A shake up in Ontario’s rental laws means the newly renamed Landlord and Tenant Board will be able to disallow all rent increases for properties that landlords have allowed to fall into a bad state of repair.

The Residential Tenancies Act, which came into effect at the end of January is ‘the beginning a new era of balanced protection for tenants and landlords’, claimed Minister of Municipal Affairs and Housing John Gerretsen.

Among other changes, the Act, which continues to exempt private rental units built since 1991 from most rent controls and allows new tenants and landlords to negotiate starting rents, does away with the current five day default possession process.

However, it also creates a fast track process for evicting tenants who vandalise their homes or cause serious problems within smaller apartment complexes in which the landlord also lives.

Annual rent increase guidelines are to be based on the Consumer Price Index for Ontario. But there is a requirement for rent increases imposed on sitting tenants to cover higher utility costs to be reversed if and when utility costs go down. Likewise, increases made to cover the cost of capital expenditure such as that needed for a new roof are to be reversed once the capital expenditure has been recovered.

‘The Residential Tenancies Act, 2006 fulfils the McGuinty Government’s commitment to provide balanced protection for tenants and landlords, while keeping Ontario’s rental housing market strong’, said Gerretsen. ‘We are building stronger communities that offer a range of housing choices that meets the diverse needs of Ontarians’.

Although private rental units built since 1991 are exempted from most rent controls, they are still covered by most of the other rules in the Act about such things as maintenance and the reasons for eviction.

Landlord and tenants can sign written agreements when new tenancies are entered into, or they can have oral agreements. Landlords must give tenants a copy of any written agreement which must not contain any terms inconsistent with the Act.

New agreements will set an initial rent which cannot be increased until at least 12 months after the tenant moved in. When the rent is increased after this date, landlords must give tenants at least 90 day’s notice. But, unless approval of the Landlord and Tenant Board is obtained, the increase is limited to the published guideline amount.

The landlord and tenant can agree to a rent increase above the guideline if they agree that the landlord will do major repairs or renovations, buy new equipment for the rental unit, or add a new service for the tenant.

In other instances landlords can apply to the board for above guideline increases to cover such things as increased municipal taxes or utilities, or major repairs or renovations. But increases needed to recoup capital expenditure, for example, cannot be more than 3 per cent above the board’s guideline figure.

Landlords may take rental deposits from new tenant on or before the start of a new tenancy. Where the tenant pays rent by the month, the deposit cannot be more than one month’s rent; where the tenant pays rent by the week, the deposit cannot be more than one week’s rent.

Rental deposits may only be used as the rent payment for the last month or week before the tenant moves out. It cannot be used for anything else, such as repairing damage to the rental unit.

If the landlord gives the tenant a notice to increase the rent, the landlord can also ask the tenant to increase the rent deposit by the same amount. But landlords must pay their tenants interest on rental deposits.

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