Rent Increases (LTB)

Overview

• See also Rent Changes (Social Housing)

Statutory Rent Increases

Residential Tenancies Act, 2006, S.O.

38 (1) If a tenancy agreement for a fixed term ends and has not been renewed or terminated, the landlord and tenant shall be deemed to have renewed it as a monthly tenancy agreement containing the same terms and conditions that are in the expired tenancy agreement and subject to any increases in rent charged in accordance with this Act.

119 (1) A landlord who is lawfully entitled to increase the rent charged to a tenant for a rental unit may do so only if at least 12 months have elapsed,

(a) since the day of the last rent increase for that tenant in that rental unit, if there has been a previous increase; or

(b) since the day the rental unit was first rented to that tenant, if clause (a) does not apply.

(2) An increase in rent under section 123 shall be deemed not to be an increase in rent for the purposes of this section.

120 (1) No landlord may increase the rent charged to a tenant, or to an assignee under section 95, during the term of their tenancy by more than the guideline, except in accordance with section 126 or 127 or an agreement under section 121 or 123. 2006, c. 17, s. 120 (1).

126 (1) A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex in any or all of the following cases:

1. An extraordinary increase in the cost for municipal taxes and charges for the residential complex or any building in which the rental units are located.

2. Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.

3. Operating costs related to security services provided in respect of the residential complex or any building in which the rental units are located by persons not employed by the landlord. 2006, c. 17, s. 126 (1); 2017, c. 13, s. 22 (1).

(2) In this section,

“extraordinary increase” means extraordinary increase as defined by or determined in accordance with the regulations.

127 Despite clause 126 (11) (b), if an order is made under subsection 126 (10) with respect to a rental unit and a landlord has not yet taken all the increases in rent for the rental unit permissible under a previous order pursuant to clause 126 (11) (b), the landlord may increase the rent for the rental unit in accordance with the prescribed rules.

Contractual Basis for Rent Increases

Heger v. Varajao et al., 2010 ONSC 4603 (CanLII)

C. The requirements for a valid lease

[93] “To be valid, an agreement for a lease must show (1) the parties, (2) a description of the premises to be demised, (3) the commencement and (4) duration of the term, (5) the rent, if any, and (6) all the material terms of the contract not being matters incident to the relation of landlord and tenant, including any covenants, exceptions or reservations”: see Canada Square Corp. et al. v. VS Services Ltd. et al. (1981), 1981 CanLII 1893 (ON CA), 34 O.R. (2d) 250 at 258-59 (C.A.), 1981 CarswellOnt 124, at para. 21, citing Williams, Canadian Law of Landlord and Tenant (4th ed., 1973), at p. 75.

[94] “[R]equirement (6) . . . relates to material terms. It comes into play only in certain cases. It may be said now that conditions (1) to (5) are invariable requirements”: see Canada Square Corp. et al. v. VS Services Ltd., et al., ibid.

TET-05754-10 (Re), 2010 CanLII 52145 (ON LTB)

2. In a ruling by the Divisional Court in “Opara v Cook” the Court stated “Ordinary rules of contract law apply. There is no unilateral right to rescind a contract that has been duly entered into by the parties simply because the effective date of the contract has not been reached”. In this matter the parties entered into a rental contract and the Tenant wanted to unilaterally rescind his offer to rent. The Tenant resolved his domestic situation and decided to back out of the contract. As cited above this is not permitted under the ordinary rules of contract law.

TNT-71808-15 (Re), 2015 CanLII 76626 (ON LTB)

3. It is not in dispute that the Landlord called the Tenant to inform him that the rent would be increased. This would not have been necessary if there was no previous agreement on the amount of the rent. In Opara v Cook (2008) O.J. No 1934 (Ont. Div. Ct.) the court stated with respect to tenancy agreements, “Ordinary rules of contract law apply. There is no unilateral right to rescind a contract that has been duly entered into by the parties simply because the effective date of the contract has not been reached”. Likewise a party does not have the ability to unilaterally change the terms and conditions of such a contract.

