Calculating Lawful Rent (RTA)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-04-23
CLNP Page ID:	2047
Page Categories:	[Payment of Rent (LTB)]
Citation:	Calculating Lawful Rent (RTA), CLNP 2047, <https://rvt.link/2v>, retrieved on 2024-04-23
Editor:	Sharvey
Last Updated:	2024/03/27

Residential Tenancies Act, 2006, S.O. 2006, c. 17

110 No landlord shall increase the rent charged to a tenant for a rental unit, except in accordance with this Part. 2006, c. 17, s. 110.

111 (1) No landlord shall charge rent for a rental unit in an amount that is greater than the lawful rent permitted under this Part. 2006, c. 17, s. 111 (1).

(2) The lawful rent is not affected by a discount in rent at the beginning of, or during, a tenancy of up to 2 per cent of the rent that could otherwise be lawfully charged for a rental period if the discount is provided for paying rent on or before the date it is due and the discount meets the prescribed conditions. 2009, c. 33, Sched. 21, s. 11 (5).

(2.1) The lawful rent is not affected if one of the following discounts is provided:

1. A discount in rent at the beginning of, or during, a tenancy that consists of up to three months rent in any 12-month period if the discount is provided in the form of rent-free periods and meets the prescribed conditions.

2. A prescribed discount. 2009, c. 33, Sched. 21, s. 11 (5).

(2.2) For greater certainty, the lawful rent is not affected if discounts described in subsections (2) and (2.1) are both provided. 2009, c. 33, Sched. 21, s. 11 (5).

(3) Subject to subsections (2) and (2.1), where a landlord offers a discount in rent at the beginning of, or during, a tenancy, the lawful rent shall be calculated in accordance with the prescribed rules. 2006, c. 17, s. 111 (3); 2009, c. 33, Sched. 21, s. 11 (6).

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113 Subject to section 111, the lawful rent for the first rental period for a new tenant under a new tenancy agreement is the rent first charged to the tenant. 2006, c. 17, s. 113.

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116 (1) A landlord shall not increase the rent charged to a tenant for a rental unit without first giving the tenant at least 90 days written notice of the landlord’s intention to do so. 2006, c. 17, s. 116 (1).

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123 (1) A landlord may increase the rent charged to a tenant for a rental unit as prescribed at any time if the landlord and the tenant agree that the landlord will add any of the following with respect to the tenant’s occupancy of the rental unit:

1. A parking space.

2. A prescribed service, facility, privilege, accommodation or thing. 2006, c. 17, s. 123 (1).

(2) Subsection (1) applies despite sections 116 and 119 and despite any order under paragraph 6 of subsection 30 (1). 2006, c. 17, s. 123 (2).

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125 A landlord shall decrease the rent charged to a tenant for a rental unit as prescribed if the landlord and the tenant agree that the landlord will cease to provide anything referred to in subsection 123 (1) with respect to the tenant’s occupancy of the rental unit. 2006, c. 17, s. 125.

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135.1 (1) An increase in rent that would otherwise be void under subsection 116 (4) is deemed not to be void if the tenant has paid the increased rent in respect of each rental period for at least 12 consecutive months. 2020, c. 16, Sched. 4, s. 24.

(2) Subsection (1) does not apply with respect to an increase in rent if the tenant has, within one year after the date the increase was first charged, made an application in which the validity of the rent increase is in issue. 2020, c. 16, Sched. 4, s. 24.

(3) For greater certainty, if subsection (1) applies with respect to an increase in rent, section 116 is deemed to have been complied with. 2020, c. 16, Sched. 4, s. 24.

(4) For greater certainty, nothing in this section limits the application of section 136. 2020, c. 16, Sched. 4, s. 24.

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136 (1) Rent charged one or more years earlier shall be deemed to be lawful rent unless an application has been made within one year after the date that amount was first charged and the lawfulness of the rent charged is in issue in the application. 2006, c. 17, s. 136 (1).

(2) An increase in rent shall be deemed to be lawful unless an application has been made within one year after the date the increase was first charged and the lawfulness of the rent increase is in issue in the application. 2006, c. 17, s. 136 (2).

(3) Nothing in this section shall be interpreted to deprive a tenant of the right to apply for and get relief in an application under section 122 within the time period set out in that section. 2006, c. 17, s. 136 (3).

O. Reg. 516/06: GENERAL under Residential Tenancies Act, 2006, S.O. 2006, c. 17

11 (2) In this section,

“the 12-month period” means,

(a) the 12-month period following the commencement of the tenancy,

(b) the 12-month period following any rent increase taken after the 12-month period described in clause (a), other than a rent increase taken under section 123 of the Act, or

(c) where clauses (a) and (b) do not apply, the 12-month period following the most recent anniversary of a rent increase taken in accordance with section 116 of the Act or, where no rent increase has been taken in accordance with section 116 of the Act, the commencement of the tenancy. O. Reg. 516/06, s. 11 (2).

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12. (1) The rules set out in this section apply in calculating lawful rent under subsection 111 (3) of the Act. O. Reg. 516/06, s. 12 (1).

(2) The lawful rent for any rental period in the 12-month period shall be calculated in the following manner:

1. Add the sum of the rents that are actually charged or to be charged in each of the rental periods in the 12-month period to the largest eligible discount determined under subsection (6).

2. Divide the amount determined under paragraph 1 by the number of rental periods in the 12-month period.

3. Add to the amount determined under paragraph 2 any rent increases under section 123 of the Act and subtract from that amount any rent decreases under section 125 of the Act. O. Reg. 516/06, s. 12 (2).

