The Annual Rent Increase Guideline and the Above Guideline Increase for 2010 have been announced. Much to no one’s surprise both rent increase guidelines are greater than those of 2009. The Annual Rent Increase Guideline has been raised from 1.8% to 2.1% and applies to a rent increase that begins any time between January 1, 2010 and December 31, 2010. This annual increase is intended to cover the costs incurred by the landlord related to building maintenance and operating costs in the preceding 12 months. The Above Guideline Increase has been raised from 2.1% to 3.15%. Landlords, however, have to apply to the Landlord and Tenant Board for approval of any rent increase that is above permitted guideline increase of 2.1%. Check our link Annual Guideline Rent Increase for more information.
GUIDELINES INCREASES AND THE CONSUMER PRICE INDEX
An explanation for how the Annual Guideline Rent Increase is calculated is available at the Landlord and Tenant Board website. It states:
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.
Based on the data from Statistics Canada and the formula used to measure inflation, the Ontario Government determined that Annual Rent Increase Guideline for 2010 is 2.1%. Keep in mind that this increase in the Consumer Price Index has occurred during one of the worst recessions in decades so this increase bears close scrutiny. The data used by Statistics Canada consist of the ‘cost of goods and services purchased’ over a specified period of time but with emphasis on ‘increased costs for energy’. One has to wonder exactly ‘who’ purchased goods and services at inflated prices in the midst of a deep recession. Check Annual Rent Increase Guideline 2010 at the Landlord and Tenant Board website for complete details on the formula used to calculate the increase. You can also obtain additional information at The Consumer Index 2009 to review Statistics Canada’s monthly calculation of the Consumer Price Index.
VACANCY DECONTROL AND GUIDELINE INCREASES
Whenever we are discussing the Annual Rent Increase Guideline we have to revisit the ambiguity of ‘Vacancy Decontrol’ in the Residential Tenancies Act. As you know, ‘Vacancy Decontrol’ allows a landlord to charge rent to a new tenant according to what the market will bear. Market value rent can be up to 18%-20% higher than the Annual Rent Increase Guideline. Landlords are also permitted to take advantage of this higher percentage increase when an existing or sitting tenant ‘moves within a building ‘. Since these tenants are also regarded as ‘new tenants’, the landlord can charge rent that is current market value whether or not repairs are made to their new unit. This ambiguity is allowed under the regulations of the Residential Tenancies Act. The reasoning behind that huge increase is that it is supposedly intended to cover the landlord’s cost to renovate and/or repair the available apartment.
Question: Do landlords actually do these repairs or renovations or is it a superficial patchwork job? It is no wonder there is a huge disparity in rents charged for same-sized units in many apartment buildings. The regulations in the Residential Tenancies Act governing rent increases overrides the Annual Guideline Rent Increase and the Above Guideline Increase. Once again, more questions should be posed: Why does this continue? Does it have more to do with the agenda of ‘Landlord lobbyists’? Is it too naive to expect a fair system for both landlords and tenants? Again, why does the ambiguity remain regarding ‘Vacancy Decontrol’ in the Residential Tenancies Act?
IMPACT ON TENANTS
1) Clearly these rent increases will adversely affect tenants struggling to get by on modest incomes in these difficult economic times. Many of those most affected by the recession have had to deal with layoffs, reduced hours and a much smaller paycheque. Despite the increased energy costs, one has to wonder who purchased all those ‘goods and services’ that Statistics Canada used to reach this apparent inflation in the calculation of the Consumer Price Index. Could it be the ‘stimulus package’ is at work here or was it simply increased spending at all levels of government on certain ‘goods and services’ that help inflate the Consumer Price Index? One might wonder if the Consumer Price Index accurately represents an ‘average family shopping basket’!
2) An Above Guideline Increase takes into account costs such as increased municipal taxes, utilities and operating costs related to security and other eligible capital expenditures. So another issue that will obviously impact many tenants is related to the installation of ‘smart sub-meters’ and how that massive and complex project will impact rental costs and the rent increases. In 2010 it seems that tenants can expect to see a huge jump in operating costs due to ’higher utility and energy costs’, ‘smart sub-meters’ and so-called ‘retrofits’. This will most certainly result in landlords applying for, and being granted Above Guideline Increases. And this will have a potentially devastating effect on the meagre budget of many tenants. We strongly recommend tenants check two of our recent posts: Smart Sub-meters and Smart Sub-meters – Getting it right. We also encourage you to pay attention to the questions and concerns raised in these posts. Just remember – Tenants do not have to consent to the installation of these gadgets in their unit.
NOTES:
i) In 2010 the interest paid by the landlord on your Last Month’s Rent (LMR) must also be increased to 2.1%. Check our link Renting Regulations for regulations regarding interest payment on your last month rent.
ii) The Ontario Tenants Rights website contains a table listing the Rent Increase Annual Guidelines from 1975 to the present that will give you an idea of how rent increases have been fluctuating. Please refer to this link: http://www.ontariotenants.ca/research/rent-increase.phtml
We look forward to hearing your comments on these Guideline Increases for 2010, or on anything else you find of interest at our site.
