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Get My Free Estimate →An above-guideline increase requires an application to the Landlord and Tenant Board on one of only three grounds: an extraordinary increase in municipal taxes and charges, eligible capital expenditures, or the cost of security services provided by people the landlord does not employ. Where capital and security costs justify more than 3 per cent, s. 126(11) caps the increase at 3 per cent above the guideline in each of up to three consecutive 12-month periods. Utilities have not been a ground since 1 January 2018. The Board shall dismiss or withhold the increase where the landlord has outstanding work orders or is in serious breach of maintenance obligations. The guideline is 2.1 per cent for 2026 and 1.9 per cent for 2027.
An above-guideline increase is the one legal route a landlord has to raise the rent by more than the annual guideline. It is not automatic, it is not the landlord’s decision, and it requires an application to the Landlord and Tenant Board that a tenant can respond to. Here is how it actually works.
The guideline first
| Year | Guideline | How it was set |
|---|---|---|
| 2026 | 2.1% | Announced 30 June 2025. |
| 2027 | 1.9% | Minister’s notice dated 13 July 2026, published in The Ontario Gazette 25 July 2026. |
Under s. 120(2) of the Act the guideline is the year-over-year change in the Ontario Consumer Price Index averaged over the twelve months ending at the end of May of the previous year, rounded to one decimal place and capped at 2.5 per cent. Section 120(3) requires the Minister to publish it in The Ontario Gazette no later than 31 August of the preceding year.
The 2027 guideline was announced by Gazette notice only. Unlike previous years there was no Ontario Newsroom release, and the plain-language page on ontario.ca carries a last-updated date that precedes the Minister’s notice. If you need to prove the figure, cite the Gazette.
When the guideline does not apply at all
Section 6.1(2) of the Act exempts a rental unit from the guideline where “no part of the building, mobile home park or land lease community was occupied for residential purposes on or before November 15, 2018”, and the same test applies to an addition to an existing building under paragraph 2.
Note the statutory wording carefully. It is “no part was occupied for residential purposes on or before 15 November 2018”, not “first occupied after 15 November 2018”. The plain-language explanation on ontario.ca uses the second phrasing. They come apart at the margin, and the margin is where disputes live. Under s. 6.1(6) the onus is on the landlord to prove the exemption applies.
There is a further exemption in s. 6.1(3) for a self-contained unit created after 15 November 2018 in a detached, semi-detached or row house that had no more than two units on or before that date — but it carries four cumulative conditions, and all of them have to be met.
Separately, the guideline does not cap the rent charged to a new tenant. Between tenancies a landlord may set the rent at whatever the market bears.
The three grounds for an AGI — and the one that no longer exists
Section 126(1) allows an application in three cases, and only three:
| Ground | What it covers | Cap |
|---|---|---|
| Municipal taxes and charges | An extraordinary increase in the cost of municipal taxes and charges for the complex. “Extraordinary increase” is determined under the regulations. | The 3 per cent cap in s. 126(11) does not by its terms apply to this ground. |
| Eligible capital expenditures | Work necessary to protect or restore physical integrity, to comply with maintenance or health and safety obligations, to maintain a plumbing, heating, mechanical, electrical, ventilation or air-conditioning system, to provide access for persons with disabilities, to promote energy or water conservation, or to maintain or improve security. | 3 per cent per year, combined with security costs. |
| Security services | Operating costs for security services provided by persons not employed by the landlord. | 3 per cent per year, combined with capital expenditures. |
Utilities are not an AGI ground. An extraordinary increase in the cost of utilities was removed as a ground by the Rental Fairness Act, 2017, effective 1 January 2018. Any page listing utilities among the current grounds is nearly a decade out of date.
The cap, and how it is phased
Section 126(11) is the provision to know. Where the increase justified by capital expenditures and security costs is more than 3 per cent, the Board may allow no more than 3 per cent above the guideline in the first year, and must specify a further percentage — again no more than 3 per cent — in each of the two following 12-month periods.
So the practical maximum is 3 per cent above guideline in each of three consecutive years. Not 9 per cent at once. And it is on top of the guideline, so on the 2027 guideline of 1.9 per cent, a fully loaded AGI year is 4.9 per cent.
What limits or defeats an AGI
- Timing, s. 126(3). The application must be made at least 90 days before the effective date of the first intended increase.
- Like-for-like replacements, s. 126(8). Replacing a system or thing that did not need major repair or replacement is not an eligible capital expenditure, unless it promotes disability access, energy or water conservation, or security.
- New tenants, s. 126(9) and (14). An expenditure is not eligible against a unit where a new tenant’s agreement took effect after the work was completed, and an AGI order stops applying to a unit once a new tenancy begins in the circumstances set out in s. 126(14).
- Outstanding work orders, s. 126(12) and (13). Where the landlord has outstanding work orders, or is in serious breach of the maintenance obligations in s. 20(1) or s. 161, the Board shall dismiss the application as to the affected unit or withhold the increase until the work is done.
- Elevators, s. 126(3.1) and (3.2). The landlord must file summaries of outstanding elevator work orders, and outstanding elevator work can hold up the increase.
