Ontario’s 2026 Rent Increase Guideline: A Complete Guide for Renters and Landlords

The Government of Ontario has announced the 2026 rent increase guideline, capping annual rent increases at 2.1%. This marks the lowest cap in the past four years and reflects the province’s aim to balance rising inflation with housing affordability.

This guide will walk you through what the new guideline means, who it applies to, what exceptions exist, and what both renters and landlords need to know to stay compliant.

 

What Is the Rent Increase Guideline?

The Rent Increase Guideline is the maximum percentage that landlords can legally raise rent each year for existing residential tenants, without requiring approval from the Landlord and Tenant Board (LTB).

It is set annually by the Ministry of Municipal Affairs and Housing, and is based on Ontario’s Consumer Price Index (CPI) — a measure of inflation that reflects changes in the cost of goods and services.

The guideline helps prevent sudden or excessive rent hikes, especially in tight housing markets, while still allowing landlords to respond to inflationary pressures.

 

The 2026 Rent Increase Cap: Key Facts

• Guideline amount: 2.1%
• Effective date: Applies to rent increases taking effect between January 1 and December 31, 2026
• Applies to: Most private residential rental units in Ontario
• Announced on: July 2, 2025
• Determined by: Ontario Consumer Price Index (CPI)

This cap is lower than the 2.5% cap used in 2023–2025, reflecting slower inflation in the provincial economy.

For the full announcement, see the Ontario government press release.

 

Who Is Affected?

Renters

The guideline applies to tenants living in:

• Apartment buildings
• Condo rental units
• Houses or townhouses
• Secondary suites (e.g., basement apartments)

If you’re an Ontario tenant whose lease started before Nov. 15, 2018, or your unit is not exempt, your landlord must follow the 2.1% cap for 2026.

Landlords

Landlords leasing eligible private rental units must:

• Limit rent increases to 2.1% annually
• Provide written notice using Form N1
• Wait at least 12 months between increases for the same tenant

 

Exemptions: When the Guideline Does Not Apply

Certain properties are exempt from the rent increase guideline. These include:

• Units first occupied after November 15, 2018
• Community housing
• Nursing and long-term care homes
• Commercial units
• Vacant units between tenancies (i.e., landlords can reset the rent)

In these cases, landlords may increase rent by any amount upon lease renewal or turnover, subject to fair housing practices.

Details on exemptions are available through the Government of Ontario’s rent regulation page.

 

Responsibilities and Requirements for Landlords

To lawfully raise rent in 2026, landlords must:

1. Use Form N1: Issue a Notice of Rent Increase form, available here (PDF).
2. Provide 90 days’ notice: Tenants must receive the notice at least 90 calendar days before the new rent takes effect.
3. Respect the 12-month rule: Rent can only be raised once in a 12-month period for the same tenant.

Failure to meet these conditions may render a rent increase invalid.

 

Above-Guideline Increases (AGIs)

Landlords may apply to the Landlord and Tenant Board for permission to increase rent above the 2.1% cap in specific circumstances, such as:

• Significant capital improvements (e.g., roof or elevator replacement)
• Extraordinary increases in municipal taxes or utilities
• Enhanced security services

To qualify, landlords must provide evidence and apply formally. Renters have the right to participate in the LTB hearing.

More information on AGIs is available on the LTB website.

 

What Renters Should Know

 

How to Verify Your Rent Increase

• Check your eligibility: Confirm whether your unit is covered by the guideline.
• Review the increase: Ensure the proposed rent hike is within the 2.1% limit.
• Verify the notice: The landlord must use Form N1 and issue it 90 days in advance.

Disputing an Increase

If you believe a rent increase is invalid, you may:

• File a T1 application with the LTB within 12 months
• Seek legal support or advice from tenant advocacy services

A full guide for tenants is available at TenantRights.ca.

 

Why Was the Cap Set at 2.1%?

The 2.1% figure reflects the Ontario CPI average from June 2023 to May 2024, as required under the Residential Tenancies Act, 2006.

This methodology ensures that rent increase caps are tied to real-world inflation, helping to:

• Prevent rent shock for tenants
• Maintain stability in the housing market
• Allow landlords to cover increased operating and maintenance costs

While some landlords may face tighter margins, the cap is designed to protect long-term rental affordability in a province facing significant housing challenges.

 

Additional Resources

• Ontario Rent Increase Guideline
• Notice of Rent Increase – Form N1 (PDF)
• Landlord and Tenant Board – Above Guideline Application
• Rentals.ca Blog – Market Reports and Housing Trends
• Tenant Rights and AGI InformationOntario’s 2026 rent increase guideline represents a clear effort to balance affordability and economic realism. While landlords are limited in how much they can raise rents, the system still allows for exceptions when necessary, and ensures transparency for all parties involved.Whether you’re a landlord navigating notice periods and exemption rules, or a renter seeking clarity about your housing rights, staying informed is key.For ongoing updates on rent policy, housing trends, and provincial regulations, visit the Rentals.ca Blog regularly.