Following updated 2024 provincial guidelines, most residential rental properties in Toronto remain subject to rent control. This limits some landlords from increasing rent on existing tenants above the determined rate regardless of whether market conditions may justify higher adjustments.
That said, given the financial and legal implications, it’s critical for prospective or active investors to understand these in-place restrictions while managing their tenants and property.
This blog post will analyze Ontario’s active regulations on rent increases, which properties they apply to, and what landlords must know before adjusting their tenant’s rent.
Charting an investment in Toronto real estate? We have four decades of industry experience to support your goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
Rent Control in Toronto: Critical Details
Toronto’s rental market remains one of the most active in North America. While this dynamic offers a myriad of opportunities for investors seeking a high-return venture, property owners do face certain limitations in regard to cash flow. One of the most impactful of these restrictions is rent control.
Rent control and other major regulatory structures pertaining to rental properties are outlined in Ontario’s Residential Tenancies Act (RTA). The RTA was introduced in 2006 and is updated annually in response to evolving economic circumstances, concerns from landlords and tenants, and other various factors. So what are the most recent updates regarding rent control?
For 2024, Ontario’s maximum rent increase rate is 2.5%. This is identical to last year’s rate, which was a nearly two-fold increase over the year previous (2022). Many economic and real estate experts have pointed out that this guideline does not sufficiently account for inflation and the rising costs that investors are facing.
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What Properties in Toronto Are Exempt From Rent Control?
From a bird’s eye view, most income properties in Toronto are impacted by rent control. However, there are certain rental properties exempt from RTA increase guidelines – most notably, rental units in new or recently built buildings.
To be more specific, properties built or first occupied on November 15, 2018 or later are exempt from the RTA’s rent control guidelines.
In addition to the age of a building, there is one other major variable governing the application of rent control: property type. Under the RTA, rent control guidelines apply primarily to long-term rental properties such as apartments, secondary suites, garden suites, spare rooms, and entire homes.
By extension, there are certain property types that are exempt from this framework, such as city-owned or subsidized housing, long term care facilities (nursing homes), or commercial real estate.
What About Vacancies?
Rent control does not apply to vacant properties in Toronto. This exemption allows landlords the flexibility to advantageously align rental rates to market demand when renting out vacant rooms or units.
Regulation on Informing Tenants
As a landlord, it is essential to adhere to the communication requirements outlined by the RTA when implementing rent increases. This entails providing tenants with proper written notice at least 90 days before the increase takes effect.
Failure to provide adequate notice can result in legal repercussions or headaches with the Landlord Tenant Board, underscoring the importance of due diligence and compliance with the law. To that end, beyond adhering to regulatory necessities, proactive communication and prioritizing responsiveness can create trust and goodwill with your tenant leading to an easier management experience overall.
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Navigating a Seamless Investment
If you are looking to purchase an investment property in Toronto, you won’t want to navigate the market without a seasoned real estate expert at your side – like Christensen Real Estate Group. Not only do we boast over four decades of experience in Toronto’s ever-evolving market, but we’re also investors and landlords ourselves.
In addition to helping you buy a high-opportunity property, we can assist you in optimizing your short term income and long term ROI – all while providing dynamic guidance on property management, tenant communication, and other critical facets of your venture.
Eager to invest in Toronto’s high-opportunity market? Our strategic advisory services can ensure you accomplish your present and future real estate goals. Call us at 416.441.2888 or reach us by email at evan@christensengroup.ca.