Drewlo Holdings Inc. v. Custidio 2009 CarswellOnt 9151

1. Custidio signed a lease. She was a tenant and not a prospective tenant when she repudiated the lease. Bd decisions have interpreted "prospective tenant" as someone at the application stage. That is not the case here where a tenancy agreement was entered into. Since Custidio was not a prospective tenant, S.107 of the Residential Tenancies Act does not apply. There is nothing in S.106 to require the Landlord to refund the deposit in these circumstances. There is nothing to distinguish this case from the Divisional Court case in Opara v. Cook, 2008 CarswellOnt 2747 (Ont. Div. Ct.).

Drewlo Holdings Inc. v. Weber, 2011 ONSC 6407 (CanLII)

[1] Drewlo appeals an order of the Landlord and Tenant Board dated February 3, 2011 and a Review Order of February 8, 2011 holding that a rent increase of 9 percent levied against pet owning tenants was an impermissible premium or penalty proscribed by Section 134(1)(a) of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the RTA) , and as such interfered with Weber’s reasonable enjoyment of her apartment. The Board awarded an abatement of the increased rent charged pursuant to Section 31(1)(c) of the RTA. The appellant submits that the abatement remedy is available only if an application is brought under Section 29 of the RTA. It is not an available remedy, the appellant submits, under Section 135(1) of the RTA for a breach of Section 134.

[2] For the reasons that follow we disagree.

[9] In our opinion, it was appropriate for the Board to have recourse to Section 202 of the RTA to ascertain the real substance of the rent increase. Section 14 of the RTA voids prohibitions in leases against pet ownership. The Act also provides a mechanism for a landlord to recover compensation for damage caused by pets and in certain circumstances, to obtain an order terminating a tenancy because of a pet. The Board found that the real substance of the rent increase was to extract a premium or penalty from pet owning tenants. Although taking the position on the hearing before us that the real substance was irrelevant, Drewlo conceded that the finding was reasonable on the evidence before the Board. The Board then found that “…a tenant’s reasonable enjoyment of the property…includes the expectation that they [sic] will not be made subject to premiums, penalties or other charges for otherwise lawful conduct.” We find that was a reasonable finding that was open to the Board.

Increase Rent on Consent

Residential Tenancies Act, 2006, S.O.

121 (1) A landlord and a tenant may agree to increase the rent charged to the tenant for a rental unit above the guideline if,

(a) the landlord has carried out or undertakes to carry out a specified capital expenditure in exchange for the rent increase; or

(b) the landlord has provided or undertakes to provide a new or additional service in exchange for the rent increase.

124 An agreement under section 121 or 123 is void if it has been entered into as a result of coercion or as a result of a false, incomplete or misleading representation by the landlord or an agent of the landlord.

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.

Exemptions from Rules Relating to Rent

Residential Tenancies Act, 2006, S.O.

6.1 (1) In this section,

“addition” means, with respect to a mobile home park or land lease community, an expansion beyond the boundaries of the mobile home park or land lease community; (“rajout”)

“commencement date” means the day section 1 of Schedule 36 to the Restoring Trust, Transparency and Accountability Act, 2018 comes into force. (“date d’entrée en vigueur”) 2018, c. 17, Sched. 36, s. 1.

(2) Sections 120, 121, 122, 126, 127, 129, 131, 132, 133, 165 and 167 do not apply on and after the commencement date with respect to a rental unit if the requirements set out in one of the following paragraphs are met:

1. The rental unit is located in a building, mobile home park or land lease community and no part of the building, mobile home park or land lease community was occupied for residential purposes on or before November 15, 2018.

2. The rental unit is entirely located in an addition to a building, mobile home park or land lease community and no part of the addition was occupied for residential purposes on or before November 15, 2018. 2018, c. 17, Sched. 36, s. 1.

(3) Sections 120, 121, 122, 126, 127, 129, 131, 132 and 133 do not apply on and after the commencement date with respect to a rental unit if all of the following requirements are met:

1. The rental unit is located in a detached house, semi-detached house or row house which, on or at any time before November 15, 2018, contained not more than two residential units.

