If you’re renting a newer condo, a newly built basement apartment, or a unit in a recently constructed building, chances are your rent increase notice doesn’t look like your friend’s — and there’s a good reason. Many newer units in Ontario are exempt from the province’s annual rent increase guideline, and the form landlords use for those increases is the N2, not the more familiar N1.
That exemption surprises a lot of tenants, and it’s often misunderstood by landlords too. Here’s what the N2 actually covers, and what protections still apply even when the guideline percentage doesn’t.
What Is the N2 Form?
The N2 — Notice of Rent Increase (Unit Partially Exempt) — is used when a rental unit is exempt from Ontario’s standard rent increase guideline cap. The most common reason for this exemption: the unit was first occupied for residential purposes on or after November 15, 2018. Under changes to the Residential Tenancies Act, these newer units were removed from rent control, meaning landlords aren’t limited to the annual guideline percentage when raising rent.
Other, less common categories of partial exemption also fall under the N2, but the post-2018 new-build exemption is by far the most frequent reason tenants encounter this form.
What Does Exempt Actually Mean?
It’s a common misconception that “exempt” means a landlord can do whatever they want, however often they want. That’s not accurate. The unit is only exempt from the guideline percentage cap — not from the rest of the Residential Tenancies Act’s procedural protections. In other words:
- The landlord can propose a rent increase larger than the current year’s guideline (which is 2.1% for 2026)
- The landlord still must give at least 90 days’ written notice
- The landlord still can only increase rent once every 12 months
- The landlord still must use the correct, complete LTB form and serve it properly
So while the percentage ceiling disappears, the timing and process rules don’t. A tenant in an exempt unit still has the right to expect proper notice and proper form, even if the dollar amount itself isn’t capped.
How to Tell If Your Unit Is Actually Exempt
This is where disputes often start — landlords sometimes assume a unit is exempt when it isn’t, or tenants assume it’s not exempt when it is. The key test is the date the unit was first occupied for residential purposes, not the date you personally moved in. A unit first rented out in 2016, for example, remains subject to the guideline even if you only moved in last year. Confirming the unit’s original occupancy date — through the building’s history, occupancy permit, or landlord disclosure — is the first step in figuring out whether an N1 or an N2 should apply.
If a landlord serves an N2 on a unit that doesn’t actually qualify for the exemption, the notice may not be valid, and the increase may be enforceable only up to the standard guideline. If you’re unsure which category your unit falls into, it’s worth having a paralegal review your notice before agreeing to pay an increase above the guideline.
Common Mistakes With the N2
- Applying the exemption to a unit that doesn’t qualify, based on when the building was constructed rather than when the specific unit was first occupied residentially
- Serving less than 90 days’ notice, assuming the exemption also removes the timing requirement (it doesn’t)
- Increasing rent more than once in a 12-month period, mistakenly believing exempt status removes this limit too
- Using the wrong form entirely — filing an N1 for a genuinely exempt unit, or an N2 for a unit that’s actually rent-controlled
- Posting the notice on the door instead of using an accepted method of service
What Should Tenants in Exempt Units Watch For?
Tenants in newer buildings sometimes assume there’s nothing to check because “the rules don’t apply here.” In reality, the two things worth confirming on any N2 are the same as any rent increase notice: was it served at least 90 days in advance, and has it actually been 12 months since the last increase? Those protections exist regardless of whether the unit is exempt from the percentage cap.
If a landlord tries to raise rent again within that 12-month window, or gives short notice on the assumption that exempt units don’t need the same process, that notice can still be challenged at the Landlord and Tenant Board.
N1 vs. N2: Side-by-Side
N1 | N2 | |
|---|---|---|
Applies to | Units first occupied on or before Nov 15, 2018 | Units first occupied after Nov 15, 2018 (and other partial exemptions) |
Rent increase cap | Limited to the annual guideline (2.1% in 2026) | No percentage cap |
Notice period | 90 days | 90 days |
Frequency | Once every 12 months | Once every 12 months |
Frequently Asked Questions
Does my landlord need LTB approval to raise rent above the guideline in an exempt unit?
No. For a genuinely exempt unit, the landlord can set the new rent amount without a percentage cap or LTB approval — but must still follow the 90-day notice and 12-month rules.
How do I find out if my unit was first occupied before or after November 15, 2018?
This usually requires checking the building’s occupancy history or asking the landlord directly. If there’s a dispute about the date, it can be raised at the LTB.
Can a landlord use an N2 on an older building?
No. If a unit doesn’t meet the exemption criteria, it remains subject to the standard guideline under the N1, regardless of which form the landlord chooses to serve.
Is there any limit at all on how much rent can increase in an exempt unit?
There’s no guideline percentage cap, but the increase still must follow proper notice (90 days) and frequency (once per 12 months) rules, and cannot be applied in a way that violates other tenant protections under the RTA.
What if I already paid an increase that didn’t follow the notice rules?
You may have grounds to dispute the increase and seek recovery of amounts paid under an invalid notice. A paralegal can help assess whether the notice met the legal requirements.
Know Your Numbers Before You Pay — or Push Back
Whether you’re a landlord managing a mix of older and newer units, or a tenant trying to figure out which rules apply to your specific building, the N2 is one of the more commonly misapplied LTB forms — precisely because “exempt” gets misunderstood as “no rules at all.”
At Chubz Legal, we help landlords and tenants across Ontario sort out exactly which notice applies to their unit and whether it was served correctly. Reach out for a free consultation before you sign off on — or challenge — a rent increase.