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Email this pageAbove Guideline Increases – Capital

A tenant’s rent can be raised by an above guideline increase for capital expenditures, e.g. a new roof. The RTA makes the above guideline increase system fairer to tenants:

  • When a landlord finishes paying for capital expenditures, e.g. a new roof and new windows, sitting tenants whose rents were increased based on these capital expenditures will have their rents reduced accordingly.
  • Before a landlord is allowed to pass costs onto tenants, there is a stricter test to decide if the capital expenditure is really necessary.
  • Above guideline rent increases are not allowed for routine maintenance or repair.  Work must be extraordinary or significant to qualify for an increase. Above guideline rent increases are not allowed for projects that are substantially cosmetic in nature, or that enhance the level of prestige or luxury of a building.
  • The rent increase for certain items is spread out over more years, so the tenant will be paying less per year.
  • The cap for an above guideline increase based on capital expenditures is set at 3% per year for a maximum of three years. Previously, the cap was 4% per year with no maximum number of years.
  • Landlords cannot pass management cost allowances onto their tenants.
  • The financing rate for landlords was reduced to the five-year conventional mortgage rate.  Previously the financing rate was the five-year conventional mortgage rate plus 1%.
  • In addition to the copy of the above guideline increase application which landlords must give to each tenant, landlords are required to make a copy of the supporting documents (e.g. bills for capital work done), available to tenants on a compact disc for a fee of no more than $5. Tenants and landlords can agree on alternate ways to provide these documents.  For buildings with property management offices on the premises, the landlord must make a copy of the supporting documents available for viewing by tenants.

Note: An above guideline increase is an increase above the annual rent increase guideline. Landlords can apply for this type of increase if their costs have increased due to:

  • Extraordinary increases in municipal taxes and charges or utilities
  • Capital expenditures such as roof replacement
  • Operating costs related to security services