(Applications for Rent Increases Above the Guideline)
This is a complex area. The following is intended as only a summary of important aspects relevant to tenants now.
All increases in rent are subject to the rules in the Residential Tenancies Act, 2006 (RTA). The RTA requires the Minister to set the guideline for rent increases every year. A rent increase guideline is the maximum amount by which a landlord can increase the rent for a current tenant without the approval of the Landlord and Tenant Board (LTB). The LTB does not set the guideline and has no power to increase or decrease the guideline.
Generally, a landlord can only increase the rent by the rent increase guideline. However, under certain circumstances a landlord can apply for an increase in rent above the guideline to recover expenses that are not taken into account in calculating the guideline. This is called an application for an above the guideline rent increase or AGI.
Absent special circumstances, the maximum a landlord can increase rent is the percentage guideline set yearly by the Provincial Government. For 2021 that percentage is zero.
Landlords are able to apply for an AGI in relation to capital expenditures for capital improvements. A capital expenditure is an expenditure for an extraordinary or significant renovation, repair, replacement or new addition, the expected benefit of which extends for at least 5 years. It does not include routine or ordinary maintenance work or work that is substantially cosmetic or designed to enhance the level of prestige or luxury offered by a unit or residential complex.
Examples of capital improvements are balconies, elevators and safety elements such as security cameras. The fact that a landlord claims that work is a capital improvement doesn't mean it is such. Those claims can be disputed by tenants before the LTB which has authority to make the final decision after hearing from both the landlord and the tenant. Tenants can be represented by a tenants association, such as ours.
The maximum increase a landlord can ask for is 9% in any one application. However, the Landlord and Tenant Board (LTB) which has jurisdiction to decide on the rent increase will force the landlord to spread out the increase over 3 years. For example if a landlord had received a 9% increase in 2019, it could raise rent by 4.8% in 2019 (guideline of 1.8% for 2019 plus 3%), 5.2% in 2020 (guideline of 2.2% plus 3%) and 3% in 2021 (guideline of 0% plus 3%).
QRES has posted or given notice of at least 3 work items it claims are capital improvements: balcony work; interior corridor work; and the drainage work at the east side of the building. The notices from QRES concerning these work items, especially balcony work, fail to mention the critical fact that QRES will apply for an AGI for the cost of the work. The Tenants' Association has reason to believe that the claim for balcony work alone will be approximately $6 million.
There is no doubt that QRES will apply for an AGI as soon as work is completed and costs finalized. The Executive is taking steps to prepare material the Tenants' Association will use to oppose that application. Those steps must be taken now. We cannot wait until the application is made. The Tenants' Association will need the cooperation of all members for this very important work. The Executive will be calling on you for support and will keep you updated on the Website.
Landlords must be approved by the LTB for AGI in order to legally raise your rent, they cannot force you to pay for an AGI without an order from the LTB.
An interesting element of the law around these increases is that landlords can ask for the money after they have applied to the LTB but before the increase has been approved. There’s often a gap of several months in between applying and the hearing.
Additionally, if the landlord asks for the increase but it hasn’t been approved yet, the tenant doesn’t have to pay the “Above Guideline” portion (only the guideline amount).
The only issue with not paying is that if and when the increase is approved, the LTB could award back rent to your landlord for the period they asked but did not get the AGI.
Some tenants prefer to pay for the AGI and see if they get money back after the increase has been approved. Other tenants prefer to not give the landlord a cent until it’s legally owed. Ultimately the choice will be up to the tenant to decide when to pay or not.
The Tenants' Association will fight the AGI application. The following information comes from the Federation of Metro Tenants' Associations. We will use the resources available from the FMTA.
The City of Toronto funds the FMTA Organizing and Outreach team to help tenants organize to dispute AGI’s and keep the rent at affordable levels. We help save millions in rent for tenants in Toronto every year. The Outreach team can outline your options and also help you apply for a Tenant Defense Fund Grant.
If you’ve received notice of an AGI that hasn’t been approved yet by the LTB, our Outreach and Organizing Team can help. Call the Outreach Team at 416-413-9442 today to ask talk about your options in disputing an AGI including holding in a meeting in your building to discuss these options will all interested tenants.
More information on the Outreach and Organizing Team here.