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(6) For the purpose of this section, the largest eligible discount shall be determined in accordance with the following rules:

1. In the case of a discount that is provided for in a written agreement, the largest eligible discount is the largest of the following amounts:

i. The lesser of the following amounts:

A. The sum of the discounts in rent during the first eight months of the 12-month period.

B. The rent for one month.

ii. The largest discount in rent during any month in the last five months of the 12-month period, plus the lesser of the following amounts:

A. The sum of the discounts in rent during the first seven months of the 12-month period.

B. The rent for one month.

iii. The largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

iv. The sum of the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period is equal to the rent for one month, and

C. the second-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

v. The sum of the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period, if,

A. the rent is paid monthly,

B. the largest discount in rent during any month in the 12-month period and the second-largest discount in rent during any month in the 12-month period are both equal to the rent for one month, and

C. the third-largest discount in rent during any month in the 12-month period is equal to the rent for less than one month.

vi. The rent for three months, if,

A. the rent is paid monthly, and

B. the largest discount in rent during any month in the 12-month period, the second-largest discount in rent during any month in the 12-month period, and the third-largest discount in rent during any month in the 12-month period are all equal to the rent for one month.

vii. The lesser of the following amounts, if the rent is paid daily or weekly:

A. The sum of the discounts in rent provided in the form of rent-free weeks during the 12-month period.

B. The rent for 13 weeks.

2. In the case of a discount that is not provided for in a written agreement, the largest eligible discount is the largest discount in rent in one rental period in the 12-month period. O. Reg. 516/06, s. 12 (6); O. Reg. 377/11, s. 3 (2).

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(8) In this section,

“the 12-month period” has the same meaning as in section 11. O. Reg. 516/06, s. 12 (8).

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16. (1) The following services, facilities, privileges, accommodations or things are prescribed for the purposes of subsection 123 (1) and section 125 of the Act:

1. Cable television.

2. Satellite television.

3. An air conditioner.

4. Extra electricity for an air conditioner.

5. Extra electricity for a washer or dryer in the rental unit.

6. Blockheater plug-ins.

7. Lockers or other storage space.

8. Heat.

9. Electricity.

10. Water or sewage services, excluding capital work.

11. Floor space.

12. Property taxes with respect to a site for a mobile home or a land lease home. O. Reg. 516/06, s. 16 (1).

(1.1) In a circumstance in which clause 137 (3) (c) or 138 (1) (b) of the Act requires a landlord to reduce the rent for a rental unit, the rent reduction rules that are prescribed for the purposes of clause 137 (3) (c) or 138 (1) (b) of the Act apply instead of the requirements set out in subsections (2) to (5). O. Reg. 395/10, s. 1.

(2) If there is an agreement under subsection 123 (1) or section 125 of the Act, the maximum increase in rent or minimum decrease in rent shall be the actual cost to the landlord of the service, facility, privilege, accommodation or thing, other than floor space, that is the subject of the agreement or, where the actual cost to the landlord cannot be established or where there is no cost to the landlord, a reasonable amount based on the value of the service, facility, privilege, accommodation or thing. O. Reg. 516/06, s. 16 (2).

(3) If the agreement under subsection 123 (1) or section 125 of the Act is to provide or cease to provide floor space, the maximum increase in rent or minimum decrease in rent shall be proportionate to the change in floor space. O. Reg. 516/06, s. 16 (3).

(4) If an amount determined in accordance with subsection (3) would be unreasonable given the nature and quality of the floor space added or taken away, the maximum increase in rent or minimum decrease in rent shall be a reasonable amount based on the nature and quality of the floor space and the amount of the change in the floor space. O. Reg. 516/06, s. 16 (4).

(5) Despite subsections (2), (3) and (4), where a service, facility, privilege, accommodation or thing was provided in accordance with a previous agreement under section 123 of the Act, section 132 of the Tenant Protection Act, 1997, section 46 of the Rent Control Act, 1992 or subsection 96 (4) of the Residential Rent Regulation Act, the minimum decrease in rent on ceasing to provide the service, facility, privilege, accommodation or thing shall be equal to,

(a) the most recent amount of the separate charge for the service, facility, privilege, accommodation or thing; or

(b) where there is no separate charge, the increase in rent which the landlord took when the service, facility, privilege, accommodation or thing was first provided, adjusted by the percentage increase in the rent being charged for the rental unit from the date the service, facility, privilege, accommodation or thing was first provided to the date the landlord ceased to provide it. O. Reg. 516/06, s. 16 (5).

SWL-94855-16 (Re), 2016 CanLII 88168 (ON LTB)

[5] The Landlord argued that the lawful rent should not be affected, and should remain the same, whether or not the discounts comply with the Regulation. That is not the law, but perhaps one may argue that if the Tenants have pets, and no longer qualify for the “no pet” rent discount, then the discount does not apply so it does not matter if it meets the prescribed rules.

[6] The contrary argument would be that it is not good public policy to permit a landlord to give a non-compliant discount so long as the landlord makes the discount conditional and the tenant does not meet the condition. Similarly, if a landlord gives a prompt payment discount that exceeds 2% of the monthly rent, this will decrease the lawful rent whether or not the tenant pays the rent on time to meet the condition for the discount.

[7] Any offer of a rent discount before or during the tenancy will result in a calculation of the lawful rent unless the discount meets the prescribed rules. This is set out in subsection 111(3) of the Residential Tenancies Act, 2006 (the ‘Act’).

TEL-86897-17-SA (Re), 2018 CanLII 42542 (ON LTB)

7. Pursuant to s. 110 no landlord can increase the rent charged to a tenant for a rental unit, except in accordance with the Act. Pursuant to s. 111(1) no landlord shall charge rent for a rental unit in an amount that is greater than the lawful rent permitted. The lawful rent is equal to the rent charged at the beginning of a tenancy plus or minus any increases or decreases permitted by the Act.

8. In other words, the amount of rent a landlord can charge and collect is strictly regulated under the Act.