Above-Guideline Rent Increases in Ontario: What They Are and How to Fight One

The Normal Rule: Ontario's Annual Rent Guideline

Under section 120 of the Residential Tenancies Act, 2006(RTA), a landlord can only increase a tenant's rent once every 12 months, and the increase is capped at the annual rent increase guideline. The landlord must also give at least 90 days' written notice before any increase takes effect.

The guideline is set each year by the Ontario government based on the Ontario Consumer Price Index. For 2026 the guideline is 2.1%; it was 2.5% in both 2024 and 2025.

One critical limitation: rent control under the RTA only applies to units first occupied for residential purposes before November 15, 2018. If your unit was first rented on or after that date, the guideline does not apply to you — your landlord can raise the rent by any amount with proper notice, no LTB approval required.

What Is an Above-Guideline Increase (AGI)?

Section 126 of the RTA allows a landlord to apply to the LTB for permission to raise rent above the guideline amount. This is called an above-guideline increase, or AGI. Unlike a standard guideline increase, the landlord cannot simply serve notice — they must file a formal application, the LTB must hold a hearing, and an adjudicator must approve the increase before it can take effect.

There are only three permitted grounds for an AGI:

• a

  Extraordinary capital expenditures

  Major capital work such as replacing a roof, windows, elevators, plumbing systems, or HVAC equipment. The work must be genuinely extraordinary — well above routine maintenance — and must provide a lasting benefit to the building.

• b

  Extraordinary increases in municipal taxes

  Property tax increases that are significantly above the rate of inflation, to the point where the guideline increase does not adequately cover the added cost burden on the landlord.

• c

  Extraordinary increases in utilities

  Major cost increases in gas, hydro, or water that are borne by the landlord and that go substantially beyond what the guideline accounts for.

The landlord must prove that at least one of these grounds applies. The LTB does not rubber-stamp AGI applications — evidence is required and tenants have the right to participate.

How the AGI Process Works

From filing to decision, the AGI process at the LTB follows several defined steps:

1. 1

   Landlord files Form L5

   The landlord submits an Application for Above Guideline Increase (Form L5) to the LTB, along with supporting documentation — invoices, contracts, cost records, and utility bills.

2. 2

   LTB notifies affected tenants

   The LTB sends a notice of the application to every tenant in every unit covered by the application. All affected tenants have a right to participate in the hearing.

3. 3

   Tenants have 30 days to respond

   Within 30 days of receiving notice, tenants can file a T3 (Tenant's Motion to Strike Out or Amend Grounds) challenging the application, or submit a written response to the LTB.

4. 4

   LTB schedules a hearing

   A hearing is held before an LTB adjudicator. These hearings often involve multiple tenants and can span multiple days. Both the landlord and tenants present their evidence.

5. 5

   Adjudicator reviews the evidence

   The LTB reviews invoices, contracts, financial records, and testimony. The adjudicator apportions costs across units and calculates the per-tenant impact.

6. 6

   Decision issued — possibly retroactive

   If the AGI is approved, the increase can be backdated to the filing date. Tenants may owe arrears going back months or even years. The increase is also capped and phased in over time.

What Landlords Cannot Claim for an AGI

Not every cost a landlord incurs qualifies. The LTB has consistently held that the following cannot support an AGI application:

• Routine maintenance and repairs — these are part of the landlord's basic obligation to keep the unit in a good state of repair
• Cosmetic upgrades — painting, landscaping, lobby renovations that don't improve the building's systems
• Work done improperly or that did not actually benefit the tenants
• Costs already included in a previous AGI or already factored into the rent level
• Capital work that was deferred because of the landlord's own neglect
• Inflated invoices from related parties rather than arm's-length contractors

The LTB apportions eligible costs across all units in the affected building and calculates what portion each tenant bears based on their unit size and rent. The per-unit impact determines the maximum increase percentage the LTB will approve.

How Tenants Can Fight an AGI

Receiving notice of an AGI application does not mean the increase is inevitable. Tenants who participate actively have a real chance of reducing or eliminating the increase. Here is a practical strategy:

1. 1

   File a T3 within 30 days

   Use the T3 form to challenge the grounds of the application. State clearly why you believe the claimed work does not qualify as extraordinary — or that it was never completed.

2. 2

   Attend the LTB hearing

   Your presence and testimony matter. An uncontested hearing often moves quickly in the landlord's favour. Attending signals to the adjudicator that the claims will be scrutinized.

3. 3

   Challenge the invoices

   Ask: are the contractors real, arm's-length companies? Are the amounts consistent with market rates for that type of work? Inflated or fraudulent invoices are grounds for dismissal.

4. 4

   Challenge whether the work was extraordinary

   Argue that the work claimed was actually routine maintenance — something the landlord was already obligated to do under the RTA, not a capital improvement justifying extra rent.

5. 5

   Challenge whether the work was completed properly

   If the work was done sloppily or remains unfinished, it does not meet the legal standard. Evidence of ongoing problems (photos, written complaints, maintenance records) is highly relevant.

6. 6

   Request documentary disclosure

   Through the LTB process you can request that the landlord produce full documentation — receipts, building permits, contracts, and financial records. Missing or inconsistent documents weaken the landlord's case.

7. 7

   Coordinate with other tenants

   An AGI typically affects the whole building. Joining forces with other tenants lets you share the cost of legal advice or tenant duty counsel representation, and strengthens the collective response.

If the AGI Is Approved — Key Protections

Even if the LTB approves an AGI, important tenant protections remain in place:

• Partial approval is possible. The LTB can approve a lower increase than the landlord requested, based on the evidence. You may reduce the amount even if you cannot eliminate it entirely.
• Phase-in over three years.The approved above-guideline amount must be phased in over a maximum of three years. The LTB splits it into annual instalments so no single year's increase is devastating.
• Right of appeal. A tenant (or landlord) can appeal an LTB decision on an AGI to Divisional Court on a question of law. Consult a legal clinic or tenant rights organization before pursuing an appeal.

If retroactive arrears are ordered, the LTB may set a repayment schedule so that tenants are not required to pay a large lump sum immediately.

Ontario Rent Guideline History

The table below shows the annual rent increase guideline for the past several years. An AGI allows a landlord to apply for an increase on top of these amounts.

Frequently Asked Questions