The outstanding work order provisions are the ones tenants most often do not know about. If a building has open work orders and the landlord is asking for money for capital work, that is directly relevant and the Act says the Board shall act on it.
What to do if you receive one
An AGI application is a hearing, not a notice. You are entitled to receive the application and the landlord’s supporting material, to review it, and to participate. In practical terms:
- Read what is actually being claimed. The application must itemise the expenditures.
- Check whether the work looks like a like-for-like replacement of something that was not failing.
- Check for outstanding work orders on the building.
- Note the 90-day timing requirement against the first intended increase date.
- Get advice. A community legal clinic, a licensed paralegal or a tenant duty counsel at the Board will know this material far better than a realtor does, and most of that help is free.
Renting in Etobicoke and thinking about what comes next?
I am a realtor, not a paralegal — for an AGI hearing you want a community legal clinic or tenant duty counsel, and that help is usually free. But if the increase has you thinking about whether to move or to buy, that part I can help with honestly, including telling you when the answer is to stay put.
connect@jatindua.com · 437-987-1925 · Book a free consultation
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Frequently asked questions
What is the Ontario rent increase guideline for 2027?
1.9 per cent, set by the Minister’s notice dated 13 July 2026 and published in The Ontario Gazette on 25 July 2026. The 2026 guideline is 2.1 per cent. The guideline is capped by statute at 2.5 per cent.
How much above the guideline can rent go?
Where the increase is justified by eligible capital expenditures and security service costs, s. 126(11) caps it at 3 per cent above the guideline in the first year, with up to a further 3 per cent in each of the two following 12-month periods. On the 2027 guideline that is 4.9 per cent in a fully loaded year.
Can my landlord apply for an above-guideline increase because utilities went up?
No. An extraordinary increase in the cost of utilities was removed as a ground by the Rental Fairness Act, 2017, effective 1 January 2018. The three remaining grounds are municipal taxes and charges, eligible capital expenditures, and security services provided by persons not employed by the landlord.
Does the guideline apply to my unit?
Not if the unit falls within the exemption in s. 6.1 of the Act. The statutory test is that no part of the building was occupied for residential purposes on or before 15 November 2018. Note that wording — it is not quite the same as “first occupied after” 15 November 2018, and the onus is on the landlord to prove the exemption applies.
Can an AGI be refused?
Yes. Where the landlord has outstanding work orders or is in serious breach of the maintenance obligations in s. 20(1) or s. 161, the Act says the Board shall dismiss the application as to the affected unit or withhold the increase until the work is completed. Outstanding elevator work has its own provisions.
How much notice do I get?
The application must be made at least 90 days before the effective date of the first intended increase under s. 126(3). You receive the application and the supporting material, and you can participate in the hearing.
Is replacing the lobby an eligible capital expenditure?
Not necessarily. Under s. 126(8) a like-for-like replacement of a system or thing that did not require major repair or replacement is not eligible, unless it promotes access for persons with disabilities, energy or water conservation, or security. Cosmetic work that was not needed is exactly what that provision targets.
Related reading
- Your unit is listed for sale: showings, notice, and what a new owner can do
- Do Ontario fixed-term leases become month-to-month?
- Rent versus buy in Etobicoke: the arithmetic
Sources
Every figure on this page traces to one of these, and each was read on 30 August 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.
- Residential Tenancies Act, 2006, S.O. 2006, c. 17 — e-Laws consolidation. Official consolidation. Consolidation period stated on the document: from July 1, 2026. Last amendment: 2025, c. 14, Sched. 12. Accessed 30 August 2026.
- Residential rent increases — guideline. Government of Ontario. 2026 guideline 2.1 per cent; 2027 guideline 1.9 per cent. Accessed 30 August 2026.
- The Ontario Gazette, Volume 159, Issue 30 (PDF). Published 25 July 2026. Notice 159-G110E under s. 120 of the Residential Tenancies Act sets the 2027 rent increase guideline at 1.9 per cent; notice dated 13 July 2026. Accessed 30 August 2026.
- Ontario Capping Rent Increases at the Rate of Inflation. Ontario Newsroom, 30 June 2025. Announcement of the 2.1 per cent guideline for 2026. Accessed 30 August 2026.
- Landlord and Tenant Board. Tribunals Ontario. The tribunal with exclusive jurisdiction over most residential tenancy disputes in Ontario. Accessed 30 August 2026.
- Landlord and Tenant Board — forms and filing. Tribunals Ontario. The N-series notices and L/T-series applications, in their current approved forms. Accessed 30 August 2026.
About the author — Jatin Dua, Etobicoke real estate agent
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke. I write these pages the same way I work a file: read the primary source, quote it, date it, and say plainly where the source is silent or where two sources disagree. If a figure on this page has no citation beside it, that is a mistake and I want to hear about it.
I work with buyers, sellers, renters and investors across Etobicoke, Mimico, Humber Bay Shores, New Toronto, Long Branch, Alderwood and Stonegate–Queensway. connect@jatindua.com or 437-987-1925.