Despite recent rent decreases, including a 3.6% annual dip recorded in May, Ontario remains the priciest province for tenants in the country. At the same time, ongoing trade tensions have created economic uncertainty for all Canadians, and those who pay their shelter costs month to month are particularly vulnerable.
Given the precarious backdrop, the Ontario government has opted to cap rent increases at just 2.1% for 2026. At 2.5%, the cap for 2025 constituted a country-wide low and marked the third consecutive year of it being held at that level.
The guideline is informed by Ontario’s Consumer Price Index and applies to around 1.4 million households — however, it does not apply to rental units first occupied after November 15, 2018, vacant residential units, community housing, long-term care homes, or commercial properties.
“This cap is the lowest in four years, which demonstrates our commitment to protecting tenants across our province as we continue searching for ways to keep costs down across the province,” said Minister of Municipal Affairs and Housing Rob Flack in a press release from the Province.
The release explains that the cap represents the maximum amount a landlord can increase rent during the year without applying for above guideline rent increases (AGI) through the Landlord and Tenant Board (LTB). According to the Tribunal’s Ontario 2023-24 Annual Report, AGI applications at the LTB have surged over 50% between the last two fiscal years, and over 125% since the 2020-2021 fiscal year.
Meanwhile, the Province notes that rent increases are neither automatic nor mandatory, and can only be issued 12 months from the last increase. In addition, landlords who wish to raise rent are required to give 90 days written notice.
Monday's press release also highlights Ontario’s progress in getting more rental housing off the ground, citing 6,977 rental starts between January to May 2025, marking a 25% increase over the same period in 2024. “This is the second-highest level of rental starts on record for this time of the year, after 2023, and showcases the government’s plan to get shovels in the ground to build more homes, faster.”
