Rent Control Exemptions in Toronto Explained.

What Is Rent Control in Toronto?

Rent control in Ontario limits how much a landlord can increase a tenant’s rent each year. For 2026, the provincial guideline is 2.1% for most residential units—meaning landlords can’t raise rents above that amount unless approved for an above-guideline increase (AGI).

But not all rentals follow this rule. In Toronto, a growing number of units are exempt from rent control, creating different rules for both landlords and tenants.

Which Rentals Are Exempt from Rent Control?

Post‑November 15, 2018 Units

Any unit first occupied for residential use after November 15, 2018 is exempt under Ontario’s Residential Tenancies Act. This includes:

• New condo units rented out for the first time.
• Purpose-built rental buildings completed after that date.
• Newly finished basement suites or secondary units occupied for the first time after 2018.

Why Are They Exempt?

The Ontario government introduced this exemption to encourage new housing development. By allowing landlords to set market-driven rent increases, policymakers hoped more developers would build rental housing.

What Rules Still Apply to Exempt Units?

Even if a unit is exempt from rent control caps, landlords still must:

• Wait 12 months between rent increases.
• Provide 90 days’ written notice using Form N2 (VERY IMPORTANT as most landlords we speak with assume Form N1 is sufficient)
• Follow all other tenancy rules (e.g., maintenance, eviction regulations).

How This Impacts Tenants and Landlords

For Tenants

Exempt units can see steeper rent increases year-over-year. Budgeting is trickier, and long-term affordability can be uncertain.

For Landlords

More pricing flexibility can mean higher rental income, especially in high-demand areas. But aggressive rent hikes may push tenants out, causing longer vacancies.

Average Rent Increase Comparison

According to Clavis Property Management, exempt units saw average increases of 5–10% annually in recent years—double or even triple the guideline cap.

Should You Rent or Invest in an Exempt Unit?

For renters, exempt units often come with newer finishes and better amenities—but expect rent to grow faster than older, controlled buildings. For investors, these units provide better revenue potential, making them attractive for long-term holds.

Thinking about renting or investing in Toronto? Talk to our team. We help clients understand how rent control exemptions could affect their long-term plans.

FAQ

Can my landlord raise my rent anytime?

No. Even in exempt units, landlords must wait 12 months between increases and give 90 days’ written notice.

Can I refuse a rent increase on an exempt unit?

You can’t refuse if proper notice is given, but you can dispute illegal increases at the Landlord and Tenant Board.

Are all new condos exempt?

Most are—if the unit was first occupied after November 15, 2018. Older condos remain under rent control.

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Ready to Make a Move?

Whether you’re a tenant navigating rent hikes or an investor weighing the benefits of an exempt unit, our team can guide you through the Toronto rental market. Contact us today to get expert advice and a strategy that fits your goals.

External References:

• Ontario Residential Rent Increases
• Landlord and Tenant Board Fact Sheet