit is exempt. In a dispute, the burden of proof is on the landlord.

What tenants in new condos should expect

If you rent a condo completed in 2019 or later, it is most likely exempt. The landlord can raise the rent to market level every 12 months with 90 days’ notice on Form N1, by any amount. Budget for market changes, not for “about 2% a year”.

Ask whether the unit is exempt before you sign, and where you can, lock in the rent with a fixed-term lease. If you want to add your own cap on increases in section 15, first check with a legal clinic or the LTB whether such a term is enforceable.

If you live in a building built before November 15, 2018 (most older apartment buildings and pre-2018 condos), the guideline applies, and you can ask a landlord who claims an exemption to prove it.

Buying a condo to rent out

An exempt unit lets you adjust rent to market, which investors like, but the 90-day notice, the 12-month rule, the eviction rules and the duty to repair are the same. Collect the documents that prove the exemption (occupancy permit, Tarion documents, builder documents) when you buy, and put the exemption term in section 15 of the lease.

If you buy a tenanted unit in a building first occupied before November 15, 2018, you can raise the rent only by the guideline each year, even if the current rent is well below market. When a listing’s “current rent” and “market rent” are far apart, find out why before you buy.

Example