After a year of pandemic uncertainty and economic woes, landlords in Toronto and the GTA are finally able to raise rents. But what if you want to go beyond the 1.2% threshold set out by the Landlord and Tenant Board (LTB)?

Seeking an above guideline rent increase requires LTB approval, and there are a number of policies and procedures landlords should know before they start the process. Below is a guide to securing your increase, outlining everything you need to know to legally raise your rent beyond the guidelines while avoiding penalties.

Applying for an above guideline rent increase

After a year-long freeze due to the pandemic, the LTB rent increase guideline for 2022 is 1.2%. If you want to go higher, you need to go before the Board to plead your case. Not every landlord will be eligible, of course, but the provision is designed to help those who’ve significantly invested in their properties and are hoping to reclaim some of those expenses. 

Step one: Make sure you’re eligible

Landlords looking for a higher rent increase must fall into one or more of the following three categories:

• Municipal taxes and charges on your residential complex increased by “an extraordinary amount” (ie greater than the guideline, plus 50% of the guideline)
• Operating costs for security services for the residential complex have been experienced for the first time or have increased, and/or 
• Capital expenditure work was done in the residential complex

Step two: File an AGI (Above Guideline Rent Increase) application

Complete an L5 form and file this with the LTB along with your supporting material such as details of all affected tenants. 

Make sure you file your application at least 90 days before you want the rent increase to take effect and double check your documents – the LTB can refuse to process your application if anything’s missing.

Step three: Notify your tenants

Once your AGI application is filed, the LTB will notify you when a hearing is scheduled. At that point they’ll also order you to deliver a copy of the application and Notice of Hearing to your affected tenants. Don’t delay on this step, tenants must receive those documents at least 30 days before your hearing date so they can prepare their response.

In certain circumstances, usually those relating to extraordinary municipal taxes and security services expenses, the board may decide a written hearing is sufficient. In those cases, they’ll issue a Notice of Written Hearing which must be shared with your tenant within 20 days of receiving it. 

Applications on the grounds of capital expenditures are generally dealt with in oral or in-person hearings and, in light of the pandemic, may even be carried out remotely via a virtual meeting.

Disputes and penalties

Your tenant obviously has the right to object to any rent increases, so it may not be as easy as filing a form and awaiting a verdict.

In the case of a written hearing, tenants can respond with their own rebuttal within 50 days of the LTB setting the date. When dealing with an oral hearing, the LTB can ask for a Case Management Hearing (CMH), overseen by a Dispute Resolution Officer. If the landlord doesn’t attend the CMH their application may be dismissed. If the tenant is a no-show, they’re assumed to have accepted the terms.

The idea behind the CMH is to give everyone a chance to air their concerns and potentially reach a resolution before the hearing. Landlords and tenants may draw up a binding consent order or mediated agreement if they can equitably reach a settlement together.

The LTB is very clear that the AGI system isn’t there to smooth the way for unscrupulous landlords hoping to circumvent the guidelines. The categories under which landlords can apply are narrowly defined and any breach of the requirements is likely to result in the application being thrown out, and that dismissal is final. 

The LTB also has the power to grant the application but delay when it comes into effect. This is generally used to penalize those landlords who haven’t fulfilled their duty to maintain and repair the property. Knowingly breaching those obligations means an immediate dismissal of the AGI application but if a landlord was unaware of the issue, the LTB can delay their approved rent increase until it’s resolved.

With decades of experience in the GTA and Toronto rental markets, HighGate Properties can guide you through any rent issues and help you manage the day to day operations of your property. For more information about our property management and realty services, contact us today.