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East York Tenants Group 
Have to agree totally that the system is geared to provide huge financial benefits to landlords, major property owners and property developers. Landlords’ incomes are maintained, if not increased, while tenants are laid off, are on EI or having to survive on less hours. Are politicians at all levels of government in the pockets of landlords and property owners? Why else are politicians silent when it comes to fairness or any financial incentive for tenants? Those numbers from the CPI and the Guideline Rent increase for next year are questionable. It was the height of the recession when that increase in cost of goods & services purchased was supposed to have occured. Unbelievable! If there was any fairness in the system there would be no such thing as ‘Vacancy Decontrol’ as it provides an opportunity for huge financial gains to landlords while placing undue burdens on struggling tenants in this recession that just won’t go away. Without exception all politicians from every political stripe remain strangely quiet when it comes to Vacancy Decontrol. I will remember this when they all come around asking for my vote.
Very good information at this site on the Annual Guideline Increase and also other issues helpful to renters. However, I wonder how many renters are able to use this information to their advantage. For example,
– new residents to Canada are unfamiliar with their tenant rights and responsibilities and are too busy trying to settle in, to find work, get their kids in school and generally learning how to manoeuvre their way around their new country.
– even residents born in Canada whose first language is English are baffled and turned off by the type of language used in the Residential Tenancies Act
– long term residents quite often either don’t have the time or are simply not engaged enough to familiarize themselves with their tenant rights and hope that someone else will lead the fight on their behalf.
– Many landlords of large buildings are very much aware of all these weaknesses and quietly ignore or bypass the regulations in the Residential Tenancies Act so renters often end up paying more than the permitted Guideline increase and continue to have problems with outstanding repairs.
There has to be ‘something effective’ in place to engage renters so that they become enthusiastic about fighting for their rights and ensure landlords are accountable. You can’t trust any politicians offering help as they only want your vote and are of no use to you when approach them about a tenant problem. Your site is a really good start but you will have to be more creative to get tenant involvement. Great site with so much useful information……
Are these figures from Stats Canada reliable? Something doesn’t add up here. Many Ontario residents lost their jobs and curtailed their expenses due to a reduction in incomes. Car sales were down as were many other major items. House prices fell in the 12 months that the CPI based its calculation for inflation. As you pointed out many people were laid off and living on reduced wages. EI is less than 60% of regular wages as I can personally attest as I am having to cope with a reduced wage. So I would say the recession has severely limited our ability to purchase good and services. And an increased number of residents are now using food banks. This doesn’t make sense. These ‘numbers gurus’ can get statistics to say whatever fits an agenda. How come the Consumer Price Index shows this increase in the cost of ‘goods and services’ purchased even if ‘increased energy costs’ are factored in? (Good timing! Increased energy costs and now we have to have ‘smart meters’!) If the Consumer Price Index relies on data related to the cost of all the ‘goods and services’ purchased to determine the level of inflation and so many people have been forced to cut back, I would say your question about who is purchasing these ‘goods and services’ is very legitimate? Is it the 1% ‘super rich’ who have been purchasing all these goods and services at inflated prices during this recession that inflated the CPI? This doesn’t make any sense as we are still not out of this terrible recession. Can anyone out there figure this whole thing? Like the other viewers who commented I don’t see either a small or major improvement to my building. And to boot so many of these landlords were given our taxpayers money to construct the buildings in the first place. What are renters supposed to do? These landlords have been provided with a golden opportunity for a MONEY GRAB !!! That’s all it is.
—-RA
MargC, I agree. Yes, they just want to maintain their level of income. To do so, any cost increases in doing general maint. i.e. price of paint, utility cost or new bulbs in each apt. is passed on to tenants. However, the thing that baffles me is that my building, most any other buildings (as old as mine) for that matter, have recovered their cost and made money many times over, and they are still making profit. In light of that (you think) they should be satisfied with modest profit or with what they are making now after covering their monthly expenses. But, NO they don’t like any additional cost that affects the level of income they were used to — so we are the obvious target to bear the additional cost. I can understand that to certain extent … many businesses do the same thing. But those business make major improvement (i.e. technological) … I wonder what improvement a “rental property” makes? Major capital improvement? We pay for that or it becomes part of our rent.
My concern is how would one know if the so called additional cost were real or beefed-up amount to justify such a guideline increase?
It seems to me that, regardless of the current economical situation, landlords feel that it is their ‘right’ to raise rents. They feel that they (& they alone) must maintain their level of income.
I have always felt that unless there is a visual improvement in the appearance of the building (inside or out), or an noticeable improvement in services supplied to the tenants there should not be increases.
Although ‘smart sub-meters’ seems like a good idea, I feel the landlords are making it an excuse to raise rents.
As to the price differences in rental units, I know of a long-term tenant who moved out in 2001 who had lived in the building for 26 years who found out that the new tenants for her unit were going to be paying a whopping 25% more for the unit than she was.