Raising rent in Ontario is tightly regulated, and most landlords are familiar with the annual rent increase guideline (if you’re not, check out our guide here). However, there are specific situations where a landlord may be allowed to increase rent above that cap. These are known as Above-Guideline Rent Increases (AGIs).
For property owners in Belleville, Trenton, Cobourg, Oshawa, Picton, Campbellford, Port Hope, and Brighton, understanding how AGIs work is critical. Applying incorrectly can lead to Landlord and Tenant Board disputes, delayed approvals, or denied applications. This guide explains what qualifies for an AGI, how the process works, and what landlords should consider before moving forward.
Key Takeaways
Above-guideline rent increases are only permitted in limited circumstances
Capital improvements and extraordinary costs are the most common AGI reasons
AGIs must be approved by the Landlord and Tenant Board
Proper documentation and timing are essential for a successful application
What Is an Above-Guideline Rent Increase?
An above-guideline rent increase allows a landlord to raise rent beyond Ontario’s annual rent increase guideline when certain legal criteria are met. These increases are not automatic and cannot be applied unilaterally.
To proceed with an AGI, a landlord must apply to the Landlord and Tenant Board and receive approval before collecting the higher rent. Until approval is granted, landlords must continue charging rent based on the standard guideline increase, if any.
When Can a Landlord Apply for an AGI in Ontario?
Ontario law permits above-guideline rent increases in a limited number of situations. The most common reasons relate to significant costs incurred by the landlord.
Eligible Capital Improvements
Capital improvements are permanent upgrades that extend the life of the property or improve safety and structural integrity. Examples may include replacing the roof, upgrading plumbing or electrical systems, installing new windows, or modernizing heating systems.
Routine maintenance and cosmetic updates do not qualify. Painting, minor repairs, and appliance replacements are generally considered normal operating expenses and cannot be used to justify an AGI.
Extraordinary Increases in Municipal Taxes or Charges
In some cases, landlords may apply for an AGI if there has been an extraordinary increase in municipal property taxes or government charges that significantly impacts operating costs. These increases must exceed normal annual fluctuations and be properly documented.
Security and Safety-Related Work
Certain work required to meet safety standards or comply with municipal orders may qualify for an AGI. This can include fire safety upgrades or structural repairs mandated by a local authority.
What Does Not Qualify for an AGI?
Understanding what does not qualify is just as important as knowing what does. Many AGI applications are denied because the work cited does not meet the legal threshold.
Expenses that typically do not qualify include general maintenance, cleaning, landscaping, administrative costs, marketing expenses, or upgrades made solely to increase market rent. Landlords in Central Ontario should carefully review the nature of any work before assuming it supports an AGI application.
How the AGI Application Process Works
Applying for an above-guideline rent increase involves several steps and strict timelines.
First, landlords must provide tenants with proper notice of the intended rent increase using the correct Landlord and Tenant Board form. The application must then be submitted to the Board with supporting documentation, including invoices, permits, and proof of payment.
The Landlord and Tenant Board will review the application and may schedule a hearing. Tenants have the right to participate and challenge the request. If approved, the Board will determine how much of the increase can be passed on and over what period of time.
How AGIs Are Calculated and Applied
Even when an above-guideline rent increase is approved, landlords are not permitted to recover the full cost of eligible work immediately. The Landlord and Tenant Board applies a formula to determine how much of the expense can be passed on to tenants each year.
Approved AGIs are typically capped at a percentage above the annual guideline and are often spread out over multiple years. This means landlords should view AGIs as a long-term cost recovery tool rather than a short-term solution. Understanding this limitation is especially important for Central Ontario landlords who may be budgeting for large upgrades in older properties.
Documentation Required for an AGI Application
Strong documentation is one of the most important factors in a successful AGI application. Landlords should be prepared to provide detailed records that clearly demonstrate the nature and cost of the work completed.
Common documentation includes invoices, contracts, proof of payment, permits, inspection reports, and before-and-after descriptions of the work. Missing or unclear documentation can delay the process or result in a denied application.
Organizing records in advance can make the application process smoother and reduce the likelihood of tenant challenges at a hearing.
Timing Considerations and Notice Requirements
Timing plays a critical role in AGI applications. Landlords must provide tenants with proper written notice of the proposed rent increase using the correct Landlord and Tenant Board form. This notice must meet Ontario’s minimum notice period requirements.
In addition, AGI applications must be filed within specific timelines after the eligible work is completed or costs are incurred. Missing a deadline can eliminate the ability to recover those costs through an AGI.
Risks and Considerations for Central Ontario Landlords
AGI applications require careful planning and realistic expectations. Even when work qualifies, the Landlord and Tenant Board may limit how much rent can be increased each year. In many cases, approved increases are spread over multiple years.
Landlords should also consider tenant relations. Significant increases can strain relationships and increase turnover risk, particularly in smaller Central Ontario communities where long-term tenancies are common.
Working with a professional property manager can help ensure applications are accurate, well-documented, and aligned with broader investment goals.
Frequently Asked Questions about Above-Guideline Rent Increases in Ontario
Do AGIs apply to all rental units in Ontario?
No. Only rent-controlled units are subject to the annual guideline and AGI rules. Newer units that are exempt from rent control follow different regulations.
Can a landlord apply an AGI without LTB approval?
No. Above-guideline rent increases must be approved by the Landlord and Tenant Board before they can be collected.
How much above the guideline can rent be increased?
There is no fixed amount. The Landlord and Tenant Board determines the allowable increase based on eligible costs and legal limits.
Can tenants dispute an AGI application?
Yes. Tenants have the right to participate in the process and challenge the application at an LTB hearing.
Navigating AGIs with Confidence in Central Ontario
Above-guideline rent increases can help landlords recover major costs, but the process is complex and highly regulated. Mistakes can lead to denied applications or prolonged disputes.
At Blue Anchor Property Management, we help landlords across Central Ontario evaluate capital improvements, prepare documentation, and navigate the AGI process with confidence. If you are considering an above-guideline rent increase, our team can help you determine the best path forward while staying compliant with Ontario law.
