How does a landlord get a rent increase above the guideline?
By applying to the Board. The Act says: No landlord may increase the rent charged to a tenant, or to an assignee under section 95, during the term of their tenancy by more than the guideline
, except in the ways the Act names. (Residential Tenancies Act, s. 120 (1)) Section 126 is the way for renovations.
It says: A landlord may apply to the Board for an order permitting the rent charged to be increased by more than the guideline for any or all of the rental units in a residential complex
, and one case is Eligible capital expenditures incurred respecting the residential complex or one or more of the rental units in it.
(Residential Tenancies Act, s. 126 (1)) The Landlord and Tenant Board puts it this way: In certain cases, a landlord may be able to request an above guideline increase, but they must obtain approval from the LTB.
(Landlord and Tenant Board, Application and hearing process)
What counts as a capital expenditure?
A regulation defines it. A capital expenditure is an expenditure for an extraordinary or significant renovation, repair, replacement or new addition, the expected benefit of which extends for at least five years
. (O. Reg. 516/06, s. 18 (1)) It leaves out routine or ordinary work undertaken on a regular basis or undertaken to maintain a capital asset in its operating state, such as cleaning and janitorial services, elevator servicing, general building maintenance, grounds-keeping and appliance repairs
, and work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex
. (O. Reg. 516/06, s. 18 (1))
Which capital expenditures are eligible, and which are not?
The Act lists six reasons that make a capital expenditure eligible, then limits, and the six apply except under the prescribed circumstances
. (Residential Tenancies Act, s. 126 (7)) The table gives the words of each. Whether a given job fits is for the Board to decide.
| Work | Counts? | The law says | Source |
|---|---|---|---|
| Protecting or restoring the structure | Can count | it is necessary to protect or restore the physical integrity of the residential complex or part of it | RTA s. 126 (7)(a) |
| Meeting the landlord's repair and standards duty | Can count | it is necessary to comply with subsection 20 (1) or clauses 161 (a) to (e). Subsection 20 (1) is the duty in our maintenance standards guide | RTA s. 126 (7)(b) |
| Keeping a building system going | Can count | it is necessary to maintain the provision of a plumbing, heating, mechanical, electrical, ventilation or air conditioning system | RTA s. 126 (7)(c) |
| Accessibility | Can count | it provides access for persons with disabilities | RTA s. 126 (7)(d) |
| Saving energy or water | Can count | it promotes energy or water conservation | RTA s. 126 (7)(e) |
| Security | Can count | it maintains or improves the security of the residential complex or part of it | RTA s. 126 (7)(f) |
| Replacing something that did not need replacing | Does not count, unless it promotes accessibility, conservation or security | Not eligible if the system or thing that was replaced did not require major repair or replacement | RTA s. 126 (8) |
| Work finished before a new tenant moved into the unit | Does not count for that unit | Not eligible if a new tenant entered into a new tenancy agreement in respect of the rental unit and the new tenancy agreement took effect after the capital expenditure was completed | RTA s. 126 (9) |
| Routine work and maintenance | Does not count | Excluded: routine or ordinary work undertaken on a regular basis | O. Reg. 516/06, s. 18 (1)(c) |
| Cosmetic or luxury work | Does not count | Excluded: work that is substantially cosmetic in nature | O. Reg. 516/06, s. 18 (1)(d) |
| Work finished outside the time window | Does not count | A rent increase shall not be ordered in respect of a capital expenditure unless the work was completed during the 18-month period ending 90 days before the effective date of the first intended rent increase referred to in the application. | O. Reg. 516/06, s. 26 (2) |
How much can the rent go up, and when?
There is a cap. The Act says the part of the increase that comes from capital expenditures and security costs shall not be more than 3 per cent
. (Residential Tenancies Act, s. 126 (11)) The Board explains: A rent increase for capital expenditures and operating costs for security services cannot be more than 3% above the guideline in any one year.
Any balance can be taken in the following two 12-month periods, at a rate of up to 3% above the guideline per year
. (Landlord and Tenant Board, brochure on above guideline applications, updated April 2, 2025)
Timing matters. The Act says: An application under this section shall be made at least 90 days before the effective date of the first intended rent increase referred to in the application.
(Residential Tenancies Act, s. 126 (3)) And the tenant is not out of pocket meanwhile: The tenants, however, do not have to pay this higher amount unless it is approved in an LTB order.
(Landlord and Tenant Board, brochure)
What does the landlord have to prove?
The cost, and that it was paid. The Board says: Landlords must provide detailed information in the application about their costs. They must also file proof that they paid these costs.
That may include invoices from a contractor to show the amount charged for a major repair, and cancelled cheques to prove the landlord paid the invoice
. (Landlord and Tenant Board, brochure)
An expenditure counts once it is incurred, which the regulation defines as the payment in full of the amount of the capital expenditure, other than a holdback withheld under the Construction Act
. (O. Reg. 516/06, s. 18 (1)) The Board also changed the filing in late 2025: the Rental Unit Information form is now a mandatory requirement when filing an L5 application
, and L5 is the application for a rent increase above the guideline. (Landlord and Tenant Board, operational update, October 31, 2025)
Can maintenance problems stop the increase?
Yes. The Board says: If a Member finds that serious maintenance problems exist, the LTB may dismiss the application for the rental unit(s) affected by the maintenance problems, or, issue an order that does not allow the AGI rent increase to take effect until the work is complete.
(Landlord and Tenant Board, brochure) Keeping up with income property maintenance protects the application as well as the tenants.
What does this mean for a renovation job?
Keep each unit's costs separate and keep every invoice. A Reborn Renos quote is a written list of every part of the job, unit by unit, each line with its own price, then HST and the total, so you can see what each part costs. We do apartment and commercial renovations from framing to paint and trim, and the work in hallways, stairwells, laundry rooms and balconies. Which jobs the Board accepts as capital expenditures is its decision, so check the table above, and ask a paralegal or lawyer, before you plan an application.
Is this legal advice?
No. This is a plain summary, not legal advice. The linked law is what counts. The Act, the regulation and the Board's pages were read on 1 November 2026.
How do I book renovation work?
Reborn Renos is insured and covered by WSIB. We work in Beamsville, Lincoln, Grimsby, Stoney Creek, Hamilton, St. Catharines, Thorold and Niagara Falls. Call (905) 920-1418, Monday to Saturday, 7 am to 7 pm, or send the units and the work on the request page.