Rent increases are one of the most contentious issues in Ontario's rental market, and for good reason. When landlords fail to follow proper procedures or exceed legal limits, tenants often find themselves paying hundreds or thousands of dollars more than they legally owe. Recent analysis of Landlord and Tenant Board (LTB) decisions reveals a troubling pattern of illegal rent increases—and the substantial financial consequences that follow.
The Legal Framework: What Makes a Rent Increase Illegal?
Under Ontario's Residential Tenancies Act (RTA), rent increases must meet strict requirements:
- 90-day written notice using the official N1 form
- Annual guideline limits (1.2% for 2022, 2.5% for 2023, 0% for 2021)
- Proper timing (12 months between increases)
- Valid justification for above-guideline increases
When landlords skip these requirements, the increases become void—regardless of whether tenants agree to pay them.
The Most Common Violations
1. Failure to Provide Proper Notice
The most frequent violation involves landlords who increase rent without serving the required 90-day notice on the official N1 form. In xavier-v-subramaniam-20231110, landlords admitted they "did not serve a proper Notice of Rent Increase as required by the Act." The result? They were ordered to pay tenants $11,000 in illegally collected rent plus filing fees.
Similarly, in mcmillan-v-iskari-20240607, landlords increased rent from $1,100 to $1,200 without proper notice. The tenant paid the illegal increase for over a year out of fear of eviction, ultimately receiving $1,500 in reimbursement.
2. Exceeding Guideline Amounts
Many landlords attempt to increase rent beyond the annual guideline without proper justification. In xu-v-wu-20231005, a landlord increased rent by $100 per month when the 2022 guideline only allowed for a $10.20 increase (1.2% of $850). The Board found this clearly illegal.
Even more egregious was the case in saleh-v-awad-20240319, where landlords increased rent from $2,000 to $2,700 per month—a 35% increase—during 2021 when the guideline was 0%. Tenants paid this illegal increase for nine months before moving out, ultimately recovering $4,200 in excess rent.
3. Informal or Text Message "Notices"
Some landlords believe a casual conversation or text message constitutes proper notice. In bouchard-v-lai-20250127, landlords sent a text asking tenants to pay $1,800 per month "due to their increased costs." The tenant agreed because he was "afraid he would be evicted if he didn't." The LTB ordered the landlords to pay $2,036.80 for the illegal rent collection.
The Financial Impact on Tenants
The cases reveal how illegal rent increases create significant financial hardship:
Substantial Overpayments
- $11,000 collected illegally over 20 months in xavier-v-subramaniam-20231110
- $4,200 in excess rent over 9 months in saleh-v-awad-20240319
- $1,500 overpaid over 15 months in mcmillan-v-iskari-20240607
- $1,200 for 12 months of overpayments in stevenson-v-martin-20231130
The Fear Factor
A recurring theme in these cases is tenant fear. Many tenants pay illegal increases because they're afraid of eviction or retaliation. As one tenant explained in mcmillan-v-iskari-20240607, he "paid the illegal rent increase as he was concerned he might be evicted."
This fear is often exploited by landlords who use intimidation tactics. In singh-v-imran-20250221, a landlord who tried to illegally increase rent by $300 per month also "threatened eviction" and "unilaterally altered lease terms," resulting in a $1,000 administrative fine.
When Agreements Don't Matter
A critical legal principle emerges from these cases: tenant agreement to an illegal rent increase doesn't make it legal. The RTA explicitly states that parties cannot contract out of the Act's protections.
In saleh-v-awad-20240319, the Board emphasized that "the fact that the Tenants signed a new lease containing the illegal rent increase does not make it lawful." Similarly, in mcmillan-v-iskari-20240607, the Board noted that "the Tenant's agreement or acquiescence is irrelevant as the Act states that landlords and tenants do not have the right to contract out of the Act."
The One-Year Rule and Deemed Lawful Increases
However, there's an important exception. Under section 135.1 of the RTA, if a tenant pays an illegal rent increase for 12 consecutive months without challenging it, the increase may become "deemed lawful." This was demonstrated in lam-v-tu-20240822, where the first illegal increase became lawful after 12 months of payment, but the second increase remained void due to improper notice.
Harassment Through Illegal Rent Demands
Illegal rent increase demands often constitute harassment under the RTA. In S.M.-and-J.M.-v-Z.S.-and-C.D.-20180416, the Board found that a landlord's request for an illegal rent increase constituted harassment, even though the tenants didn't have to move out in response. The tenants were awarded one month's rent as compensation.
Consequences for Landlords
The financial consequences for landlords who impose illegal rent increases are severe:
Immediate Refunds
- All illegally collected rent must be refunded
- Application filing fees (typically $48-$53) must be paid
- Interest charges apply if payment is delayed
Administrative Penalties
- Fines up to $25,000 for serious violations
- Orders to cease illegal practices
- Potential impact on future LTB applications
Legal Precedent
In sapershteyn-v-1821317-ontario-limited-20231031, the Divisional Court upheld an LTB decision ordering repayment of illegal rent increases, rejecting the landlord's appeal and confirming that section 135.1 doesn't protect landlords from refunding illegal rent in all circumstances.
Red Flags for Tenants
Based on these cases, tenants should be alert to these warning signs:
- Verbal or text message rent increase notices
- Increases exceeding the annual guideline without proper justification
- Less than 90 days' notice
- Threats of eviction if increase isn't accepted
- Requests to sign new leases with higher rent
Protecting Your Rights
For Tenants:
- Know the annual guideline (check the government website)
- Demand proper N1 forms for any rent increase
- Keep detailed records of all communications
- Don't be intimidated by threats or pressure
- File T1 applications within one year of illegal increases
- Seek legal advice if unsure about your rights
For Landlords:
- Use only official forms (N1 for rent increases)
- Provide full 90 days' notice
- Stay within guideline amounts unless you have LTB approval
- Keep detailed records of all notices served
- Understand the deemed lawful provisions
- Consult legal professionals before implementing increases
The Broader Impact
These cases highlight a systemic problem in Ontario's rental market. Illegal rent increases not only harm individual tenants but undermine the entire regulatory framework designed to balance landlord and tenant rights. When landlords ignore the rules, it creates an unfair advantage over compliant property owners and erodes tenant confidence in the system.
The LTB's consistent enforcement sends a clear message: landlords who attempt to circumvent rent control laws will face significant financial consequences. The awards in these cases—often totaling thousands of dollars—demonstrate that compliance isn't just legally required, it's economically essential.
Key Takeaways
- Illegal rent increases are surprisingly common and costly
- Proper notice requirements are strictly enforced
- Tenant agreement doesn't legitimize illegal increases
- The one-year rule can make some illegal increases lawful
- Financial consequences for landlords are substantial
- Documentation and timely action are crucial for tenant protection
Understanding these principles is essential for both landlords and tenants navigating Ontario's complex rental market. The cases analyzed here show that while the system can be complicated, the LTB consistently protects tenant rights when proper procedures aren't followed—making compliance not just a legal obligation, but a financial necessity.
