1) 2010 ANNUAL RENT INCREASE GUIDELINE
The Annual Rent Increase Guideline for 2010 has been raised to 2.1%. This is an increase of 0.3% above the 2009 guideline of 1.8%. This increase applies to a rent increase that begins any time between January 1, 2010 and December 31, 2010. The formula for this increase “is based solely on the Ontario Consumer Price Index for all goods and services.” An explanation for how the Annual Rent Increase Guideline 2010 was formulated is available at the Landlord and Tenant Board website. These sections below provide a rationale for the increases:
The annual rent increase guideline is based on the Ontario Consumer Price Index (CPI). The Consumer Price Index is released monthly by Statistics Canada and is widely regarded as a reliable and objective measure of inflation.
The 2010 rent increase guideline is calculated by averaging the percentage change in the Ontario Consumer Price Index for each of the previous 12 months from June 2008 to May 2009”
and
The 2010 guideline is based on the changes in the Ontario Consumer Price Index (CPI) for all goods and services running from June 2008 to May 2009, compared to the same time period in the previous year. Increased costs for energy in the first six months of this period have contributed to a guideline which is higher than last year.
The Ontario Government relied on figures from The Consumer Index 2009 prepared by Statistics Canada’s to determine that the Annual Rent Increase Guideline for 2010 is 2.1%. The data used by Statistics Canada consist of the ‘cost of goods and services purchased’ with emphasis on ‘increased costs for energy’. The Annual Rent Increase Guideline 2010 publication provided by the Landlord and Tenant Board provides details about the formula used to calculate this guideline increase.
Landlords are required to notify tenants in writing of this increase 90 days before the anniversary date of their tenancy agreement. Tenants should bear in mind that this increase is intended to cover the costs incurred by the landlord related to building maintenance and operating costs. The implication is that tenants have a huge responsibility placed on them when landlords disregard or violate municipal building codes and bylaws or provincial building codes and issues related to the Health Act. That responsibility usually entails time-consuming activities such as contacting City inspectors, seeking advice from community organizations and ultimately resorting to filing either a T2 or T6 with the Landlord and Tenant Board to resolve violations.
2) 2010 ABOVE GUIDELINE INCREASE
The Above Guideline Increase has also been increased for 2010. This Above Guideline Increase allowed by the Ontario Government is now 3.15%. This increase is 1.05% greater than the 2.1% allowed in 2009. Landlords have to apply to the Landlord and Tenant Board for an increase that is greater than the guideline of 2.1%.
This section of the Residential Tenancies Act clarifies the regulation regarding the Above Guideline Increase for 2010. Refer to the example below:
The 2010 rent increase guideline is 2.1 per cent. 50 per cent of this guideline is 1.05 per cent. To claim an above guideline increase related to utilities, costs should increase by more than 3.15 per cent (2.1 per cent+1.05 per cent = 3.15 per cent).
In 2009, a landlord’s utility costs were $10,000
In 2010, the landlord’s costs increased to $11,000 — an increase of 10 per cent
Hence, the landlord is eligible to apply for an above guideline increase because the landlord’s utility costs increased by more than 3.15 per cent.
An important aspect of the Above Guideline Increase that should not be overlooked is ‘vacancy decontrol’. This is particularly relevant when existing tenants ‘move within a building’. Since these tenants are regarded as ‘new tenants’, the landlord can charge rent that is current market value whether or not repairs are made to the ‘new unit’. Market value rent can be up to 18%-25% higher than the Annual Rent Increase Guideline and landlords can reap a huge bonanza when a tenant moves within a building. This ambiguity is allowed under the regulations of the Residential Tenancies Act.
Check this Ministry of Housing link for answers to ‘Frequently Asked Questions’ related to the Rent Increase Guideline: http://www.mah.gov.on.ca/Page6537.aspx
It is to the advantage of tenants to familiarize themselves with the sections of the Residential Tenancies Act that deal with various violations and offences by Landlords. Check this link for more information:
http://www.ltb.gov.on.ca/en/Law/STEL02_111323.html
Interest payment on Last Month Rent - It is also recommended that you check our link Renting Regulations for regulations regarding interest payment on your Last Month Rent (LMR). In 2010 the interest paid by the landlord on your last month rent must also be increased to 2.1%. Based on the regulations of the Residential Tenancies Act, the landlord is required to pay you annual interest on your last month’s rent deposit.
According to the Residential Tenancies Act:
…. the landlord must pay the tenant interest on the rent deposit every 12 months. The amount of interest that a landlord must pay is the same as the rent increase guideline that is in effect when the interest payment is due.
More detailed information on this regulation can be accessed at :
http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111479.html
