Ontario's 2027 Rent Increase Guideline Is Set at 1.9%: What Landlords Need to Know

Ontario has officially announced that the 2027 rent increase guideline is 1.9%.

For landlords across Ontario, this number is an important benchmark. It represents the maximum annual rent increase that most rent-controlled residential units can receive in 2027 without seeking approval from the Landlord and Tenant Board (LTB).

However, there is one common misconception: a 1.9% guideline does not mean landlords can automatically increase rent or raise rent whenever they choose.

Before increasing rent, landlords must still comply with Ontario's Residential Tenancies Act, including rent control regulations, timing requirements, notice periods, and proper documentation procedures. Understanding the annual guideline is only the first step; understanding the rules surrounding it is what helps landlords remain compliant and avoid unnecessary disputes.

What Is Ontario's 2027 Rent Increase Guideline?

Each year, Ontario establishes a rent increase guideline using a formula outlined under provincial legislation. The guideline determines the maximum amount that landlords can increase rent for most rent-controlled residential units without applying for approval from the Landlord and Tenant Board.

For 2027, the rent increase guideline has been set at 1.9%. For example:

Current Monthly Rent	Maximum Increase (1.9%)	New Monthly Rent
$2,500	$47.50	$2,547.50
$3,000	$57.00	$3,057.00
$3,500	$66.50	$3,566.50

Even when the increase falls within the annual guideline, landlords must still follow the required legal process before the increase can take effect. Failure to do so may result in the rent increase being considered invalid.

Why Has Ontario's Rent Increase Guideline Been Declining?

Many Ontario landlords have noticed that the annual rent increase guideline has decreased over the past several years:

• 2025: 2.5%

• 2026: 2.1%

• 2027: 1.9%

Naturally, many landlords ask the same question: if operating costs continue to rise, why are allowable rent increases becoming smaller?

The answer is that Ontario's rent increase guideline is not based on landlords' actual operating expenses. Instead, it is calculated using a formula that primarily considers the Ontario Consumer Price Index (CPI), subject to limits established under provincial legislation.

For many property owners, however, the reality looks very different.

Landlords across Ontario continue to face:

• Higher mortgage payments;

• Increasing property taxes;

• Rising insurance premiums;

• Higher condominium maintenance fees;

• Increasing repair and maintenance costs;

• Rising contractor and labour expenses.

As a result, many landlords are experiencing rising ownership costs that significantly exceed the annual rent increase guideline, creating additional pressure on cash flow and long-term returns.

When Can Ontario Landlords Increase Rent?

The announcement of a new rent increase guideline does not automatically allow landlords to increase rent.

In most situations, rent can only be increased if at least 12 months have passed since:

• The tenant first moved into the rental unit; or

• The previous lawful rent increase took effect.

This remains one of the most important requirements under Ontario's Residential Tenancies Act.

For example, if a tenant's rent was last increased on July 1, 2026, the earliest another increase could typically take effect would be July 1, 2027, provided all notice requirements have been met.

Landlords Must Provide Proper Written Notice

Before a rent increase can take effect, landlords must provide tenants with at least 90 days' written notice using the appropriate provincial notice form.

The notice should clearly state:

• The current rent amount;

• The new rent amount;

• The amount of the increase;

• The date the increase will take effect.

Providing incorrect information, using the wrong notice form, or failing to provide sufficient notice can invalidate a rent increase. Maintaining proper documentation and records is therefore an important part of the process.

Which Ontario Rental Properties Are Subject to Rent Control?

The 1.9% rent increase guideline applies to most residential rental units that are subject to Ontario's rent control regulations. However, not every rental property falls under these rules.

Generally, residential units that were first occupied for residential purposes after November 15, 2018, are exempt from Ontario's annual rent increase guideline.

Examples may include:

• Newly constructed condominium units;

• Newly built rental apartments;

• Certain basement apartments and secondary suites were first occupied after the exemption date.

Even when a rental unit is exempt from the annual guideline, landlords must still comply with other requirements, including:

• The 12-month interval between rent increases; and

• Providing proper written notice.

Before increasing rent, landlords should always confirm whether their property is subject to Ontario's rent control rules.

Can Landlords Increase Rent Above the 1.9% Guideline?

