Ontario's 2027 Rent Increase Guideline Is 1.9% — What Landlords and Tenants Need to Know Before October

 

August 16, 2026

If you own a rental property in Ontario — or rent one — mark October 3 on your calendar. That's the earliest a landlord can legally serve notice for a rent increase that takes effect January 1, 2027, and it's the practical starting gun for a guideline that's quietly gotten tighter for the third year in a row.

The province has set the 2027 rent increase guideline at 1.9%, down from 2.1% in 2026 and well off the 2.5% legal ceiling that held for three straight years before that. It's the lowest guideline Ontario has published in years — and while that sounds like a straightforward win for tenants, the real story for both sides is in the timing, the exemptions, and what a below-inflation-feeling number actually does to a landlord's math.

What It Means for You

Landlords: the earliest you can serve a valid N1 notice for a January 1, 2027 increase is October 3, 2026 — 90 days' notice is mandatory. Tenants: a 1.9% cap only applies if your unit is rent-controlled, and a meaningful share of newer Ontario rentals aren't.

How the number gets set

The guideline isn't a policy choice made behind closed doors each year — it's a formula. Ontario calculates it from the average provincial Consumer Price Index over a fixed 12-month window, running from June of the prior year to May of the current one. For the 2027 figure, that's June 2025 through May 2026. Whatever that inflation average works out to becomes the guideline, full stop — with one hard limit: under section 120(2) of the Residential Tenancies Act, the guideline can never exceed 2.5%, no matter how hot inflation runs.

That cap is exactly why 2023, 2024, and 2025 all landed at the same 2.5% ceiling — actual inflation was running higher than that, and the law simply capped it there. This year, with price growth cooling, the formula produced a real, uncapped number for the first time in a while: 1.9%.

The math on a few common rents

A guideline increase is simple multiplication, but seeing it in dollars makes the "record-low" framing feel less dramatic:

Current rent	Max increase (1.9%)	New rent
$1,600	$30.40	$1,630.40
$2,000	$38.00	$2,038.00
$2,500	$47.50	$2,547.50
$3,200	$60.80	$3,260.80

For landlords, that's the tension in this year's number: property insurance premiums, utilities, and maintenance costs have generally been climbing faster than 1.9% (Ontario home insurance premiums alone averaged roughly $2,235 in 2026, up about 6% year over year). A guideline increase that lags rising carrying costs is a real squeeze on cash flow, not just a symbolic tenant win — and it's the main reason so many landlords lean on turnover pricing or Above Guideline Increase applications instead of relying on the annual guideline alone.

The exemption almost everyone gets wrong

The 1.9% guideline doesn't apply to every rental unit in Ontario — and this is the detail that trips up more landlords (and confuses more tenants) than any other part of the rules. Units first occupied for residential purposes after November 15, 2018 are generally exempt from the guideline entirely. That covers most new-build condos, purpose-built rentals, and legal basement apartments completed in the last several years.

If your unit falls into that exempt category, there's no 1.9% ceiling — rent increases are a matter of what the lease and the market will bear, though you still need to follow the standard notice rules. If it doesn't — meaning the unit was occupied as a rental on or before November 15, 2018 — the 1.9% cap is hard law, and going above it without an approved Above Guideline Increase application can make the entire notice invalid.

The timing rules landlords actually need to follow

• 12-month rule: You can't increase a given tenant's rent more than once every 12 months, measured from the last increase's effective date — not from when you served notice.
• 90 days' notice: Tenants must receive written notice at least 90 days before the increase takes effect, using the correct N1 form.
• Which year's guideline applies: The guideline that governs is the one in effect on the increase's effective date, not the date you serve notice. A notice served in October 2026 for a January 1, 2027 effective date uses 2027's 1.9% — not 2026's 2.1%.
• Earliest you can act: For a January 1, 2027 increase, the 90-day clock means the earliest valid notice date is October 3, 2026.

Get any of these wrong — wrong form, insufficient notice, wrong percentage — and the increase can be thrown out entirely, forcing you to start the 90-day clock over.

If You're a Landlord: A Quick Checklist for the Next Six Weeks

• Pull each tenancy's last rent increase date and confirm you're past the 12-month mark before your target effective date.
• Confirm whether each unit was first occupied on or before November 15, 2018 — if it wasn't, the guideline doesn't apply to you.
• If you've done major capital work in the last 18 months (a new roof, HVAC replacement, major renovation), weigh whether an Above Guideline Increase application is worth filing instead of relying on 1.9% alone.
• Compare in-place rent to current market rent for your area — where the gap is wide, the guideline won't close it, and that's a longer-term hold-vs-turnover decision, not a paperwork one.
• Calendar October 3, 2026 as your earliest N1 service date for any January 1, 2027 increase, and use the current N1 form.

The bottom line

A 1.9% guideline is genuinely good news for tenants in rent-controlled units — it's the lowest cap Ontario has set in years, and it means predictable, modest increases through all of 2027. For landlords, it's a reminder that the guideline is a ceiling, not a plan: with carrying costs still climbing faster than 1.9% in a lot of cases, the number itself is the easy part. The paperwork, the exemption check, and the October 3 timing are where increases actually go wrong — and where they actually get done right.

This article is for general information and isn't legal advice. For a specific tenancy dispute or an Above Guideline Increase application, consult the Landlord and Tenant Board or a paralegal/lawyer familiar with Ontario's Residential Tenancies Act.