When an Ontario rental unit is exempt from the RTA's limits on how much rent can go up, the landlord raises the rent with the Landlord and Tenant Board's N2 Notice of Rent Increase (Unit Partially Exempt). Most units in this category are social, non-profit or otherwise publicly assisted housing. No guideline caps the increase, yet in the usual case the landlord is still bound to give 90 days' written notice and to space increases at least 12 months apart.
At a glance
| Used by | Landlords of partially exempt units, for example care home units that are exempt, or social and non-profit housing |
| Timing | Ahead of any rent increase on such a unit |
| Notice required | 90 days or more in writing "where applicable", which covers most situations |
| Delivery | Given to each tenant; not filed with the LTB |
| Cost | None |
| Next form | None |
Why some units are only "partly" exempt
For certain units, the RTA turns off rent control while every other part of the Act keeps working, hence the label "partially" exempt. The two main sources are these.
RTA s. 7(1) covers:
- units the Government of Canada owns or operates;
- designated housing projects belonging to a local housing corporation or a service manager;
- non-profit housing created through a prescribed program that now operates under a qualifying agreement or the Housing Services Act, 2011;
- units in a non-profit housing co-operative occupied by non-members;
- units an educational institution supplies to its students or staff; and
- units a religious institution operates for a charitable purpose on a non-profit basis.
For all of them, s. 120 (the guideline) and the above-guideline increase rules are switched off.
O. Reg. 516/06, s. 6 adds two more groups. One is units that came into being or were bought through a listed affordable-housing program (municipal capital facility by-laws and the Canada-Ontario Affordable Housing Program are examples) and that satisfy s. 6(2). The other is housing in the Rural and Native Rental Housing Program.
On its face, the N2 states the new rent and informs the tenant that because the guideline does not apply, "the landlord can raise the rent by any amount".
Is the N2 the right notice?
The N2 is correct where the unit belongs to one of the categories above. The N2 instructions offer this description: "non-profit and other social housing rental units, including care home units that are exempt from the rules limiting rent increases."
Turn to a different form where:
- rent control applies to the unit, in which case use the N1;
- rent control applies and the unit is in a care home, in which case use the N3; or
- you and the tenant have agreed to an above-guideline increase, which is the N10. Bear in mind that s. 121 agreements are not available for s. 7 units, so the N10 cannot be used for them.
When rent control comes back
Two exceptions restore rent control to units that otherwise look exempt:
- in a federal or service-manager project, if the tenant pays rent to some other landlord (s. 7(4), (5)); and
- in student or staff housing, if a residents' council or association exists and was not consulted on the increase (s. 7(6)).
Getting these wrong is the single biggest risk with the N2, because the consequence is an unlawful increase.
Units first occupied after November 15, 2018
According to the N1 instructions, landlords should use the N2 for units "exempt from the rules … limiting the amount of the rent increase". Post-November 15, 2018 units covered by RTA s. 6.1 seem to match that wording. But the N2 instructions date from May 2017, before s. 6.1, and mention only non-profit and social housing. The LTB has not said which of the two forms it expects for an s. 6.1 unit. Either way, the form must be an approved one that gives 90 days' or more written notice (s. 116), and it is prudent to check with the LTB first.
Timing rules
The 90-day notice
Section 116 of the RTA reaches partially exempt units, so you need at least 90 days' written notice, plus five days for mailed notices (s. 191(3)). The LTB has no power to reduce the period (O. Reg. 516/06, s. 56). For an increase effective September 1, 2027, that means handing the N2 over by June 3, 2027 or mailing it by May 29, 2027.
There is one carve-out, which explains the words "where applicable" on the form. No notice is required when rent goes up because the tenant's income has gone up, for a tenant paying rent geared to income in a unit under s. 7(1) paras. 1–4 or under reg. s. 6 (O. Reg. 516/06, s. 6(5); RTA s. 7(3)).
The 12-month rule
In general, RTA s. 119 still governs. It is lifted (O. Reg. 516/06, s. 6(4); RTA s. 7(2)) for:
- tenants paying rent geared to income in units under s. 7(1) paras. 1–4 or reg. s. 6; and
- student, staff and religious-charitable units.
Completing the N2
The current N2, version 01/04/2022, fits on a single page. Compared with the N1 it is simpler: you will find no section explaining the increase and no guideline tick-box.
- To: (Tenant's name and address). Name every tenant and add a mailing address if it differs from the unit.
- From: (Landlord's name and address). Name every landlord, with a mailing address.
- Address of the Rental Unit. Give the complete address with unit number and postal code.
- Your New Rent. Enter the effective date under "On dd/mm/yyyy", the full new rent under "your rent will increase to $", and the rent period (per month, week or other). The form explains that rent includes service charges paid separately, but for a care home it does not include charges for meals or care services.
- Important Information About the Law. Do not alter the printed text.
- Signature. Shade Landlord or Representative, print your name and telephone number, and sign and date. A representative completes the representative section too.
Delivering the N2
The N2 instructions allow these methods:
- giving it to the tenant, or to an adult in the unit;
- putting it in the mailbox or where mail usually arrives;
- sliding it through the mail slot or beneath the door;
- mail or courier; and
- fax to the tenant's home or workplace.
Under Rule 3.1, email is also acceptable where the tenant has given written consent. Never tape it to the door. Every tenant must be served, and you should keep proof that they were.
Errors that make the increase unlawful or void
- Treating a rent-controlled unit as exempt. The tenant never hears about the guideline, and anything charged above it is unlawful. Confirm the exemption, including the s. 7(4)–(6) exceptions, before you rely on the N2.
- Assuming "exempt" means no notice. Section 116 continues to apply, apart from income-driven changes to rent geared to income, and an increase given without proper notice is void under s. 116(4).
- Overlooking the 12-month rule for a market-rent tenant who happens to live in a partially exempt building. The s. 119 carve-out is limited to the categories listed above.
- Counting care or meal charges as rent in a care home unit. The form leaves them out. If the care home is rent-controlled the N3 is the form; otherwise put the rent alone on the N2.
- Door-posting, or email without written consent. Service will be defective unless you can show actual, timely receipt (s. 191(2)).
After serving
You file nothing. The new rent takes effect on the effective date. Hold on to the notice and your proof of service: if no challenge is brought within one year from when the increase was first charged, RTA s. 136 deems it lawful.
Frequently asked questions
What makes a unit "partially exempt"?
Being listed in RTA s. 7(1) or O. Reg. 516/06, s. 6. That includes housing owned by government or run by a service manager, qualifying non-profit housing, co-op units held by non-members, housing from educational institutions and charitable housing run by religious institutions. Their rent increases are not capped by the guideline, but the RTA's other rules mostly still apply.
Is 90 days' notice still needed with an N2?
In most cases, yes. No notice is needed only when rent geared to income rises because the tenant is earning more, in the listed social housing categories.
Can an N2 increase exceed the guideline?
For a unit that genuinely is partially exempt, yes; the form states that the landlord "can raise the rent by any amount". If the exemption does not actually apply, the amount above the guideline is unlawful.
Must I wait 12 months between N2 increases?
Generally yes. The exceptions in RTA s. 7(2) are rent-geared-to-income tenants in listed social housing and units used as student, staff or religious-charitable housing.