Dealing with unfair rent increases

Every year after the rent review, tenants are apprehensive about rent increases in Canada. This persistent phenomenon threatens to undermine the country’s thriving real estate rental market. The scourge affects the financial situation of both landlords and tenants. How do you deal with a rent increase from a landlord?

What are the regulations governing rental rates in Canada?

Landlords are subject to rent control before setting their rates.

Reasons for a rent increase

Rent prices are based on the TAL ( Tribunal Administratif du Logement ) price scale.

Several variables influence pricing: the owner’s building expenses, average estimates of building management costs, insurance premiums, municipal taxes, energy used for heating (electricity or gas), property taxes and municipal taxes.

Given the complexity of the rate structure, a landlord is entitled to increase his rent even if he does not carry out any renovation or maintenance work.

Landlords’ obligations when increasing rent

In order to modify a rental contract on the grounds of arent increase, landlords are required to send their tenants a written notice within a timeframe that depends on the length of the lease:

3 to 6 months before the end of the lease: for a lease of 12 months or more ;
1 to 2 months before the end of the lease: for a lease of less than 12 months;
10 to 20 days before the request is modified: for a one-bedroom lease;
1 to 3 months before lease modification: for an open-ended lease.

Regardless of the length of the contract, the landlord can only make a modification once every 12 months, according to lease laws. He may also take the opportunity to change a few lines in the lease conditions.

The notification is sent in writing and specifies the amount of the increase in Canadian dollars or as a percentage. Failing notification, the lease will be renewed on the same terms as the previous contract.

How to identify an abusive rent increase?

Rent increases are subject to certain regulatory conditions laid down by the TAL. Failure to comply with these criteria can be challenged in court by the tenant.

When does a rent increase comply with the law?

The notice of rent increase includes the following regulatory elements:

the amount of the landlord’s new rent ;
the amount of the increase expressed in Canadian dollars or as a percentage of the current rent;
other lease modifications;
the proposed duration of the lease if the landlord proposes to modify this part;
the tenant’s deadline for accepting or refusing the rent increase.

The notice is sent to the tenant’s address given in the lease. The document is written in the same language as the old lease. The tenant’s silence constitutes acceptance of the rent.

The landlord can use the TAL model rent increase notice and modify it to suit the specific conditions of the lease.

When does a rent increase become abusive?

Rent regulations do not impose a fixed rate for rent increases. Instead, they list a number of criteria that may vary the rate of increase in the current rent (municipal tax increases, school tax increases, major work carried out or to be carried out on the building, insurance premium increases, etc.).

The extent of building repairs also influences rent increases. Repairs that affect all tenants result in a rent increase that applies to all tenants. However, repairs affecting only one apartment will result in a rent increase only for the apartment concerned.

Followingrent indexation, the TAL imposes an average index on the average rent increase. In 2023, the rate reached around 2.3% for an unheated apartment, compared with 2.9% for a heated one. An increase that exceeds both the average legal index and the variable rates may be considered an illegal rent increase.

The TAL website provides a rent increase calculation tool that will determine the legality of your rent increase.

If you notice an unreasonable rent increase, seek the assistance of a housing lawyer. He or she will assist you in the event of a tenant-landlord dispute. He or she can also help you with the rental mediation process.

What recourse do tenants have against unfair rent increases?

Tenants have the right to refuse, negotiate or take legal action against a rent increase if they consider the amount to be unreasonable.

Tenant refusal

Refusal is a tenant’s right. The decision must be notified to the landlord in writing, which will lead to 3 scenarios:

the landlord shows no reaction, in which case the renewed lease remains unchanged;
the landlord negotiates to reach an amicable agreement;
the landlord applies to the TAL for a final rent increase.

The landlord cannot evict the tenant from the premises for refusing the rent increase, at the risk of bordering onabuse of power. However, if he appeals to the TAL and requests a rent adjustment, he will send you several regulatory documents:

notification of the application to fix the rent ;
proof of notification of the application to the TAL within 45 days;
completed TAL calculation form;
proof of submission of the completed form to the TAL;
proof of notification of the form to the TAL within 90 days of receipt.

The TAL summons the 2 parties to a hearing. The Rental Tribunal will analyze whether or not the new rent amount complies with the law.

The negotiation

Real estate experts advise negotiation between the parties involved before starting lengthy court proceedings. For the tenant, negotiation means refusing the notice of increase while remaining in the rental property.

The tenant announces his decision to find common ground. The landlord then has one month to open a case to set the rent. It will be up to the Tribunal to set the rent (upwards or downwards, depending on the supporting documents received).

Intervention by the Régis du logement

In the month following the refusal, the tenant can apply to the Régie du logement, which will rule on the tenant-landlord dispute. A Régisseur will be mandated to assess the rent increase and study the circumstances behind it (maintenance expenses, service charges, taxes, energy costs, renovations, etc.). The steward’s decision cannot be revoked by either the landlord or the tenant.

The tenant can also try to negotiate a reasonable increase that will benefit both parties. In this case, he can use the Régie du logement’s calculation tool to facilitate negotiations.

Lease transfer

Assigning a lease is a last-resort solution for tenants facing an abusive rent increase. It is one of the measures designed to protect tenants. Landlords cannot refuse the request unless there is a serious reason for doing so, such as the insolvency of the tenant or a poor track record leading to the lease being repossessed.

Assigning a lease enables the tenant to free himself from the lease and pass it on to a newcomer. The tenant must then find a candidate to present to the landlord. Once the latter has agreed, the lease will be taken over under the same conditions and at the same price.

The process begins by sending the landlord a notice requesting the transfer of the lease. If the landlord resists, the tenant can contact a bailiff to ensure that the request has been duly received.

If the landlord refuses, the tenant can take the matter to court.

What are the consequences of refusing a rent increase?

All tenants have the right to refuse a rent increase. Despite your decision, you have the right to remain in your apartment before your lease expires.

There is, however, one exception to this rule. If the building was constructed at least 5 years ago, or if the use of the building was changed less than 5 years ago, you do not have the right to refuse the change. In this case, you are faced with an alternative. You will either have to leave the premises at the end of your lease, or accept the owner’s modifications.

Conclusion

Tenants cannot remain indifferent to abusive rent increases. Negotiation, intervention by the Régis du logement or assignment are the solutions for dealing with this phenomenon. To defend your rights, contact a real estate lawyer.