Is there a way to verify or predict the guideline for rent increases? (step-by-step process)

 

In our previous post, we talked about rent increases and notices of rent increases in general.

As we all know, the Guideline for 2022 is 1.2%, as announced by the Ministry of Municipal Affairs and Housing (MAH). Sometimes landlords and tenants ask if there is a way to verify the calculation behind the guideline that the Ministry publishes every year (list of past guidelines). As well, some ask if there is a way to figure out ahead of time what the future guideline may be. The answer is "yes" to both questions, depending on timing. As soon as Statistics Canada publishes Consumer Price Index for May, you can follow the process below for calculating the guideline for the following year, while waiting for the official announcement by MAH, which sometimes comes quite a bit later (see the table of some past announcements below *), since RTA subsection 120(3) says that MAH has up until August 31 to publish the guideline.

Below is the process for re-calculating the guideline, using examples from 2022, 2021 and 2020 (feel free to test this out for other years):

(Please note that for the 2021 guideline, the original result (published in the Ontario Gazette (Volume 153 Issue 35) on August 29, 2020) was 1.5%, but, in an unprecedented move due to COVID-19, it was overridden by Bill 204, Helping Tenants and Small Businesses Act, 2020 which set the guideline for 2021 to zero. **)

Step 1:

Go to Statistics Canada website and pull out CPI numbers for Ontario for each of the 12 months until May of the year before the Guideline:

Link: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810000413

You will have to manually set Geography to "Ontario" and choose Month and Year and pull out the "All-Items" Year-over-Year number from the top right corner.

Example from June 2020: 0.4% (highlighted in yellow)

Step 2:

Repeat the first step ^ for all 12 months from June till May.

Step 3:

Calculate the average of these 12 numbers and round the result to the first decimal point.

See results below:

But if the result is greater than 2.5%, the guideline will be capped at 2.5% (as per RTA subsection 120(2)2). This was introduced by Bill 19, Residential Tenancies Amendment Act (Rent Increase Guideline), 2012.

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The rules for calculating the guideline are covered in RTA subsection 120(2):

"Guideline

(2) The Minister shall determine the guideline in effect for each calendar year as follows:

1. Subject to the limitation set out in paragraph 2, the guideline for a calendar year is the percentage change from year to year in the Consumer Price Index for Ontario for prices of goods and services as reported monthly by Statistics Canada, averaged over the 12-month period that ends at the end of May of the previous calendar year, rounded to the first decimal point.

2. The guideline for a calendar year shall be not more than 2.5 per cent. 2012, c. 6, s. 1.

Publication of guideline

(3) The Minister shall have the guideline for each calendar year published in The Ontario Gazette not later than August 31 of the preceding year. 2012, c. 6, s. 1.

Guideline for 2021

(3.1) The guideline for the calendar year 2021 is zero per cent, despite subsection (2) and despite the guideline published under subsection (3) in The Ontario Gazette for 2021. 2020, c. 23, Sched. 7, s. 1.

Same

(3.2) The Minister is not required to have the guideline for the calendar year 2021, as set out in subsection (3.1), published in The Ontario Gazette. 2020, c. 23, Sched. 7, s. 1."

Please remember that you should NOT be relying on these numbers for N1 (notice of rent increase) purposes. You should wait for the official announcement by MAH each year. The discussion above is only intended for those who want to understand and perhaps verify how MAH comes up with its guidelines and for those who might want to prepare for future MAH announcements by doing their own draft calculation in anticipation.

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Notes:

(*)

Dates of some past guideline announcements:

(**)

Original publication for 2021 (from the Ontario Gazette on August 29, 2020), which was later overridden by Bill 204 (setting the Guideline to zero):

Ontario Gazette Volume 153 Issue 35 | August 29 2020:

https://www.ontario.ca/document/ontario-gazette-volume-153-issue-35-august-29-2020

https://files.ontario.ca/books/ontariogazette_153-35.pdf

Bill 204 overriding it and resulting in RTA subsection 120(3.1):

"Guideline for 2021

(3.1) The guideline for the calendar year 2021 is zero per cent, despite subsection (2) and despite the guideline published under subsection (3) in The Ontario Gazette for 2021. 2020, c. 23, Sched. 7, s. 1."

https://www.ontario.ca/laws/statute/06r17#BK187

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