2. The rental unit is a residential unit that meets all of the following requirements:

i. The unit has its own bathroom and kitchen facilities.

ii. The unit has one or more exterior or interior entrances.

iii. At each entrance, the unit has a door which is equipped so that it can be secured from the inside of the unit.

iv. At least one door described in subparagraph iii is capable of being locked from the outside of the unit.

3. The rental unit became a residential unit described in paragraph 2 after November 15, 2018.

4. One or both of the following circumstances apply:

i. At the time the rental unit was first occupied as a residential unit described in paragraph 2, the owner or one of the owners, as applicable, lived in another residential unit in the detached house, semi-detached house or row house.

ii. The rental unit is located in a part of the detached house, semi-detached house or row house which was unfinished space immediately before the rental unit became a residential unit described in paragraph 2.

(4) Subject to subsection (5), the exemption under subsection (2) or (3) does not apply with respect to a rental unit that is subject to a tenancy in respect of which a tenancy agreement was entered into on or before November 15, 2018.

(5) Subsection (4) applies only with respect to the tenancy described in that subsection and does not apply with respect to any subsequent tenancy.

(6) For greater certainty, in an application to the Board in which the application of subsection (2) or (3) is at issue, the onus is on the landlord to prove that the subsection applies.

(7) The following rules apply on and after the commencement date with respect to a rental unit, if subsection (2) or (3) applies to the rental unit and the unit is subject to a tenancy in respect of which a tenancy agreement was entered into before that date but after November 15, 2018:

1. Despite subsections (2) and (3), sections 121 and 122 continue to apply with respect to an agreement that was entered into between the landlord and the tenant of the rental unit under section 121 before the commencement date.

2. Despite subsections (2) and (3), section 132 continues to apply with respect to an application that was made by the landlord or the tenant of the rental unit under that section before the commencement date and was not finally determined before that date.

3. Despite subsections (2) and (3), section 133 continues to apply with respect to an application that was made by the tenant of the rental unit under that section before the commencement date and was not finally determined before that date.

4. Despite subsection (2), section 165 continues to apply with respect to an assignment of the rental unit for which the landlord granted consent under section 95 before the commencement date or which was authorized by the Board under section 98 before that date. 2018,

Nanne v. 3011650 Nova Scotia Limited (Michipicoten Forest Resources), 2015 ONCA 391 (CanLII)

[26] The underlying issue in this dispute is whether the rent control provisions of the RTA apply to the respondents’ Cottage leases (which replaced leases that pre-existed the 1994 amendments and therefore were not affected by the amendments).[11] As discussed, that issue was decided in Matthews. The question of whether the leases are subject to the indefinite, automatic renewal provisions of the RTA – and if so, whether that would create a conflict with PA s. 50(3) – should not, and need not, be decided in the context of the present appeal.

[27] At the time of the 1994 amendments, the Landlord and Tenant Act did not provide for a tenant’s right to indefinite renewal or security of tenure; the security of tenure that exists today in the RTA was not available to tenants until 1997, with the enactment of the Tenant Protection Act, 1997.[12]

[28] It is therefore arguable whether the legislature, in simultaneously enacting PA s. 46 and adding land lease communities to the Landlord and Tenant Act, had the intention to allow indefinite, automatic renewal of existing 20-year land leases that were not part of a registered plan of subdivision.

[29] In the proper context, it may be open to a party to raise the issue of the possible conflict between PA s. 50(3) and RTA s. 38(1) as these provisions apply to pre-1994 land leases, potentially including the respondents’ Cottage leases.

[30] However, in the current appeal, along with the failure to address the conflict with the Matthews decision or seek to have a five-judge panel reconsider that decision, the parties did not direct the court to PA s. 46, or provide any guidance on how to approach or interpret the 1994 amendments. Nor did they provide this court with evidence regarding the number of pre-1994 land lease communities that are not subject to a registered plan of subdivision, which evidence might well have assisted the court in addressing the policy arguments raised by the Landlord. Without evidence and robust argument of these issues, this court is not in a position to decide the legal question in the full context of the potential effects of the application of RTA s. 38(1) on the Cottage or similar leases.