Updated October 3, 2026 · DF Property Management
Where an AGI fits
Most rent-controlled units in Ontario can be increased only by the annual guideline: 2.1% for 2026 and 1.9% for 2027, with the guideline itself capped at 2.5%. An above-guideline increase (AGI) is the Landlord and Tenant Board's process for approving more.
AGIs matter mainly for older rental stock — the post-war and 1960s–70s apartment towers that make up much of Toronto's purpose-built rentals. Units first occupied for residential purposes after November 15, 2018 are generally exempt from the guideline, so an AGI isn't needed there.
Three grounds
- Extraordinary increase in municipal taxes and charges — an increase greater than the guideline plus half of it. With a 1.9% guideline, that's anything above 2.85%.
- Eligible capital expenditures — significant work on the building or units (most AGIs).
- Security services — new or increased costs for security provided by someone other than the landlord's employees, still in place at the hearing.
What counts as a capital expenditure
An amount spent on an extraordinary or significant renovation, repair, replacement or new addition with an expected benefit of at least five years. It excludes ordinary or routine maintenance, substantially cosmetic work, and work designed to raise the prestige or luxury of the building.
To be eligible, the work must be necessary to:
- protect or restore the physical integrity of the building;
- maintain health, safety or housing standards;
- maintain plumbing, heating, mechanical, electrical, ventilation or air-conditioning systems;
or it must provide access for people with disabilities, promote energy or water conservation, or maintain or improve security. Replacing something that didn't need replacing is usually ineligible — unless the work falls into those last three categories.
| Often eligible | Often not eligible |
|---|---|
| Roof replacement | Repainting corridors |
| Boiler or chiller replacement | Lobby redesign for appearance |
| Elevator modernization | Routine repairs and servicing |
| Balcony and concrete restoration | Luxury amenity upgrades |
| Energy-efficient windows | Replacing items in good condition |
| Parking garage membrane | Work done more often than every five years |
Every item is judged on its facts; the table shows tendencies, not rules.
Timing rules
- The work must be completed within the 18-month period ending 90 days before the first rent increase date in the application.
- It must be fully paid before you file, other than construction lien holdbacks.
- File the application at least 90 days before the first increase date.
- Serve tenants a notice of rent increase at least 90 days ahead showing the higher amount. Tenants don't have to pay the above-guideline portion until the LTB approves it.
- Tenants who move in after the filing deadline can't be charged the increase.
The 3% cap
For capital expenditures and security costs, the LTB can't allow more than 3% above the guideline in any one year. If more is justified, the rest is taken over the next two 12-month periods, at up to 3% above the guideline each year. Increases for extraordinary municipal taxes have no cap.
Example: the LTB justifies 7% for a building whose first increase falls in 2027. Year one: 1.9% + 3% = 4.9%. Year two: that year's guideline + 3%. Year three: that year's guideline + the remaining 1%.
The LTB spreads each cost over the item's useful life, allocates it to the units that benefit, and compares it with rents. Grants, insurance proceeds and similar recoveries reduce the amount claimed. When the capital costs are fully recovered, the capital-expenditure portion generally comes off the rent of tenants who were there when it took effect.
The process
- Document the need — Condition reports, engineering assessments and photos before work starts.
- Keep the paper trail — Contracts, invoices and proof of payment for every item.
- File Form L5 — $233 for the first ten units, plus $10 per additional unit, to a maximum of $1,000.
- Serve the tenants — The LTB usually directs you to serve the application and Notice of Hearing, and file a certificate of service.
- Case conference and hearing — A dispute resolution officer may help reach agreement; otherwise, a member hears the evidence.
- Serve the order quickly — Since July 1, 2026, a landlord directed to serve the AGI order has 7 days to do so and 5 days after service to file the certificate of service.
Is an AGI worth filing?
Not always. On a small building, the filing work and evidence may outweigh a modest increase, and a few long-term tenants on low rents may limit what can be recovered. On a large building with major structural or mechanical work, the recovery over the useful life of the item can be meaningful. Run the numbers before the work starts, not after — the timing rules mean an AGI has to be planned in from the beginning.
Talking to tenants
An AGI is a public process: tenants receive the application, can review the supporting documents, and often organize a spokesperson. Buildings where tenants understood the work in advance — why the boiler failed, what the balcony repairs fixed — tend to have calmer hearings. Notices about the work while it's under way, clear timelines and a tidy site all help. So does a maintenance record that shows the building was kept up before the capital work began.
The evidence binder
- Building condition assessment or engineering report showing the need for the work.
- Tender documents and the signed contract.
- Every invoice, with proof of payment matched to it.
- Before, during and after photos, dated.
- Permits and inspection sign-offs where required.
- Records of any grants, rebates or insurance recoveries.
- A current rent roll for all affected units.
What can sink an AGI
Serious outstanding maintenance problems. If the LTB finds them, it can dismiss the application for affected units or hold the increase until the work is done; outstanding elevator repair orders can block an increase. The LTB can't consider anyone's ability to pay.
How we can help
Capital planning for apartment buildings is where an AGI is won: scoping eligible work, sequencing it, and keeping invoices and photos from day one. Our owner statements attach every invoice. See also the 2026 guideline and, where work needs the unit empty, the N13 rules.
General information, not legal advice. AGI applications are technical; get specialist advice on calculations before filing.