By A.J. Keilty, President, KEILTY Realty Management
Probably not. Your unit is exempt from Ontario's rent increase guideline only if it was occupied for the first time for residential purposes after 2018-11-15. Everything older than that is capped, and for 2027 the cap is 1.9%. If your unit does qualify, you can raise the rent by any amount, but you still have to wait 12 months between increases and give 90 days written notice on the right Landlord and Tenant Board form.
That is the short version. The longer version matters, because the exemption attaches to the unit and not to you, not to the tenancy, and not to the date you bought the property. Owners get this wrong in both directions. Some raise rent above the guideline on a unit that was never exempt and end up refunding it. Others sit on a legitimately exempt unit for years without realizing it.
It means one specific thing: the annual guideline does not cap your increase. It does not mean the Residential Tenancies Act, 2006 stops applying to your unit. The exemption lives in section 6.1 of the Act, and it is narrow.
The guideline itself is set each year from the Ontario Consumer Price Index, using data from June to May, and it is capped at 2.5% by legislation. It has been 1.9% for 2027, 2.1% for 2026, and 2.5% for each of 2023, 2024 and 2025. We wrote about the 2027 number and what to do before October in this post.
For an exempt unit, none of those numbers apply. You and the tenant are governed by the market instead, which in Ontario right now is doing more to hold rents down than the guideline is.
Ontario groups them into two situations, and they are tested differently.
A building, or an addition to an existing building, that was occupied for the first time for residential purposes after 2018-11-15 is exempt. Same rule for new mobile home parks and new land lease communities. The test is first residential occupancy, not the permit date, not the closing date, not the date you took title.
A purpose-built rental building that took its first residents in 2020 is exempt, and stays exempt through every tenant who ever lives there. A 1970s walk-up is not exempt, and never will be, no matter how much you spend on it.
This is the category most small owners are in, and the conditions are stricter. A new self-contained unit added to an existing detached house, semi-detached house or row house can be exempt if it was completed after 2018-11-15 and one of two things is true: the unit was built in space that was previously unfinished, like a basement or an attic, or the owner lived in another part of the house when the unit was first occupied.
So a basement that was raw storage in 2019 and became a one bedroom apartment in 2021 can qualify. A basement apartment that already existed in 2010, was gutted and rebuilt in 2022, does not. Renovation is not creation, and the Board draws that line firmly.
If the condo was occupied for the first time for residential purposes after 2018-11-15, it is exempt, and the exemption follows the unit. It does not reset or expire when the first tenant leaves, and it does not transfer to a resale unit that was already lived in before that date.
The trap is occupancy versus registration. Many Ontario condos have an interim occupancy period where residents move in months or years before the building registers. What counts is when someone first occupied the unit for residential purposes. If that happened on 2018-11-01 during interim occupancy, the unit is inside rent control even though the building registered in 2019. Get the occupancy date from the builder in writing before you assume anything.
Most of them. The exemption is one clause, not a carve-out from the Act. On an exempt unit you still have to:
A tenant in an exempt unit who receives a rent increase they think is improper can still dispute it at the Board within 12 months of first being charged. What they cannot argue is that the increase exceeded the guideline, provided you can prove the exemption.
The burden is on the landlord, and it is a documentary burden. Ontario is explicit about this. For a new building or addition, keep building permits and permit applications, plans, occupancy permits, new home warranty documents, and anything from the builder that fixes the first occupancy date. For a new unit in an existing house, keep contractor invoices, builder documents, permits, and before and after photographs that show the space was unfinished.
Ontario also recommends adding a term under section 15 of the standard lease stating that the unit is exempt from the guideline. That is not what makes the unit exempt. It puts the tenant on notice, and it removes the surprise argument later.
Owners who bought the property from someone else usually have the weakest file, because none of these records came with the sale. If you own an exempt unit and cannot lay hands on the proof today, that is the job for this month, not for the week a tenant files against you.
Yes, and this one has nothing to do with the exemption. When a tenancy ends and a new tenant signs, the landlord and the new tenant agree on the rent. That applies to every unit in Ontario regardless of age. Turnover is the one moment when the guideline is irrelevant to everybody.
Which is a bigger deal for most owners than the exemption is. A single turnover at market rent moves the needle more than three years of guideline increases on an exempt unit, and it is available to owners of 1965 buildings and 2023 buildings alike. Our rental income calculator and vacancy loss calculator will show you what the same turnover costs when it takes six weeks instead of two.
Being allowed to and being able to are different questions, and 2026 has separated them.
Asking rents across Canada averaged $2,033 in June 2026, down 4.3% year over year and the 21st straight month of annual decline, according to the Rentals.ca national rent report. Ontario fell further than the national average, down 5.3% to $2,233. Kingston recorded the largest year over year drop of any census metropolitan area in the country, with Statistics Canada showing two bedroom asking rents down nearly 6% in the first quarter of 2026 and the city's vacancy rate up to 2.4%, as Global News reported.
In that market, an aggressive increase on a sitting tenant in an exempt unit is often a decision to create a vacancy. The tenant can leave with 60 days notice, and there is more competing supply for them to leave into than there was two years ago. Then you are carrying the unit, paying to turn it, and re-letting at a number the market sets anyway. We looked at what softening does to owner math in this post.
The exemption is most useful where it was designed to be useful: on new supply, where the operator is pricing a lease-up against current comparables rather than trying to catch a below-market sitting tenant up in one jump. Developers and build-to-rent owners can read more on that at our build-to-rent page.
No. The section 6.1 exemption is intact and the 2018-11-15 date has not moved.
There was a scare. Bill 60, the Fighting Delays, Building Faster Act, introduced on 2025-10-23, included a plan to consult on an alternative to Ontario's lease expiry rules, which renters and advocates read as a path to uncapped increases at renewal. After sustained public pushback, Housing Minister Rob Flack said the province would not proceed with those consultations. Nothing in the rent control framework changed as a result.
Treat that as a reason to keep your records current rather than a reason to wait for a rule change. The exemption you can document is worth something. The one you assume is not.
Four things, in order.
KEILTY manages residential and commercial rentals across Ontario, from Kingston and Belleville through Peterborough, Cobourg, Oshawa, Cornwall and Ottawa. We charge a flat monthly rate per unit rather than a percentage of rent, so the fee does not climb when the rent does, and a placement fee when we fill the unit. Current rates for single family rentals are on our single family rental page, and owners with buildings should look at small multi-family or apartment communities.
Not sure whether your unit is exempt, or what it should actually rent for in today's market? Get a free rental evaluation and we will tell you both, or contact us and talk it through with someone who manages units on your street.
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