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Using Ontario Standard Form Lease to Increase Rents Above Guideline.

Updated: Feb 24


Effective April 30th, 2018 landlords of most Ontario rental properties will have to use the Ontario Standard Form Lease, developed by the Government to assist landlords and tenants to be more aware of their rights.


While the lease and appended notes are full of information for tenants on their rights and how to go about enforcing them, landlords rights are conspicuously absent from the materials.


One of the key features of the lease that can be employed by landlords for example is rental discounting: While Ontario law has always prohibited landlords from charging late fees on rent, a "prompt payment" discount of up to 2% of monthly rent is allowable. 


Take for example a lease with a monthly rental of $ 2,000: While you cannot charge $2,000 per month with a $ 40 late fee you are allowed to charge $2,040 with a $ 40 discount in each month the rent is paid on time. This accomplishes the same result in that it provides an incentive to pay on time and some measure of compensation to the landlord if the rent is late.


There is another benefit however in that discounts permitted by the legislation do not affect the lawful rent upon which future rent increases can be based. In the case of the $ 2,040 discounted rent described above for example this allows the landlord to more than double the allowable increase after the first year of tenancy (based on the 2018 guideline of 1.8%):


Without discount:       $ 2,000 * 1.018 = $ 2,036.00

With discount:            $ 2,040 * 1.018 = $ 2,076.72


Particularly in the current climate of rising rents, discounting can be a critical tool for landlords who want to be able to keep pace with the market. Apart from the 2% prompt payment discount there are other ways of discounting rent that can result in allowable increases of over 10% per year.


The above is for information purposes only and is not intended to constitute legal advice. As in most cases with Ontario rent regulations, it is necessary to strictly follow all requirements in order to preserve the benefits of these strategies. To get expert assistance in leasing your rental portfolio or for legal advice on Ontario rentals contact me at 416-628-4835 or email/message me through my website.


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