Rent Adjustment Following Property Tax Reduction

Due to the ongoing Canada Post strike, there may be a delay in notice delivery. Tenants and landlords are encouraged to refer to the Tenant Notification for Rent Reduction 2024 listing of residential rental properties for information on which properties have been issued notices of rent reduction. Notices will be issued to the affected properties once mail delivery resumes.  

 

Under Section 131 of the Residential Tenancies Act (RTA), tenants are entitled to an automatic rent reduction when their landlord’s property taxes have been reduced by more than 2.49 per cent from one year to the next. When this situation occurs, the City will send notices of rent reduction to landlords by September 15 and to tenants by December 15 of that year. While the tenant does not have to get permission from the landlord to automatically reduce the rent, it is recommended that tenants talk with their landlords prior to the effective date on December 31.

At the end of each year, a listing of rental residential properties is provided by the City. This listing outlines the reasons as to whether or not an automatic rent reduction applies to a property.

Rent can be automatically reduced for:

  • apartment buildings
  • rented townhouses
  • duplexes and detached houses
  • rooming houses, boarding and lodging homes
  • mobile home parks and land lease communities
  • rented condominiums
  • most private care homes
  • “for-profit” cooperatives that are rented

Rent cannot be automatically reduced for:

  • public housing
  • non-profit housing projects
  • non-profit housing cooperatives
  • vacation homes
  • some housing owned by educational institutions
  • nursing homes
  • commercial, industrial or recreational properties
  • residential buildings where property taxes increase or do not change

The RTA prescribes that if property taxes have been reduced by more than 2.49 per cent between two consecutive years, the rent reduction is equal to the percentage decrease in property taxes from one year to the next, and then multiplied by:

  • 20 per cent for rental residential properties in the multi-residential property tax class, or
  • 15 per cent for rental residential properties in the residential or new multi-residential property tax class.

Below is an example of a rent reduction calculation for a multi-residential complex that is currently paying $800 per month for rent.

Step 1: Determine percentage of property tax decrease

Previous Year Property Taxes = $10,000

Current Year Property Taxes = $9,150

Reduction in Taxes = Previous Year Property Taxes – Current Year Property Taxes

= $10,000 – $9,150

= $850

Tax Reduction % = (Reduction in Taxes / Previous Year Property Taxes) x 100%

= ($850 / $10,000) x 100%

= 8.5%

Step 2: Determine the percentage of rent reduction

Based on the prescribed rate of 15 per cent for residential or new multi-residential properties and 20 per cent for multi-residential properties (as stated in the RTA):

Rent Reduction % = Tax Reduction % x Prescribed Rate (15% or 20%)

= 8.5% x 20%

= 1.7%

Please note that Steps 1 and 2 are unique and separate, and that the percentage of the property tax decrease is not equivalent to the percentage of the rent reduction. The rate of either 15 or 20 per cent must be applied to the property prior to calculating the value of the rent reduction.

Step 3: Determine value of rent reduction

Rent Reduction = Monthly rent x Rent reduction %

= $800 x 1.7%

= $13.60

Step 4: Determine new monthly rent amount

New Monthly Rent = Monthly Rent – Rent Reduction

= $800 – $13.60

= $786.40

Expanded Notices will be mailed to landlords and tenants of eligible buildings where property tax decreases of more than 2.49 per cent occurred as a result of changes that happened after regular legislated notices were mailed. Property tax changes may result from assessment appeals, tax classification changes or supplementary or omitted assessment changes to a property tax account.

The Expanded Notices are not notices for the purposes of Section 131 of the RTA, they are provided for information only. As such, the City cannot determine whether a tenant is entitled to a rent reduction after receiving these notices. Tenants can either come to an agreement with their landlord, or make an application to the Landlord and Tenant Board to determine whether a rent reduction applies, and the amount of the rent reduction, if any.

List of properties that received Expanded Notices for the year.

  • If a landlord or tenant wants to vary the amount of a rent reduction because they think the amount on the Notice of Rent Reduction is wrong, they may apply to the Landlord and Tenant Board to vary the amount. This action cannot stop the tenant from taking the rent reduction. Once the Board resolves the matter, the ruling would be effective December 31 of the year when the rent reduction originally took effect, and any overpayment or underpayment by the landlord or the tenant would have to be repaid to the other party.
  • Tenants who live in rental buildings with tax decreases of 2.49 per cent or less do not receive a Notice of Rent Reduction from the City; however, they may still apply to the Landlord and Tenant Board for a rent reduction.
  • The deadline for making the application to vary the amount of a rent reduction is March 31 of the year following the day the rent reduction took effect.
  • Contact the Landlord and Tenant Board if you have questions or want more information about the rules for automatic rent reductions, exemptions, or making an application.