Ontario’s 2026 Rent Increase Guideline: The 2.1% Cap, the 12-Month Rule, N1 Notice, and Above-Guideline Increases
For most Ontario tenants, the legal 2026 increase is just 2.1% — but which units are exempt, and how a landlord can charge more, is where people get caught.
What is Ontario’s 2026 rent increase guideline, and how much can my landlord raise my rent?
According to the Government of Ontario, the 2026 rent increase guideline is 2.1%. This is the most a landlord of a covered (rent-controlled) unit may raise rent in a year without approval from the Landlord and Tenant Board (LTB). The guideline is capped at 2.5% by statute. A landlord must give at least 90 days’ written notice using Form N1, and rent can generally be raised only once every 12 months.
Source: Government of Ontario (ontario.ca, 2026)
Every year when the rent guideline is announced, my landlord and tenant clients ask the same question: “How much can it actually go up this year?” For 2026 the answer is 2.1% — the lowest cap in four years. But the number isn’t where people get tripped up. What matters is which units the guideline covers, which it doesn’t, and when a landlord can legally charge more than 2.1%. Here’s how the 2026 guideline, the 12-month rule, the N1 notice, the new-unit exemption, and Above-Guideline Increases (AGI) all fit together — useful whether you’re the landlord or the tenant.
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💡 According to the Government of Ontario (ontario.ca, 2026), the 2026 rent increase guideline is 2.1%. For most units covered by the Residential Tenancies Act, 2006, that is the maximum a landlord can raise rent in a year without any approval. There is also a hard legal limit: the guideline is capped at 2.5% to prevent large one-time increases. So even in a high-inflation year, the annual guideline for a covered unit won’t exceed 2.5% — and 2026’s 2.1% sits comfortably inside that ceiling.
⚠️The biggest misconception: assuming every rental is capped at 2.1%. Units first occupied after November 15, 2018 (including most new basement apartments) are not covered by the guideline — a landlord can, in principle, raise rent by any amount with 90 days’ notice. Confirm which category your unit is in before you sign.
The dividing line: November 15, 2018
Conversely, new buildings, additions to existing buildings, and most basement apartments first occupied for residential purposes after November 15, 2018 are not covered by the guideline — a landlord of an exempt unit can, in principle, raise rent by any amount as long as 90 days’ notice is given. Before you sign a lease, find out whether your unit is covered or exempt.
The 12-month rule: once a year, not once a lease
A common misunderstanding: the limit is once every 12 months, not once per lease renewal. A landlord can’t raise the rent again inside that 12-month window just because you renewed or signed a new lease. For tenants, this is the key protection against a string of frequent small increases.
The 90-day N1 notice: wrong form, no valid increase
The point: a verbal heads-up, a text message, or less than 90 days’ notice is not a valid rent increase. If the form or notice period is wrong, the tenant can keep paying the old rent until the landlord serves proper notice and 90 days pass. When an N1 arrives, check four things: is the unit covered, is the amount at or under 2.1%, has it been 12 months, and is the notice a full 90 days.
ℹ️An AGI must be approved by the LTB — a landlord cannot impose an above-guideline increase on their own. If you receive an AGI notice, you’re entitled to see the landlord’s claimed expenses or tax basis and to object at the hearing.
When a landlord wants more: the Above-Guideline Increase (AGI)
• Capital expenditures: an extraordinary or significant renovation, repair, replacement, or new addition to the complex, with an expected benefit of at least 5 years
• An extraordinary increase in municipal taxes and charges
• An increase in operating costs for security services
The key point: an AGI is not something a landlord decides unilaterally — it must be approved by the LTB, with notice to affected tenants and a chance to respond.
How much an AGI can add — and for how long
According to the LTB (tribunalsontario.ca, 2025), the size of an AGI is also governed by rules:
• An increase justified by capital expenditures and security-service operating costs cannot exceed 3% above the guideline in any single year; if the justified amount is more than 3% above the guideline, the remainder can be taken over the following two 12-month periods, at up to 3% above guideline per year.
• For an extraordinary increase in municipal taxes and charges, there is no percentage cap on the above-guideline portion. What counts as “extraordinary”? Per the LTB, a municipal tax increase is extraordinary if it is greater than the guideline plus 50% of the guideline (using the guideline for the year the first increase takes effect).
In short: capital-expenditure AGIs are capped at 3%/year and phased in, while tax-based AGIs are uncapped — the distinction tenants most need to see.
Tenant rights: what you can do with an N1 or an AGI
• Check compliance: is the unit covered, is the amount at or under 2.1% (for covered units), has 12 months passed, and is the N1 a properly formatted 90-day notice? If any of these fail, you can decline to pay the new rent until the landlord serves proper notice.
• Participate in the AGI hearing: when a landlord files an AGI, you’ll receive notice, can review the claimed expenses or tax basis, and can raise objections at the LTB hearing (for example, that a cost is deferred maintenance rather than a legitimate capital expenditure).
• Keep written records: save every increase notice and communication — it’s your evidence later.
When a dispute can’t be resolved privately, you can apply to the LTB (tribunalsontario.ca).
Practical reminders for landlords and tenants
For landlords: for a covered unit, raise by no more than 2.1%, use Form N1, give 90 days’ notice, and confirm 12 months have passed — all four, or the increase isn’t valid and you invite a dispute. To charge more via an AGI, assemble the invoices, contracts, and proof of payment for the capital work first and apply to the LTB — don’t self-impose the higher rent.
For tenants: don’t assume the number on the notice is automatically enforceable. First determine whether your unit is covered (≤2.1%) or a post-Nov-15-2018 exempt unit, then check the N1 point by point. This article is educational; rely on the LTB’s current forms and rulings for your specific case, and get professional advice where needed.
Frequently Asked Questions
How much can my landlord raise my rent in 2026?
According to the Government of Ontario (ontario.ca, 2026), the 2026 rent increase guideline is 2.1% — the most a landlord of a covered unit can raise rent in a year without approval. The guideline is capped at 2.5% by statute. Note that units first occupied after November 15, 2018 are not subject to this cap.
Is my unit subject to the 2.1% cap?
It depends on when it was first occupied. According to the Government of Ontario, the guideline applies to units first occupied for residential purposes on or before November 15, 2018. New buildings, additions, and most basement apartments first occupied after that date are not covered. Find out which category your unit falls into before signing.
How often can rent go up, and how must I be notified?
According to the Government of Ontario, in most cases rent can be raised only after 12 months since the last increase or the start of the tenancy — and it’s once every 12 months, not once per renewal. The landlord must give at least 90 days’ written notice on the LTB’s Form N1; a verbal or short-notice increase is not valid.
Can a landlord charge more than 2.1%?
In specific situations, yes — but only with LTB approval. Per the LTB, a landlord can apply for an Above-Guideline Increase (AGI) using Form L5 on grounds such as a capital expenditure (5-year expected benefit), an extraordinary municipal tax increase, or higher security-service costs. Capital-expenditure and security AGIs are limited to 3% above guideline per year; the extraordinary-municipal-tax portion has no percentage cap.
I think my landlord’s increase isn’t valid — what can I do?
Check the basics first: is the unit covered, is the amount at or under 2.1%, has it been 12 months, and is the N1 a properly formatted 90-day notice? If any fail, you can decline to pay the new rent until proper notice is served. If an AGI is involved, you can object at the LTB hearing. Disputes can be brought to the LTB (tribunalsontario.ca).
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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