Market & Money | Rent Control
Rent Control and a New Toronto Multiplex: What the 2018 Exemption Actually Does
Under Ontario's Residential Tenancies Act, rental units first occupied for residential purposes after November 15, 2018 are exempt from the annual rent increase guideline. A multiplex you build today is on the exempt side of that date. It is the single fact that most changes how a Toronto build-to-rent project is underwritten, and it is also the fact most often misread.
Key Takeaways
- ✓Units first occupied after November 15, 2018 are exempt from the guideline.
- ✓A new multiplex, and most new basement units in an existing house, fall on the exempt side.
- ✓The 2026 guideline is 2.1 per cent, and it applies to units first occupied on or before that date.
- ✓Exempt removes the cap on the amount. Once every 12 months, 90 days notice, and the correct form all still apply.
- ✓The exemption attaches to the unit, not to a tenancy, and carries through later tenants.
Rent growth is only half the income question; the other half is how many units the lot supports. Model the units and the rents together using CMHC survey rents for your area.
What the Exemption Covers
The Province states it plainly: the guideline does not apply to new buildings, additions to existing buildings, and most new basement apartments occupied for the first time for residential purposes after November 15, 2018. The exemption also reaches new mobile home parks and land lease communities, which is not relevant to a Toronto multiplex but explains why the wording is broader than "new buildings".
For a multiplex owner the practical readings are these. A new four or six unit building is exempt. A self-contained unit newly added to an existing house, in certain circumstances, is exempt even though the house is old. And a unit in a building that has been rented since long before 2018 is not exempt, no matter what work has been done to it since, because the test is when the unit was first occupied rather than when it was last renovated.
The Part People Get Wrong
"Exempt from rent control" gets heard as "no rules". The exemption is narrow. It lifts the cap on how much an increase can be, and it lifts nothing else. These four obligations apply to an exempt unit exactly as they apply to any other.
Once every 12 months
Rent can be increased no more than once in any 12-month period for the same tenant. The exemption removes the cap on the amount, not the frequency.
90 days written notice
The tenant must get at least 90 days written notice of an increase, on the Landlord and Tenant Board form. Notice given late is not effective on the date you wanted.
The correct LTB form
An increase for an exempt unit is given on the Board's notice-of-rent-increase form. Using the wrong form, or no form, is how an increase gets set aside.
Every other RTA right
The exemption is about the guideline only. Security of tenure, maintenance obligations, the rules on entering a unit, and the eviction process all apply exactly as they do to any other tenancy.
An increase given without proper notice, or on the wrong form, can be set aside at the Landlord and Tenant Board regardless of whether the unit is exempt. The exemption is worth having and worth administering properly.
What It Changes in the Model
In a guideline-capped building, rent growth for a sitting tenant is limited to the published percentage for as long as they stay. If market rents move faster than the guideline, the gap between what the unit earns and what it would earn widens every year, and it only closes when the unit turns over. That gap is the reason older Toronto rental buildings trade the way they do.
In an exempt building the statute stops being the binding constraint. What the unit can charge on renewal is set by the market and by the tenant's willingness to stay or move. That is a genuine difference in the income line, and it is why purpose-built rental is underwritten separately from older stock.
It is not a licence to model aggressive rent growth. The market still sets the number, and Toronto's condo rental supply competes for the same tenant. A conservative model prices units from CMHC's Rental Market Survey, which measures existing purpose-built stock and therefore usually sits below what a brand-new unit achieves, and treats the exemption as removing a downside rather than creating an upside.
Best For
- ✓ Underwriting a new Toronto multiplex held as rental, where the guideline does not constrain renewal.
- ✓ Comparing a new build against buying an older building with sitting tenants and capped rents.
- ✓ Deciding whether to add a self-contained unit to an existing house, which can be exempt even though the house is not.
Usually Fails When
- ✕ An owner reads exempt as no rules and misses the 12-month, 90-day and correct-form requirements.
- ✕ A model assumes the exemption lets rents rise faster than the market will actually pay.
- ✕ A building rented since before 2018 is assumed exempt because it has been renovated. The test is first occupancy, not renovation.
What To Verify Before Spending Money
- → The date each unit was first occupied for residential purposes, recorded and kept, because the exemption rests on it.
- → The current year guideline on the Province of Ontario page, since it is reset annually.
- → The correct Landlord and Tenant Board form and notice period before giving any increase.
Frequently Asked Questions
Is a new Toronto multiplex exempt from rent control? +
From the annual rent increase guideline, yes. Under the Residential Tenancies Act, rental units first occupied for residential purposes after November 15, 2018 are exempt from the rules that limit rent increases to the guideline. A newly built multiplex is first occupied well after that date, so its units fall on the exempt side. The exemption also reaches additions to existing buildings and, in certain circumstances, new self-contained units added to an existing detached, semi-detached or row house, such as a basement apartment.
Does exempt mean a landlord can do whatever they want with rent? +
No, and treating it that way is how owners end up at the Landlord and Tenant Board. The exemption removes one thing: the cap on how much an increase can be. Rent can still be increased no more than once every 12 months for the same tenant, the tenant must still receive at least 90 days written notice, and the notice must still be given on the correct Board form. Every other obligation under the Residential Tenancies Act continues to apply.
What is the 2026 rent increase guideline in Ontario? +
2.1 per cent. That figure caps annual increases for units that are covered by the guideline, which means units first occupied on or before November 15, 2018. It does not apply to exempt units. The guideline is set annually, so the number changes each year and should be read from the Province's own page rather than from a figure quoted second-hand.
How does the exemption change a build-to-rent proforma? +
It changes what happens to income after year one. In a guideline-capped building, rent growth is limited to the published percentage for as long as the tenant stays, no matter what the market does. In an exempt building it is not, so the model can hold rent to market on renewal. That is the reason purpose-built rental in Toronto is underwritten differently from an older building with sitting tenants. It does not mean the market will pay more; it means the statute is no longer the binding constraint on the increase.
Does the exemption follow the unit or the tenant? +
The unit. The test is when the unit was first occupied for residential purposes, not who lives there now or when their tenancy started. A unit first occupied after the cutoff stays exempt from the guideline through later tenancies. That is also why the date the first tenant moves in is a fact worth recording carefully in your own files, because it is the fact the exemption rests on.
Where does this leave rents used in a Toronto multiplex model? +
Rents in a model should come from what comparable units actually achieve, not from the guideline. CMHC's Rental Market Survey publishes average rent by bedroom type for each survey zone, which is a conservative starting point because it measures the existing purpose-built stock rather than new construction. A new unit usually rents above the survey average. Using survey rents keeps the income side of a model on the cautious side of reality.
Official Sources Referenced
The guideline figure and the exemption wording on this page were read from the Province of Ontario page linked above on September 3, 2026. The guideline is reset every year. This page explains published rules and is not legal advice; a tenancy question on your own facts belongs with a lawyer or paralegal who practises before the Landlord and Tenant Board. VanPlex is a British Columbia builder and does not operate in Toronto.
Rent growth matters only once the units exist
The exemption changes what happens to income after year one. How much income there is to begin with depends on the unit count and the CMHC rents for your area, and PlexCheck reads both from your address.
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