The Rent Control Loophole Gouging Ontario Tenants

Same housing crisis, but two entirely different rules.

Ontario’s rent control system arbitrarily protects some tenants with rent control while leaving others completely exposed to skyrocketing rents and economic evictions. In Toronto, renters living in homes first occupied after November 2018 — and therefore unprotected from rent control — are paying around 50% more than tenants in rent-controlled units. In Sudbury, the difference is even more staggering: unprotected tenants on average are paying more than double the rent of those who are protected.1

The 2018 Rent Control Exemption protects some tenants and gouges the rest:

How much are the unprotected being gouged? As of October 2024, tenants in these “exempt” units are paying hundreds — sometimes even over a $1,000 — more each month compared to tenants in rent controlled homes, for the same basic right: a place to live.

The Financial Gap

Fair Rent Ontario’s graph below on the 2018 Rent Control Exemption provides a glimpse into the massive gap between controlled and exempted rents in several Ontario cities. It shows the average extra rent paid by tenants impacted by the 2018 Rent Control Exemption:

Figure 1

Toronto: +$786 (1B), +$1,054 (2B) Ottawa: +$532 (1B), +$873 (2B) Kitchener–Cambridge–Waterloo: +$616 (1B), +$798 (2B) London: +$751 (2B) St. Catharines & Niagara: +$591 (1B), +$695 (2B) Windsor: +$214 (1B), +$609 (2B) 2

In Figure 1, we see Toronto tenants in rent control exempted 1-bedroom and 2-bedroom units paying anywhere from $800 to over $1,000 extra every single month compared to units protected by rent control. In smaller cities like Windsor and London, the gap still hits hard, with newer rentals costing as much as $750 more.

That is money tenants could use for food, transit, childcare, leisure, savings and more. Instead, it vanishes simply because of an arbitrary date proclaimed by the current government.

How Did We Get Here?

The 2018 Rent Control Exemption represents a return to failed policy approaches used by past Ontario governments. Ontario had full rent control until the 1990s, when Ontario introduced the loopholes of: Vacancy Decontrol (i.e., allowing landlords to raise rents to any amount once a tenant moves out), Rent Control Exemption for newer buildings (post-1991), and Above Guideline Increases (i.e. increases above the yearly limit on rent controlled units).

Timeline of Ontario’s Deteriorating Rent Control Protections
1986: 
Ontario protects all tenants with full control including limiting rent hikes between tenancies.

1992: 
Ontario introduces a five-year rent control exemption for newly built units.

1996–98:
Ontario expands the exemption to all units first occupied after November 1, 1991, and introduced vacancy decontrol, letting landlords raise rents without limit when tenants moved out. Eligibility to raise rents through Above Guideline Rent Increase were also expanded.

2003–2017: 
Ontario maintains all rent control loopholes until closing the 1991 Rent Control loophole in 2017.

2018–Present: 
Ontario reopens the loophole by creating the 2018 rent control exemption. 3

In 2017, Ontario closed the post-1991 rent control exemption and for a brief time made rent control rules the same for every sitting tenant, regardless of the age of the building. Tenant advocates fought for rent controls for years but were routinely ignored — until winter 2017. A turning point emerged prior to the provincial election after a journalist revealed she was unhoused when her rent jumped nearly $1,000/month. This story sparked a public outcry over the loophole by amplifying what many tenants were already facing: runaway rent hikes with no protections, which most tenants, even higher earning professionals, could not sustain.

In April 2017, heeding pressure from tenants and the public demanding protection and fairness for renters, the provincial Liberal government capped the annual guideline rent increase to 2.5% and extended rent control to all units with the Rental Fairness Act, finally closing the former 1991 exemption.

However, in November 2018, history repeated itself when the newly elected Progressive Conservative government revived the rent control loophole, exempting all units first occupied on or after November 15, 2018 from rent regulations. The 2.5% rent cap remains in place for protected renters, but today in Toronto, for example, nearly 27,000 purpose-built rental homes have been built since 2018 without any rent controls and 25% of its condos would also be if rented. 

Why Does Ontario Keep Rolling Back Protections?

For decades, Ontario governments have embraced the arguments of residential real estate investors that rent controls hurt tenants by discouraging new housing construction. They claim that by removing rent controls rental units will be more profitable, which will incentivize investors to create new rental stock, and this added supply will result in the lowering of rents. In their view, rent controls are the cause of housing shortages and high rents. In 2018, Ontario’s Fall Economic statement echoed this logic, quoting a CIBC executive claiming, “If history is a guide, [rent control] will only hurt the people it’s trying to protect.”

But in fact, history tells a different story. Housing data from 1995 to 2016 — during the tenure of the 1991 rent control exemption — reveals rent control exemptions are a failed experiment. During this period Ontario averaged just 3,452 rental unit completions a year, less than half of what it needed. The promise of deregulation to unlock the supply Ontario desperately needed never happened.

Since the 2018 Rent Control Exemption, purpose-built rentals may have risen, but they are overwhelmingly luxury units built to maximize profits from record-high rents, as seen in Figure 1. Meanwhile, more would-be homeowners have remained tenants longer, along with  rapid population growth in the province, which has driven demand for rentals to new heights. Despite a rise in construction, projections still show Ontario facing a 200,000 rental unit shortfall by 2034, while rents have climbed by 55% over the past decade.

