Legislative Update Tenancies Act (Effective July 1, 2026) 

Another important development for Ontario landlords became effective on July 1, 2026, with new rules governing tenant-installed windows and portable air conditioners. Where landlords do not provide air conditioning, tenants may install their own window or portable air conditioner provided they:

• Notify the landlord in writing before installation.

• Provide available energy efficiency information if electricity is included in the rent.

• Install and maintain the unit safely.

• Comply with municipal property standards and applicable laws.

• Ensure the installation does not damage the rental unit or residential complex.

These rights apply even if a lease agreement prohibits air conditioners, provided the tenant meets all legislative requirements. Tenants must also notify landlords of the intended period of use and when the unit is removed or no longer in operation. Landlords retain the right to inspect tenant-installed air conditioners by providing at least 24 hours' written notice to ensure the installation is safe, compliant, and not causing damage to the property.

 

Seasonal Rent Adjustments for Air Conditioners

For landlords who include electricity in rent, the new legislation permits a seasonal rent adjustment to recover the reasonable cost of operating a tenant-installed window or portable air conditioner.

Key provisions include:

• The seasonal charge applies only during the months the air conditioner is in use.

• The increase cannot exceed the actual electricity cost or, where actual costs cannot reasonably be determined, a reasonable estimate based on the tenant's energy efficiency information and intended usage.

• Rent must be reduced by the same amount once the tenant removes the air conditioner or stops using it.

• Standard annual rent increase rules (including the 90-day notice and 12-month waiting period) do not apply to these seasonal adjustments.

• If the tenancy agreement specifically allows an air conditioner without an additional charge, no seasonal increase may be applied.

 

2027 Ontario Rent Increase Guideline

In addition to the July 2026 legislative changes, the Ontario Government has established the 2027 Rent Increase Guideline at 1.9% for most rent-controlled residential units.

Landlords should note:

• The maximum annual guideline increase for 2027 is 1.9%.

• At least 90 days' written notice must be provided using the prescribed Landlord and Tenant Board form.

• Rent generally cannot be increased until at least 12 months have passed since the last lawful rent increase or the start of the tenancy.

• Certain residential units that are exempt from rent control may not be subject to the guideline.

 

Air Conditioner-Related Disputes

Where disputes arise regarding the new air conditioner rules:

• Tenants who believe they have paid excessive seasonal charges or whose rent was not reduced after removing an air conditioner may apply to the Landlord and Tenant Board using Form T1.

• Tenants who believe a landlord has improperly refused a qualifying air conditioner installation may apply using Form T2.

• Landlords may pursue unpaid seasonal air conditioner charges through the normal rent arrears process.

 

Market Disclaimer

The rental values presented in this report are based on publicly advertised asking rents and available market data for Q2 2026. Actual rental values may vary depending on property type, bedroom count, location, square footage, age, condition, renovations, amenities, parking, utility inclusions, lease terms, and prevailing market conditions. This report is intended for general market information only and should not be considered a formal rental appraisal.

 

Best regards,

Ishpreet Singh

Founder, IPS Property Management