Ontario Above Guideline Increases
Above Guideline Increase (AGI) in Ontario: A Guide for Landlords
An Above Guideline Increase (AGI) allows an Ontario landlord to apply to the Landlord and Tenant Board for permission to increase rent by more than the annual rent increase guideline when the requirements of the Residential Tenancies Act, 2006 and applicable regulations are met.
Ontario landlords apply for an Above Guideline Increase using Form L5 — Application for a Rent Increase Above the Guideline. An AGI application may be based on eligible capital expenditures, an extraordinary increase in municipal taxes and charges, or qualifying costs associated with security services.
What Is an Above Guideline Increase?
An Above Guideline Increase is a rent increase above Ontario's annual rent increase guideline that requires an order from the Landlord and Tenant Board. A landlord seeking an AGI files an L5 application and must establish one or more grounds permitted under Ontario residential tenancy law.
When Can an Ontario Landlord Apply for an AGI?
Under Ontario's Residential Tenancies Act, 2006, a landlord may apply to the Landlord and Tenant Board for an Above Guideline Increase on three grounds: eligible capital expenditures, an extraordinary increase in municipal taxes and charges, or qualifying operating costs related to security services. Each ground is subject to specific legal and evidentiary requirements.
Eligible Capital Expenditures
Certain significant expenditures involving a residential complex or its rental units may support an AGI application when they satisfy the requirements for an eligible capital expenditure under Ontario residential tenancy law. Eligibility depends on the nature and purpose of the work, when the expenditure was incurred, and other statutory and regulatory requirements.
Learn About Eligible Capital Expenditures ↓Extraordinary Municipal Taxes and Charges
An extraordinary increase in the cost of municipal taxes and charges for a residential complex or applicable building may form a ground for an AGI application. Whether an increase is considered extraordinary is determined under the rules prescribed by Ontario regulation.
Operating Costs Related to Security Services
An AGI application may also be based on qualifying operating costs related to security services provided for the residential complex or applicable building by persons who are not employed by the landlord. The amount that may be recognized is determined under the applicable regulatory rules.
An Expenditure Does Not Automatically Qualify
The fact that a landlord has incurred a substantial expense does not, by itself, establish entitlement to an Above Guideline Increase. The expenditure or cost must fall within a permitted AGI ground and satisfy the applicable requirements of the Residential Tenancies Act, 2006 and its regulations.
What Capital Expenditures May Qualify for an AGI?
Capital expenditures are one of the principal grounds for an Above Guideline Increase in Ontario. Depending on the circumstances, significant repairs, replacements and improvements involving the residential complex or its rental units may qualify when they satisfy the requirements of the Residential Tenancies Act, 2006 and applicable regulations.
Eligible capital expenditures may relate to the physical integrity of the residential complex, repair and maintenance obligations, major building systems, accessibility, energy or water conservation, or security. Whether a particular expenditure qualifies depends on the nature and purpose of the work and the applicable legal requirements.
Capital Expenditures May Include
- Roofing
- Exterior Building Components
- Windows and Doors
- Plumbing Systems
- Heating and Mechanical Systems
- Electrical Systems
- Ventilation and Air Conditioning
- Accessibility Improvements
- Energy or Water Conservation Measures
- Security Improvements
Not Every Capital Expense Qualifies
Routine maintenance, substantially cosmetic work and certain replacements may not qualify as eligible capital expenditures. The fact that a landlord has incurred a significant expense does not, by itself, establish entitlement to an Above Guideline Increase. Each expenditure must be assessed against the applicable statutory and regulatory requirements.
Considering an Above Guideline Increase?
Before an AGI application is filed, Gobin & Leyenson LLP can assess the proposed expenditures, identify potential eligibility issues, calculate the anticipated Above Guideline Increase, and evaluate the projected return on investment. This allows Ontario landlords and property managers to make an informed decision about whether proceeding with an AGI application is economically justified.