Above Guideline Rent Increase (AGI) Ontario: Complete Guide for Landlords

What Is an Above Guideline Increase (AGI)?

An above guideline increase allows landlords in Ontario to raise rent beyond the annual rent increase guideline (2.5% for 2026). The process is governed by sections 126 and 127 of the Residential Tenancies Act, 2006 (RTA) and requires approval from the Landlord and Tenant Board (LTB).

You cannot simply decide to charge more. The LTB must review your application, examine your expenses, and issue an order before any above guideline amount can be collected.

When Can You Apply for an AGI?

There are three grounds for an above guideline increase:

1. Extraordinary Capital Expenditures

These are major repairs, replacements, or renovations that are not part of routine maintenance. Examples include:

• Roof replacement
• New boiler or HVAC system
• Elevator modernization
• Window replacement across the building
• Structural repairs
• Fire safety system upgrades

The work must be necessary to protect or restore the physical integrity of the building, comply with legal requirements, or maintain health and safety standards. Cosmetic upgrades that simply improve appearance typically do not qualify.

2. Extraordinary Increases in Property Taxes

If your municipal property taxes increased by more than the rent increase guideline percentage, you may qualify. The increase must be significant and beyond normal annual adjustments.

3. Extraordinary Increases in Security Services Costs

If you have had a substantial increase in the cost of providing security for the building, this can also serve as grounds for an AGI application.

How to Apply: The L5 Form

The application for an above guideline increase is made using the L5 form (Application for an Above Guideline Increase), available on the LTB website. Here is the process:

Step 1: Gather Documentation

Before filing, collect all supporting documents:

• Invoices and receipts for capital expenditures
• Contractor quotes and contracts
• Property tax bills showing the increase
• Photos documenting the work completed
• Any engineering or inspection reports

Step 2: Complete the L5 Application

The L5 requires detailed information about the rental complex, the units affected, current rents, and the specific expenses you are claiming. Fill out every section carefully. Incomplete applications can be delayed or dismissed.

Step 3: Pay the Filing Fee

The LTB charges a filing fee for AGI applications. The current fee varies depending on the number of units in the complex. Check the LTB website for the most recent fee schedule.

Step 4: Serve Tenants

You must serve a copy of the application and all supporting documents on every affected tenant. This is not optional. Tenants have the right to review everything you submit and to respond at the hearing.

What Happens at the LTB Hearing

After you file, the LTB schedules a hearing. Both you and your tenants can attend. Here is what to expect:

• A Board member reviews your application and supporting documents
• You present your case, explaining why the expenses are extraordinary and necessary
• Tenants can challenge your claims, question the necessity of the work, or argue the costs are inflated
• The Board member makes a decision, which may approve the full amount, a partial amount, or deny the application

Tips for a Successful Hearing

• Organize your documents clearly with tabs or labels
• Bring multiple copies of everything
• Be prepared to explain why each expense was necessary, not just optional
• Have before and after photos if applicable
• Be factual and calm. Emotional arguments do not help your case

How Much Can the AGI Add?

The maximum above guideline increase for capital expenditures is 3% per year above the annual guideline. So for 2026, the total possible increase with an approved AGI would be 2.5% (guideline) plus up to 3% (AGI) for a maximum of 5.5% total.

If the capital expenditure justifies more than 3%, the LTB can spread the increase over up to three consecutive years. For property tax increases, there is no separate cap, but the amount must be proportional to the actual tax increase.

How Long Does the AGI Process Take?

The entire process, from filing to receiving an order, typically takes three to six months. During LTB backlogs, it can take longer. Plan accordingly and file as soon as your eligible expenses are documented.

Can Tenants Challenge an AGI?

Yes. Tenants can raise several defenses at the hearing:

• The work was not necessary or was cosmetic in nature
• The costs were inflated or unreasonable
• The landlord failed to maintain the property, and the capital expense was a result of deferred maintenance
• The work was not completed to a reasonable standard

Tenants can also raise their own maintenance issues under section 82 of the RTA. If the Board finds the landlord has neglected repairs, it may reduce or deny the AGI.

AGI vs. Guideline Increase: Key Differences

• Guideline increases require only an N1 form and 90 days notice
• AGI increases require an L5 application, supporting documents, and an LTB hearing
• Guideline increases are automatic if properly noticed. AGI increases must be approved
• You can apply for both simultaneously for the same period

Practical Considerations

Before filing an AGI, consider whether the process is worth the time and expense for your situation. For a single unit with a $3,000 capital expense, the additional rent recovery may be modest. For a multi-unit building with a $100,000 roof replacement, the AGI can recover a significant portion of the cost over time.

Keep meticulous records of all capital work from the moment you start planning it. The stronger your documentation, the smoother the hearing will go. Read our guide to the 2026 rent increase guideline to understand how the standard increase works alongside an AGI.

Key Takeaways

• An AGI lets you increase rent above the annual 2.5% guideline
• Eligible grounds include capital expenditures, property tax increases, and security cost increases
• You must file an L5 application with the LTB and attend a hearing
• The maximum AGI for capital expenses is 3% per year, spread over up to three years
• Thorough documentation is the single most important factor in a successful AGI application