Ontario has set the rent increase guideline for 2027 at 1.9%. The province published the figure in summer 2026 on Ontario's residential rent increases page. It applies to rent increases that take effect between 2027-01-01 and 2027-12-31. That is down from 2.1% in 2026 and well below the 2.5% cap that applied in 2023, 2024, and 2025.
If you own rental property in Ontario, this number shapes your revenue planning for the next 18 months. Here is what the guideline means, who it applies to, the exact steps and deadlines for using it, and what a 1.9% year means for your bottom line.
The rent increase guideline is the maximum a landlord can raise rent for most existing tenants in a calendar year without approval from the Landlord and Tenant Board (LTB). It is set annually using the Ontario Consumer Price Index, a Statistics Canada measure of inflation. The province uses CPI data from June through May to set the guideline for the following year, and the result is capped at 2.5% no matter how high inflation runs.
The recent track record tells the story of inflation cooling:
Three straight years at the cap, then two years of decline. A 1.9% guideline signals that the province's inflation math has normalized, and owners should plan for guideline increases in the 2% range rather than the 2.5% ceiling for the near future.
The guideline covers most private residential rental units under the Residential Tenancies Act, 2006: rented houses, apartments, basement apartments, condos, care homes, mobile homes, and land lease communities.
The most important exemption for owners and developers: units first occupied for residential purposes after 2018-11-15 are exempt from rent control entirely. That includes new buildings and additions to existing buildings. For these units, the 1.9% figure does not limit your increase, though you still must follow the notice rules below and can only increase rent once every 12 months.
New basement apartments and other new units created inside existing houses can also qualify, but only under specific conditions: the house had no more than two residential units on 2018-11-15, the new unit is fully self contained with its own kitchen, bathroom, and lockable entrance, it was created after that date, and either the owner lives elsewhere in the building or the unit was built in previously unfinished space such as a basement or attic. A finished basement converted into a rental unit in a property where the owner does not live likely does not qualify. Getting this wrong is costly: if you serve an above-guideline increase on Form N2 for a unit that is actually rent controlled, the increase can be voided.
The guideline also does not apply on turnover. When a tenant moves out, you and the incoming tenant agree on the new rent with no cap. This is why turnover strategy and vacancy management matter so much to portfolio returns, and why the gap between in-place rents and market rents keeps widening in buildings with long-tenured residents.
If you rely on the post-2018 exemption, keep your paperwork. In a dispute, the burden of proof is on the landlord: for new buildings and additions, you must prove the building or addition was first occupied for residential purposes after 2018-11-15; for new units in existing houses, you must prove the unit was completed after 2018-11-15. Useful records include building permits, occupancy permits, new home warranty documents, and contractor invoices. Ontario also recommends adding a term under section 15 of the standard lease stating the unit is exempt from the guideline. If you develop or operate newer purpose-built rental, our build-to-rent team handles this documentation as a matter of course.
Three rules govern a lawful guideline increase:
The math is simple. On a $2,000 unit, 1.9% adds $38.00, bringing rent to $2,038.00 per month, or $456 per year. On a $1,500 unit it adds $28.50 per month. Small numbers per unit, but across a portfolio they compound: skipping one guideline increase on a $2,000 unit does not just cost you $456 next year, it lowers the base that every future increase builds on.
The deadline that matters right now: if you want an increase effective 2027-01-01, your notice must be served no later than 2026-10-03. Serve it late and the effective date slides. This is one of the most common ways self-managing owners leave money on the table, and one of the quiet advantages of professional management. Our take on that trade-off is laid out in property management vs self-management.
A lower guideline year sharpens three priorities.
Under the RTA, unused guideline room does not bank or carry forward. If you skip 2027, you cannot take 3.8% in 2028. Owners who serve notices consistently every 12 months protect the compounding base of their rental income. Run your own numbers with our rental income calculator to see what disciplined annual increases do to a 5 or 10 year projection.
At 1.9%, a full year's increase on a $2,000 unit is $456. One single month of vacancy on that same unit costs $2,000, more than four years of guideline increases. In a moderating rent environment, chasing top-of-market rents on turnover while a unit sits empty is usually a losing trade. Our vacancy loss calculator shows the break-even quickly: pricing a unit $50 over market and waiting an extra six weeks to lease it almost never pays.
Landlords can apply to the LTB for an above-guideline increase (AGI) using Form L5 for three reasons: eligible capital expenditures, operating cost increases for security services, and extraordinary increases in municipal taxes. For capital expenditures and security services, the AGI is capped at 3% above the guideline per year, and larger amounts can be spread over up to three years. The application must be filed at least 90 days before the first intended increase. AGIs involve real paperwork and tenant scrutiny, so they make sense for genuine capital programs like roofs, boilers, and elevators, not routine maintenance.
For a company managing a single rental in Kingston or a few hundred units across Ontario, this is routine annual work: tracking anniversaries, serving compliant notices, documenting exemptions, and pricing turnovers against live market data in each city. It is included in KEILTY's flat monthly rate per unit, with no percentage fees that grow just because your rent does. Details are on our pricing page.
Want to know whether your current rents are keeping pace with your market, and what a disciplined increase schedule would add to your bottom line? Start with a free rental evaluation and we will run the numbers for your property.
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