Above-Guideline Rent Increases (AGI) in Ontario, Explained

This article is general information, not legal advice. Verify against the Residential Tenancies Act, O. Reg. 516/06, and the Landlord and Tenant Board's guidance, or consult qualified counsel.

Most Ontario rent increases are capped at the annual guideline (2.1% for 2026). An Above Guideline Increase, or AGI, is the narrow exception: it lets a landlord raise rent by more than the guideline, but only on specific grounds, only with the Landlord and Tenant Board's approval, and with limits and tenant protections built in. Here is the real picture, for landlords considering one and tenants who have received a notice.

The three grounds (there are only three)

Under section 126 of the Residential Tenancies Act, an AGI is available on exactly three grounds:

1. Eligible capital expenditures. Significant renovations, repairs, replacements, or new additions, with an expected benefit of at least five years. This is not routine upkeep (more on that below).
2. Operating costs for security services. New or increased security services, specifically those provided by a third party rather than the landlord's own staff.
3. An extraordinary increase in municipal taxes and charges. "Extraordinary" has a precise meaning: the increase must exceed the guideline plus half the guideline. For 2026 that threshold is 2.1% plus 1.05%, so any municipal-tax increase greater than 3.15% can qualify.

There are no other grounds. A rent increase justified by "the market" or by the landlord's general costs is not an AGI.

The cap: 3% above the guideline, for up to three years

This is the part both sides most need to get right.

• For capital expenditures and security services combined, an AGI can add a maximum of 3% above the guideline per year. In 2026 that means an approved increase of up to 2.1% plus 3%, or 5.1% in the first year.
• If more than 3% above guideline is justified, the extra is spread across up to three consecutive years, at up to 3% above guideline each year. Any justified amount not recovered by the end of year three is lost, not carried forward.
• Municipal-tax AGIs are not subject to the 3% cap. A qualifying extraordinary tax increase can be applied in full in the first year.

So "up to 9% over three years" is a fair shorthand for a large capital-expenditure AGI, but it is not a lump sum: it is up to 3% above guideline each year for up to three years, applied to the rent base.

The process: Form L5, and approval before the money

An AGI is not something a landlord simply announces. The steps:

• The landlord applies to the LTB on Form L5, and must file it at least 90 days before the first effective date of the intended increase.
• The landlord also serves the tenant a standard rent-increase notice (Form N1) with 90 days' notice.
• Crucially, the tenant only has to pay the guideline amount until the LTB issues its order. They do not pay the above-guideline portion while the application is pending.
• At the hearing, the landlord bears the burden of proof, showing the actual costs with evidence. Tenants receive notice, can review that evidence, can organize with other affected tenants, and can contest the application.

What does not qualify

The LTB explicitly excludes a lot of what landlords hope to claim:

• Routine or ordinary maintenance done to keep an asset in working order (cleaning, servicing, general repairs, grounds-keeping, appliance repairs).
• Cosmetic work or work meant to add prestige or luxury.
• Replacing something that did not need replacing, with narrow exceptions for accessibility, energy or water conservation, and security.
• Work to fix the landlord's own neglect of maintenance obligations.

If the project is upkeep rather than a genuine capital improvement, it is not an AGI.

Tenant protections are real

This is where the AGI system has teeth, and where tenants are often under-informed:

• If the AGI is denied or reduced, any amount the tenant already paid above the guideline must be refunded.
• Serious disrepair blocks it. If the LTB finds the landlord in serious breach of maintenance, health, safety, or housing-standards obligations, it must either dismiss the AGI or order that it not take effect until the landlord proves the problems are fixed.
• Capital-expenditure increases are not permanent. When the useful life of the capital work ends, if the tenant is still there, the landlord must reduce the rent by the portion that was attributed to that work. The reduction date is set out in the LTB order.
• New tenants are protected. The AGI cannot be charged to a tenant who moved in after the application was filed.

For landlords considering an AGI

An AGI is a legitimate tool for real capital investment, but it is paperwork-heavy, closely scrutinized, and only worthwhile for genuine, documented, long-lived improvements. The practical prerequisites are good records: itemized costs, invoices, and proof the work was necessary and substantial. If your "improvement" is really deferred maintenance, an AGI is the wrong route. Our guide to the Ontario RTA covers the broader rules, and the 2026 guideline explainer sets the baseline an AGI builds on.

Frequently asked questions

How much above the guideline can rent go with an AGI? For capital expenditures and security services, up to 3% above the guideline per year (so up to 5.1% in 2026), spread over up to three years. Extraordinary municipal-tax increases are not capped.

Do I have to pay the increase while the application is being decided? No. Until the LTB issues its order, you only owe the guideline amount. If the AGI is later denied or reduced, over-guideline amounts are refunded.

Does an AGI stay on my rent forever? For capital-expenditure AGIs, no. When the useful life of the work ends and you are still the tenant, the landlord must reduce the rent by the amount attributed to that work.

Can a landlord get an AGI for repainting or fixing neglected repairs? No. Cosmetic work, routine maintenance, and fixing the landlord's own neglect do not qualify.

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AGIs live or die on documentation: itemized capital costs, proof of necessity, and clean records for every unit. Habyn helps small landlords keep the kind of records that stand up to scrutiny. See how Habyn helps landlords.