In certain circumstances, landlords may apply to the Landlord and Tenant Board for an Above Guideline Increase (AGI). However, landlords cannot simply choose to increase rent beyond the annual guideline without approval.

Examples of situations that may qualify for an AGI include:

• Eligible capital expenditures;

• Significant increases in municipal taxes and charges;

• Certain security-related improvements.

Because AGI applications require extensive supporting documentation, landlords should maintain detailed records, including invoices, receipts, contractor reports, and maintenance documentation.

Common Rent Increase Mistakes Ontario Landlords Make

Many rent increase disputes arise because of procedural errors rather than the rent increase itself. Some of the most common mistakes include:

• Increasing rent before 12 months have passed;

• Providing less than 90 days' notice;

• Using the incorrect notice form;

• Applying the wrong year's rent increase guideline;

• Assuming all rental properties are subject to rent control;

• Miscalculating the rent increase amount;

• Failing to keep proof that notice was provided.

While these mistakes may appear minor, they can result in an invalid rent increase and create unnecessary legal and administrative challenges.

For Many Landlords, the Biggest Challenge Isn't the Annual Rent Increase

Although the annual rent increase guideline receives significant attention each year, many landlords face larger long-term challenges.

For rent-controlled properties, long-term tenancies can gradually result in rental rates falling well below current market value. At the same time, operating costs continue to increase, placing additional pressure on cash flow.

In many cases, the greatest financial risk is not the difference between a 1.9% and a 2.5% annual increase, but rather issues such as:

• Poor tenant screening;

• Lease violations;

• Unpaid rent;

• Inadequate documentation;

• Costly disputes and legal proceedings.

Successful rental property ownership increasingly depends on proactive management, strong documentation practices, and effective risk management strategies.

Documentation and Compliance Matter

Every rent increase should be supported by complete and accurate records.

Landlords should maintain:

• Signed lease agreements;

• Rent payment histories;

• Copies of rent increase notices;

• Proof of service;

• Tenant communication records;

• Updated rent ledgers;

• Maintenance and repair records.

Many disputes arise not because a landlord increased rent improperly, but because the supporting documentation is incomplete or unavailable. Maintaining organized records helps protect landlords and demonstrate compliance if questions arise later.

Conclusion

Ontario's 2027 rent increase guideline of 1.9% provides important guidance for landlords managing rent-controlled residential properties. However, understanding the percentage itself is only one part of the process.

To remain compliant, landlords must also understand Ontario's rent control rules, notice requirements, timing restrictions, and documentation obligations. As annual allowable increases continue to decline while operating costs rise, successful property ownership increasingly depends on careful planning, strong record-keeping, and proactive property management practices.

For Ontario landlords, maintaining compliance and reducing risk will often have a greater impact on long-term investment performance than the annual rent increase percentage alone.

Frequently Asked Questions

Can landlords automatically increase rent by 1.9% in Ontario in 2027?

No. Before increasing rent, landlords must ensure that at least 12 months have passed since the previous rent increase or the start of the tenancy and provide tenants with at least 90 days' written notice using the appropriate form. Failure to follow these requirements may result in an invalid rent increase. Many landlords choose to work with professional property management companies, such as IPS Property Management, to help ensure compliance.

Which rental properties are exempt from Ontario's rent increase guideline?

Generally, residential units first occupied for residential purposes after November 15, 2018, are exempt from Ontario's annual rent increase guideline. However, these properties are still subject to notice requirements and the 12-month interval rule. Professional property management services, such as IPS Property Management, can help landlords determine whether their properties fall under rent control regulations.

Can landlords increase rent above Ontario's annual guideline?

In certain situations, landlords may apply for an Above Guideline Increase (AGI) through the Landlord and Tenant Board. These applications often require extensive supporting documentation and must meet specific eligibility requirements. Maintaining proper records and documentation throughout property ownership is essential.

What are the most common rent increase mistakes landlords make in Ontario?

Common mistakes include providing insufficient notice, using incorrect forms, increasing rent too early, or applying the wrong annual guideline. Even minor procedural errors can invalidate a rent increase and lead to disputes. Many landlords rely on professional property management companies, such as IPS Property Management, to help reduce compliance risks and maintain proper documentation.