Under some circumstances, a landlord can apply to the Landlord and Tenant Board for a rent increase that is above the Guideline Increase amount. AGI’s for capital expenditures are a legislated mechanism for property owners to attain a limited recovery on capital expenditures which benefit tenants. The application for AGIs is a common industry practice which all landlords in the market place participate in.
A landlord may apply for an AGI to rental prices under the following circumstances:
• The landlord’s costs for municipal taxes have increased;
• The landlord has performed significant renovations, repairs, replacements or new additions to the building. This type of work is called a “capital expenditure”.
• The landlord’s costs for security services increased, or the landlord began providing security services for the first time.
The Landlord and Tenant Board’s Procedure for Filing an AGI
Step 1: The landlord files the AGI application. The tenant may request a copy of the CD from the landlord at the cost of $5. If paper copies are required, this request can be made and all out of pocket costs will be charged to the tenant ledger.
Step 2: An oral or written hearing is scheduled by the Board. The Notice of Hearing is served to all tenants & the landlord; this is the opportunity for the landlord to present their case and for tenants to make any disputes.
Step 3: The Member of the Board presiding over this hearing will write a decision called an Order. The Landlord Tenant Board will mail a copy of the order to both the tenants and landlord.
The order will indicate if the AGI is approved or if the landlord applied to the board for the AGI and was unsuccessful.
Should there be an unapproved AGI, only the Guideline Increase is due on the effective date. The tenant has the choice to pay the full amount requested as per the Above Guideline Increase application or pay the Guideline Increase amount until the Above Guideline Increase is approved.
If approved, the Above Guideline Increase will be retroactive to the time period of the original Notice of Increase. Thus, there may be a lump sum owing once the Landlord and Tenant Board finalize their decision.
MetCap’s Procedure for Enacting an AGI
Step 1: An N1: Notice of Rent Increase form is mailed to the tenant 90 days prior to the increase taking effect.
Below is an example of where an application for an Above Guideline Increase is indicated on the N1: Notice of Rent Increase form.
Step 2: MetCap’s Head Office will adjust the tenant ledger to reflect the decision as per the Board Order.
Step 3: Our Customer Service team will send out a package to each tenant once the Order is approved. These packages include a general letter to all tenants, a copy of the unit tenant ledger, and a copy of the Order from the Board.
The retroactive Above Guideline amounts are due within 60 to 120 days according to the Board Order; however the new rental price takes effect immediately. If a tenant’s regular rent is outstanding then the Above Guideline amounts will be included in any legal action.
MetCap Living AGI Support Program
AGI’s are a mechanism offered by the Government of Ontario to encourage landlords to make investments in their properties. These investments result in an higher standard of living for all leaseholders by increasing the safety and quality of the properties, however due to fixed incomes or other extenuating circumstances, MetCap Living recognizes that the costs associated with an AGI may be difficult for some of our leaseholders to afford.
Acknowledging these difficulties, MetCap and its co-owner Alberta Investment Management Corporation (AIMCo) are implementing an AGI Support program that will make available financial relief to tenants for whom the AGI may pose undue hardship. The program would allow tenants to apply for a reduction of the above noted increases, and could include reductions to the point of no increase. The program will also help tenants to manage or possibly even reduce the accumulating back payment that accumulates throughout the AGI application process. MetCap’s owners are willing to meet with all of the residents who are affected by AGIs at AIMCo and MetCap co-owned properties to understand and alleviate the concerns of each individual.
The guideline is the maximum amount that most landlords can increase a tenant’s rent during the year without making an application to the Landlord and Tenant Board. It is determined using the Ontario Consumer Price Index (CPI) as determined by Statistics Canada.
The rate of allowable increase is 1.5% for increases proposed between January 1 and December 31, 2017.
MetCap Living’s Procedure for Guideline Increases
Step 2: On the effective date the tenant ledger is charged for the amount of the Guideline Increase.
For further information regarding Guideline Increases including allowable frequency and historical data, please visit the Government of Ontario website here or call toll free at 1-888-232-3234.