How much can I increase my Tenant’s rent?
With the prices of Toronto homes at an all time high, many first time buyers and even veteran home owners are considering homes with rental potential. There are also a record number of newbie investors buying single unit condos to fill a gap in the market for higher quality rental units.
These new Landlords are often unaware of the limitations of the Residential Tenancies Act. The top question I get asked is: “Now that my tenants term has expired, how much can I raise the rent?” A very important question that needs to be fully understood to ensure you are not in violation of the Residential Tenancies Act and the maximum allowable increase as set out by the Landlord and Tenant Board.
I noticed that the max annual increase has been trending downward since 1990 and is just now starting to climb up again. These maximum increases are in line with the Ontario Consumer Price Index (CPI) which is a measure of inflation. In 2011 the maximum allowable increase was a mere 0.7%, meaning if your Tenant was paying $1000/mth in 2010, the most you could increase their 2011 rent would be $7/mth.
The 2012 maximum allowable increase is a whopping 3.1%! [Insert Landlord Happy Dance Here]. Meaning that same $1000/mth tenant could now be charged $31/mth more. Not a big number but with prices as high as they are, every penny counts. Here’s a little nugget that you may not know; Did you know that a rental unit in a condo built after 1997 is not subject to the maximum increase limitation? As long as your tenant is willing to pay, you can increase as much as the market (or your tenant) can handle.
Of course this is just one of the many important pieces of information a Landlord needs to understand. For more information on the Act or other Landlord tips please get in touch. To keep up to date on future posts, hot listings, and contests make sure you join our Spring Realty Insider Club!