Attention landlords: Don't count on rising hydro costs as a reason to raise your rent anymore

Landlords in Ontario are no longer able to use the increasing cost of utilities as a reason to apply for an above-guideline rent increase on their units.

The Rental Fairness Act has amended the reasons a landlord can apply for an above-guideline rent increase

Toronto's skyline, as seen from a condo rooftop in St. Lawrence Market. (John Rieti/CBC)

Landlords in Ontario can no longer use the increasing cost of utilities as a reason to apply for an above-guideline rent increase on their units. 

When the Ontario government promised new legislation to help renters last week, it extended rental controls to all units built after 1991 — effectively eliminating the 1991 loophole. The province also promised some "technical changes" to the Landlord-Tenant Board to make the process "fairer and easier for renters and landlords."

With the legislation introduced on Monday, we now know these changes included an amendment to the reasons landlords can apply for above-guideline rent increases.

Prior to April 20, a landlord could apply to the board for an increase due to:

  • An extraordinary increase in municipal taxes, charges or utilities.
  • Eligible capital expenditures.
  • Operating costs related to security services.

The government wants to change the Residential Tenancies Act to "no longer allow applications based on an extraordinary increase in the cost for utilities," the proposed legislation says.

The decision was made to give landlords more "incentive to make their buildings more energy-efficient," a spokesperson for the Ministry of Housing said.

"The government is proposing to mitigate the impact of carbon costs on tenants by proposing to amend legislation,"  the statement reads. The move comes after consultations on the Climate Change Action Plan released in June 2016, where the government committed to "develop options to mitigate the impact of carbon pricing and resulting increased energy costs on tenants."

'Unfair' and 'punitive' for landlords

The change is "blatantly unfair" and punitive for landlords, says Jim Murphy, CEO of the Ontario Federation of Rental-Housing Providers.

The news has also caught many landlords by surprise. 

Julie Bond, who leases several condos to tenants in Toronto, previously told CBC Toronto that the rental income already doesn't cover the mortgage, maintenance and taxes.

"Maintenance includes common-element hydro, which has doubled in the recent years directly due to government policy on that portfolio," she said.

"Perhaps this is a great way to correct the housing market, to ensure all landlords sell their units."