The biggest problem with rent raises

The Ontario Rental Tribunal sets maximum amount a landlord can raise their tenants every 12 months. This amount is often no more than an inflation raise of 2% – 3% of the current rent.

Because the amount is so small, I really don’t want bother raising rent on my reliable, responsible tenants.

At the same time, if you, as a landlord request last month’s rent as a security deposit, the Ontario Rental Tribunal requires that you pay the interest back to the tenant on it on annual basis. The interest amount is equivalent to the maximum amount the landlord can their tenant’s rent.

The reason for this, is so that if you, as a landlord, were to raise your tenant’s rent to the maximum amount, you would not have to pay your tenant the interest amount back for last month rent. This is because the last month’s rent goes up and your tenant would have to pay you the additional amount, which is equivalent to the interest amount you have to pay back your tenant.

Now, this law is very discouraging. It is discouraging because by law, you have to pay my tenant the interest amount for last month’s rent and to prevent that, you have to raise your tenant’s rent to the maximum amount. If you do not, then your tenant is legally entitled to the interest payment for last month’s rent.

This law literally encourages you, as landlord, to raise your tenant’s rent to the maximum amount.

Regardless, what I do is I ignore the law. As terrible as that sounds, it is in the best interest of my tenants. If my tenants were to make a fuss and request for the interest amount, I would then and only then, raise their rent. That usually prevents them from making a fuss as well.



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