The Ontario government will hold the allowable rate for residential rent increases at 2.5 per cent for a third consecutive year in 2025. The newly announced rent guideline, which goes into effect January 1, will apply to sitting tenants in units that came onto the market prior to November 15, 2018, provided no above-guideline increases have been approved by the provincial Landlord and Tenant Board.

In setting the annual rent increase guideline, the Ontario government looks to the Statistics Canada’s consumer price index as an indicator of general cost trends. The 2.5 per cent threshold for 2025 falls short of the current 3.1 per cent average inflation rate, but the two rates have moved closer than when the 2024 guideline was established 12 months ago. At that time, the average inflation rate was 5.9 per cent.

Landlords will need to give sitting tenants written notification 90 days in advance of planned rent increases, while rents can be reset to what the market will bear when units turn over. In announcing what is slated to be lowest allowable rent increase rate in Canada, the Ontario government also points to a pick-up in construction of new purpose-built rental housing over the past three years, which has resulted in the highest number of housing unit starts in more than 30 years.