TRANSCRIPT: N1- Notice of Rent Increase (Guideline Increase) Update
Welcome to Landlord’s Self-Help Centre’s webinar about the N1 notice for rent increase. The information offered in this presentation is intended as general information, it is not legal advice. If you need more information, please contact a legal service provider.
There are important things to consider when serving a Form N1 to your tenant:
- This notice can only be served to the tenant once every 12 months;
- You can only increase by the approved guideline, unless you obtain special permission from the Landlord and Tenant Board to increase by a higher amount;
- Do not round up! Use the exact amount calculated or round down. Rounding up would mean an illegal rent increase; and
- Make sure to serve the notice properly so that you don’t waste time.
As a result of the COVID-19 pandemic, the government of Ontario passed Bill 204, Helping Tenants and Small Businesses Act, on October 1 2020. This Act freezes rent increases from January 1 until December 31, 2021. Notices given to take effect during this period will be deemed void.
According to the Residential Tenancies Act, rent is an amount of money given to a landlord or landlord’s agent in exchange for the right to occupy the rental unit, and a tenant is a person who pays rent for the right to occupy the unit.
Rent increases cannot be done because the tenant brought another person into the unit. Under the Residential Tenancies Act, tenants are allowed to have other people live with them and they do not have to get the landlord’s permission.
Refer to the other Landlord’s Self-Help Centre modules for termination options.
Annual Rent Increase Guideline
Rent can be increased by the annual guideline amount every 12 months, after providing the tenant with the proper 90 day notice.
The annual rent increase guideline is announced by the Ministry of Municipal Affairs and Housing by August 31st of the previous year, and the calculation is based on the Ontario Consumer Price Index (CPI).
See LSHC’s website for more information and the history of guideline increases.
Annual Rent Increase Guideline (continued)
If you don’t provide your tenant with a rent increase every 12 months, you forfeit the increase. You are not allowed to back track and collect on missed increases.
Permission is not needed from the landlord and tenant board when doing an increase by the guideline amount. But make sure to follow the rules and use the proper N1 notice.
Guideline Amount Calculation
When calculating the increase amount, simply take the monthly rent and multiply it by the appropriate guideline percentage.
The example with a $1200 monthly rent shows the allowable increase for 2020 is $26.40. When serving the N1 form, the new rent amount can be listed as $1226.40 or you may want to round it to $1226.
Do not round the amount up as this is incorrect and would make it an illegal rent increase.
For an increase to take effect on Jan 1, 2020, form N1 should have been served to the tenant by the end of Sept 2019.
When listing the tenants, include names of those who are identified on your tenancy agreement as tenants, or in the case of verbal tenancies, include names of only those who have been paying the rent. As well as their address, even though it may seem to be repetitive.
If your tenant uses a nickname, include both their legal name and their nickname (see the example with Jonathan Smith).
If you have a joint tenancy (2 or more tenants together on one agreement) make sure to include all their names.
The same applies with landlords, include the full name and address of all he landlords for a rental unit.
It is very important for the address of the rental unit to include the full address and specify exactly where the tenant is living.
New Rent Amount
This section shows the start date for the increased rent amount, along with the new monthly total the tenant is expected to pay.
Rent Increase Explanation
The explanation section of the notice is used to inform the tenant that the increase is based on the allowable amount for the year. It indicates the amount of the increase and the percentage that was used to calculate it.
Rent Increase Explanation (continued)
There are a few different ways to increase the rent, but the most common is the annual guideline increase.
This other section of the N1 notice refers to above guideline increases and since Landlord’s self-help centre does not advise on this area of the law, we will not be explaining them in this module.
Important Information About the Law
Always make sure to read and understand the entire notice before serving it to your tenant. This is a legal document and it should be reviewed before you sign it.
If there are multiple landlords, only one of them needs to sign the notice.
The date next to the signature is the date the notice will be given or sent to the tenant.
Review the notice to make sure there are no mistakes, that you understand what you are giving to the tenant and keep a copy for yourself.
If there are multiple tenants, make a photocopy for each.
The notice should be signed by the landlord unless the landlord has hired a lawyer or paralegal to be their representative, and they are serving the notice on the landlord’s behalf.
Make sure to deliver the notice to the tenant according to the Landlord and Tenant Board Rules.
Improper service will result in you having to start the process all over again.
The most common methods of service are: delivery in person to the tenant, sliding it underneath the unit door, or putting it in the mailbox (as long as you do not require a key to access the mailbox).
Never post this notice on the unit door, or send it by text message, as these are improper service methods and will make the notice invalid.
Consent to Service by Email
As of December 15, 2018, landlords and tenants can agree to service by email.
While it is not mandatory to use this form, it is suggested that you document the agreement with your tenant using this form in order to obtain all the required information.
It is important to note that consent can be revoked at any time, by the landlord or tenant, as long as it is done in writing.
If the notice is not followed and the tenant continues paying the old rent amount, the landlord may have to serve the N4 notice for non-payment of rent and go through that termination process. Refer to the N4 module for more information about filling out and serving notice for non-payment of rent.
If the tenant decides to move out of the rental unit instead of paying the new rent amount, they should provide Form N9 (Tenant’s Notice to End the Tenancy) with at least 60 days’ notice before the end of lease or rent period. If the landlord agrees to an earlier termination, Form N11 (Agreement to End the Tenancy) can be signed between the parties instead.
Gather Information & Educate Yourself
It is very important that you do your research to make sure this process is appropriate for your situation. If you serve your tenants with an incorrect notice, it can cause other problems for you down the road.
Use resources found on the Landlord and Tenant Board, and Landlord’s Self-Help Centres websites to help guide you through the proper process.
The Landlord and Tenant Board website has links to instructions for many of their notices and applications, so make sure to read through them and use them to help fill out the forms.
Thank you for watching this module about the N1 Notice of rent increase.
The information offered in this presentation is intended as general information, it is not legal advice.
If you have a specific issue or situation, please contact a legal service provider.