What Toronto’s property tax hike means for landlords and tenants

Mayor Olivia Chow has proposed a near double-digit property tax hike (9.5 percent) in her annual budget. While there are obvious monetary effects on every homeowner’s wallet, Toronto’s new property tax hike may also create changes for some landlords and tenants in the city. Here’s what Toronto’s new property tax hike means for landlords and tenants.

What is rent control in Ontario?

Any apartment, house, or condo that has been occupied before November 15, 2018, is covered by rent control. The landlord is only able to increase rent annually by an amount set by the provincial government. For example, in 2024, the rent increase guideline is 2.5%. New buildings, apartments, and condos that were first occupied after November 15, 2018, are exempt from rent control limits, and the landlord can increase rent by any amount each year.

There are some exceptions to rent increases under the rent control regulations. The Residential Tenancies Act (RTA) gives landlords the right to apply to the LTB (Landlord-Tennant Board) to increase the rent in rent-controlled units above the provincial guideline under certain circumstances. An annual increase in property taxes of over 3.75% is one of them. While the general property tax increase is proposed at 9.5%, it is important to note that the property tax increase for multi-residential properties will be 3.75%. This prevents commercial landlords with a large number of rentals from applying to the LTB for an above-guideline increase to its tenants.

How will it affect “mom-and-pop” landlords and their tenants?

Small landlords that rent out single-residential units will have to pay the full increase of 9.5% to the annual property taxes. While some will apply to the LTB for an increase above the guideline, most will not want to bother with the extra paperwork and LTB hearings to get an extra $30 to $50 per month. If the landlord’s cost increase is higher than the average $30 – $50 per month, it is more likely that they will apply to the LTB for an above-guideline rent increase. Be aware that negotiating directly with the tenant on an increase of more than the guideline is illegal, even if the tenant agrees to it. I’ve seen some online posts advising landlords to do this, but it’s the wrong advice. An N10 form (Agreement to increase the rent above the guideline) specifically outlines that the law allows a landlord and tenant to agree to a rent increase that is more than the rent increase guideline only if the landlord:

• has done (or will do) capital work; or
• has provided (or will provide) a new or additional service

And even in these cases, the rent increase cannot be more than the rent increase guideline plus 3 percent.

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