Above-Guideline Increases for Utilities

Tenants in Ontario are unfairly paying excessive, permanent rent increases for temporary increases in utilities costs, beyond the amount necessary for recovery of the landlord’s actual costs.

ACTO and representatives of the Legal Clinics’ Housing Issues Committee (LCHIC) have made proposals to the Minister of Municipal Affairs and Housing for the reform of the rules under the Tenant Protection Act for the treatment of above-guideline rent increases based on increased utilities costs.

Under the current rules, tenants are paying permanent rent increases for temporary increases in utilities costs. Landlords can collect excessive rents, beyond the amount necessary for full recovery of actual out-of-pocket costs. When the cost of utilities decreases, tenants have no remedy – given the absence of a provision in the TPA allowing a rent reduction based on decreased utility costs.

ACTO has strongly recommended to the Ontario Government that the best solution is to amend the legislation to no longer allow applications for above-guideline increases based on the cost of utilities. As an alternative approach, ACTO/LCHIC also proposed the restoration of the right to apply to the Ontario Rental Housing Tribunal for rent reductions when increased costs are no longer experienced by the landlord (i.e. “costs-no-longer-borne provision).

ACTO/LCHIC emphasized that any reform must include a mechanism for the removal from rents of those increases associated with the temporary spikes in heating costs in 2000/2001.

In the 2002-2003 Annual Report of the Ombudsman, the Ombudsman made the preliminary finding that "rent increases based on extraordinary increases in the cost for utilities are... unreasonable and improperly discriminatory".