Ontario has rental guidelines which govern the maximum amount rent can be increased each year. The annual rent increase is calculated based on the Consumer Price Index. For 2013 the maximum rent raise is 2.5%. Therefore if you are currently renting your unit out for $1000 you can bump the rent up to $1025 for 2013.
In most cases, the rent for a unit can be increased if at least 12 months have passed since a tenant first moved in, or if at least 12 months have passed since the last rent increase. Proper notice of 90 days must be given to the tenant before the rent increase takes effect.
Rental guidelines do not apply under the following circumstances:
- Vacant residential units
- Residential units first occupied on or after November 1, 1991
- Social housing units
- Nursing homes
- Commercial property
The second bullet point is an important one to take note of. What this means is that any rental unit built or first occupied after Nov. 1 1991 does not fall under the rent increase guidelines. Therefore the rents can be bumped as much as the market will bear. Even homes that were built prior to 1991 but never used as a rental then converted to a rental after 1991- would not fall under the rental increase guidelines.
From my experience many investors are not aware of this “loop hole” and this can be a great tool to crank up the return on under preforming properties built or occupied after Nov, 1 1991.
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Contact Curt Knight – firstname.lastname@example.org