Talk:Calculating Lawful Rent (RTA)

Caselaw.Ninja, Riverview Group Publishing 2021 ©
Date Retrieved:	2024-11-23
CLNP Page ID:	2048
Page Categories:	[Payment of Rent (LTB)]
Citation:	Calculating Lawful Rent (RTA), CLNP 2048, <https://rvt.link/2u>, retrieved on 2024-11-23
Editor:	Sharvey
Last Updated:	2024/03/07

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Overview

The following tutorial is on how to calculate the lawful rent under different conditions.

A finding of fact must be made with respect to whether or not the landlord gave a rent discount, or provided a rent reduction.

Rent Discounts

In the following example we will address the issue where a rent discount is offered by a landlord, and the impact that different discounts have on the lawful monthly rent calculation.

Steps to Calculate Lawful Rent with Discount

Step One

Determine the 12-month period for which the rent will be calculated using the following questions:

Q1:

• Is this the first year of the tenancy?, if yes then the start of the tenancy is the start of the 12-month period, proceed to STEP TWO, if not then proceed to the next question. If this tenancy is greater then one year old then proceed to the next question.

Q2:

• When is the last time the rent was increased, not including the addition of any of the following services:
  • a parking space,
  • Cable television.
  • Satellite television.
  • An air conditioner.
  • Extra electricity for an air conditioner.
  • Extra electricity for a washer or dryer in the rental unit.
  • Blockheater plug-ins.
  • Lockers or other storage space.
  • Heat.
  • Electricity.
  • Water or sewage services, excluding capital work.
  • Floor space.
  • Property taxes with respect to a site for a mobile home or a land lease home.
• The last date the rent was increased in the past 12 months is the start of your 12-month period.
• If the rent has NOT been increased in the last 12 months then proceed to the next question.

Q3:

• In the last 12 months has the rent been lawfully increased in accordance with section 116 of the RTA? ^{N1 was served on time and is accurate}
• If yes, then the date the increase was effective is the start of the 12-month period calculation, Proceed to STEP TWO, if not proceed to the next question.

Q4:

• What is the anniversary date of the commencement of the tenancy? this is the start of the 12-month period calculation, Proceed to STEP TWO.

Step Two

Determine the base rent prior to the 12-month period.

• The base rent is the total amount of rent charged during the last month of the previous 12-month period.

Step Four

The next step is to determine the largest eligible discount.

• IF the rent is paid monthly AND the discount is written in the lease, answer the following questions:
  • Q1: What were the total discounts in rent given by the landlord during the first eight months of the 12-month period?
    • Q1.1: Is the answer to Q1 equal to or less than one month's rent?
  • Q2: What was the largest discount in rent during any month in the last five months of the 12-month period, plus the total discounts in rent during the first seven months of the 12-month period?
    • Q2.1: Is the answer to Q2 equal to or less than one month's rent?
  • Q3: What is the largest discount on rent during any month in the 12-month period?
    • Q3.1: Is this amount equal to or less than one month's rent?
  • Q4: What is the largest discount on rent during any month in the 12-month period PLUS the second-largest discount on rent during any month in the 12-month period?
    • Q4.1: Is the largest discount in rent during any month in the 12-month period equal to the rent for one month?
    • Q4.2: Is the second-largest discount on rent during any month in the 12-month period equal to the rent for less than one month?
  • Q5: What is the largest discount on rent during any month in the 12-month period PLUS the second-largest discount on rent during any month in the 12-month period PLUS the third-largest discount in rent during any month in the 12-month period?
    • Q5.1: Is the largest discount on rent during any month in the 12-month period and the second-largest discount on rent during any month in the 12-month period both equal to or less than the rent for one month?
    • Q5.2: Is the third-largest discount in rent during any month in the 12-month period equal to the rent for less than one month?
  • Q6: Is the largest discount in rent during any month in the 12-month period PLUS the second-largest discount in rent during any month in the 12-month period PLUS the third-largest discount in rent during any month in the 12-month period equal to the rent for one month?
    • Q6.1: If the answer to Q6 is yes, what is the total of three months of rent in the 12-month period?

• IF the rent is paid weekly AND the discount is written in the lease, answer the following questions:
  • Q7: If the rent is paid weekly, what are the total discounts on rent provided in the form of rent-free weeks during the 12-month period?
  • Q8: If the rent is paid weekly, what is the rent for 13 weeks?

• The largest eligible discount where the rent is paid monthly AND the discount is written in the lease is the largest amount calculated based on the above questions, with the following exceptions:
  • If the answer to Q1.1 is NO then exclude the answer to Q1,
  • If the answer to Q2.1 is NO then exclude the answer to Q2,
  • If the answer to Q3.1 is NO then exclude the answer to Q3,
  • If the answer to Q4.1 is NO then exclude the answer to Q4,
  • If the answer to Q4.2 is NO then exclude the answer to Q4,
  • If the answer to Q5.1 is NO then exclude the answer to Q5,
  • If the answer to Q5.2 is NO then exclude the answer to Q5,
  • If the answer to Q6 is NO then exclude the answer to Q6,
  • NOTE: It is possible that there are no eligible discounts available if the answer to questions 1 through 6 are excluded.

• 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.
  • Q1: Did the total discount in rent exceed ONE month's rent? If yes, then the rent must be re-calculated.

Step Five

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, SUBTRACT largest eligible discount (If any),

2. Divide the amount determined under paragraph 1 by 12,

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._{Exclusions are found under Step Two, Question 2}

NOTE: The above only applies to rent paid monthly.

Summary

Even though the above can be challenging it is imperative that you work out the lawful rent prior to each hearing taking into account any discounts provided. If discounts provided are not in compliance with the ACT then the lawful rent must be re-calculated.

Parking

The Cost of Parking

So, I was thinking about how much money a landlord can charge for parking in a building. In my hypothetical fact situation, we have a parking lot with 100 spots. The average (medium) cost of each parking spot is $40.

In our facts we have a tenant that is living in the building for say 5 years. The tenant did not have parking as part of their rent. The tenant decides to add parking to their services.

Question: Is there a limit to how much the landlord can charge the existing tenant for a NEW parking spot?

Answer:

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

16 (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).

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

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).

...

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.

Based on my reading of the above O’Reg and the Residential Tenancies Act, 2006, S.O. 2006("RTA"), I would propose that the landlord cannot charge more than approximately $40 a month for NEW parking given the facts I have proposed. The point I am expressing is NOT about the $40, the point is about the method used to calculate how much can be lawfully charged for parking or any other prescribed service under the RTA.