In summary, the data clearly supports the conclusion that rent control exemptions hurt tenants, and that rent controls do not stifle housing development. This was also confirmed by a leading 2020 CMHC study study that found new unit exemption regimes lead to higher rent prices and that there is no significant evidence of lower rental starts in rent controlled markets.

Who Is Paying the Price?

The pain from the rent control exemption is felt by tenants of all backgrounds, as increasingly more and more face impossible rent hikes and displacement. For example:

The 2018 Rent Control Exemption is fuelling greater financial precarity, with unaffordable rents and increased instability driven by a constant, destabilizing search for affordable housing. Paradoxically, the 2018 Rent Control Exemption is even affecting tenants who are protected by rent control!

Tenant Spotlight:

Patricia Johnston & the Demoviction Crisis

Fair Rent Ontario met with a rent controlled tenant reeling from a housing crisis made worse by the 2018 Rent Control Exemption. Patricia Johnston has lived for decades at 145 St. George Street in Toronto, a vibrant vertical neighbourhood of students, families, workers, and seniors. They have built a multi-generational community that has thrived thanks to rent control.  

However, in April 2021, Patricia and her neighbours learned that developers had applied to have their apartment building demolished. The 145 St. George Street tenants are victims of demovictions, where older, affordable, rent-controlled buildings are targeted by financialized landlords who tear them down and replace them with high-priced condos. This business model is sustained by the 2018 Rent Control Exemption, because the units in the newly built tower are exempt from rent control regulation if rented out. The result is that these investor landlords make record profits by forcibly displacing sitting tenants.

145 St. George Street is part of the surge of demoviction applications Ontario has seen since the 2018 Rent Control Exemption was introduced. In 2022, more than 5,500 demoviction applications were filed at the Landlord and Tenant Board—a 41%increase in just three years. In Toronto, more than 10,000 tenants are at risk of losing their homes to this process.

For 145 St. George Street tenants, their homes no longer feel like homes. Patricia shared the deep toll this is having as she sees her community struggle with grief and depression. “Some seniors say they hope to pass away before they’re forced out,” she laments. “Others have applied for Medical Assistance in Dying (MAID). People don’t believe me when I share that, but I know a few who have.”

Determined not to accept displacement as inevitable, Patricia has since become a member of No Demovictions: A tenant-led organization advocating to protect communities like hers, and keep them safe from displacement. She now advocates directly to decision-makers, pushing for stronger tenant protections, a return to universal rent control and social cohesion:

Rent Control is a necessity! Housing is a human right, not a privilege. Not all of us make six figures, but that doesn’t mean we don’t deserve housing. We penalize the people who keep our communities running, and soon, they won’t be able to afford Toronto or the suburbs. Where will our workers live?

Take Action for Fair Rent

The 2018 Rent Control Exemption has failed Ontario’s tenants. It destabilizes communities, drives mass displacement, and drains household budgets — while incentivizing the demolition of affordable homes replaced with luxury condos exempt from rent control.

But change is possible!

Tenants have won rent control for all before. If tenants organize, we can win it back again!

5 Ways You Can Take Action for Fair Rent

1. Share this Blog and Graph
Expose the truth about rent control loopholes and how much extra rent exempted tenants are paying across Ontario

2. Send a Letter to Your MPP
Demand your provincial leaders take action to end the 2018 Exemption and bring full rent control back to Ontario

3. Become A Public Endorser
Become a endorser and commit to publicly promoting and changing the narrative on rent control in your communities and professional networks.

4. Tell us why #RentControlMatters on Social Media
Tag us @FairRent_On on X, Facebook, and Instagram with your story on why #RentControlMatters

5. Canvas Your Building with the FRO 2018 Exemption Flyer
Spread our message by canvassing your own building to engage your neighbours on rent control with the help of our flyer

Ontario’s decades-long experiment with exemptions has left tenants more destabilized and insecure than ever. Ontario’s must make rent control universal and protect all tenants.

Join the Call: Rent Control for all!

  1. CMHC. (2024). Rental Market Survey, 2024: Data Table. 3.1.7 Profile of New Rental Stock – Private Row (Townhouse) and Apartment Vacancy Rate (%), Average Rent ($) and Universe by Zone and Bedroom Type – For Structures Completed Between July 2021 & June 2024. By Census Metropolitan Area (CMA): Toronto, Sudbury. Ottawa: CMHC  ↩︎
  2. CMHC. (2024). Rental Market Survey, 2024: Data Table. 3.1.7 Profile of New Rental Stock – Private Row (Townhouse) and Apartment Vacancy Rate (%), Average Rent ($) and Universe by Zone and Bedroom Type – For Structures Completed Between July 2021 & June 2024. By Census Metropolitan Area (CMA): Kitchener-Cambridge-Waterloo, London, Ottawa, St. Catharines – Niagara, Toronto, and Windsor. Ottawa: CMH ↩︎
  3. Tranjan, R and Vargatoth, P. (2021). Rent Control in Ontario Is Full of Loopholes. Canadian Centre for Policy Alternativ
    es. ↩︎