Inflation, Speculation on the Guideline for 2023 and the Future of 2.5% Cap (RTA ss.120(2)2) - June 22, 2022 Update

In one of our previous posts, we shared a step-by-step process that allows anyone to check the accuracy of the guideline for rent increases using data published by Statistics Canada, and we provided some examples.

We have had some questions on what the Guideline for 2023 is likely to be.

We will post an update as soon as the Ministry of Municipal Affairs and Housing (MAH) publishes their official Guideline for 2023.

Based on CPI numbers for Ontario (leading to 5.3%, see calculation below), the Guideline for 2023 is very likely to be capped at 2.5% (which is the statutory cap when the CPI-based result would surpass it, see RTA subsection 120(2)), unless the law changes.

UPDATE: Today (June 29, 2022) the Ministry of Municipal Affairs and Housing announced that the Guideline for 2023 will be indeed 2.5%:

"Ontario’s rent increase guideline for 2023 is 2.5 per cent ...

Due to recent inflation, this would result in a 2023 guideline of 5.3 per cent, however the guideline is capped to help protect tenants from significant rent increases."

https://news.ontario.ca/en/release/1002167/ontario-caps-2023-rent-increase-guideline-below-inflation-at-25-per-cent

Example of just one of the 12 data points (for May 2022) from Statistics Canada website:

^ These 12 data points are "averaged over the 12-month period that ends at the end of May of the previous calendar year, rounded to the first decimal point", but the guideline cannot be more than 2.5% (RTA subsection 120(2)).

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RTA subsection 120(2):

"(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."

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

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Dates of some past guideline announcements:

More:

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

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