Question: How can my community housing organization decide what to charge for market rents?

Answer: For community housing providers, setting market rents is about balancing affordability with financial sustainability. Market rents should be determined annually as part of the budgeting process and approved by the Board of Directors.

They can set rents anywhere from the highest amount the market allows to below-average rents to keep housing more affordable. The goal is to generate enough revenue to maintain the building while still meeting the mission of supporting low- and moderate-income households. 

Below are some key considerations.

How are market rents determined? 

For housing providers governed by the Housing Services Act, 2011 (HSA), the subsidy formula assumes an expected annual increase in market rents. This increase is based on whichever is lower: 

  • The Provincial Rent Increase Guideline published annually by the Government of Ontario, or 
  • The Canada Mortgage and Housing Corporation (CMHC) market rent increase for the local area. 

If actual market rents fall below the indexed benchmarked rent, the provider may receive a lower subsidy from the service manager. To maintain financial stability, most housing providers adjust market rents annually in line with these guidelines. 

Are community housing providers exempt from rent control? 

If a housing provider continues to operate under the HSA or a former federal operating agreement, it may be exempt from certain sections of the Residential Tenancies Act, 2006 (RTA) (see Section 7), specifically: 

  • Section 120 – Following the standard rent increase guideline. 
  • Section 126 – Applying for an Above Guideline Increase (AGI) through the Landlord and Tenant Board (LTB). 

This exemption for occupied or vacant units provides flexibility to increase rents above the guideline without requiring LTB approval in cases of exceptional circumstances. Some providers choose to stagger larger rent increases over several years to ease the impact on tenants.

What about new affordable housing projects and federal agreements? 

  • Former federal agreements: Providers still operating under federal agreements must follow the rent-setting rules outlined in those agreements. Generally, this means rents should increase annually by the rent increase guideline. 
  • New affordable housing projects: Rent-setting rules for new affordable housing projects are defined in their contribution agreements. 
  • New service agreements under the HSA (Part VII.1): Providers transitioning to new service agreements will negotiate how market rents are set with their service manager. 

Key takeaway 

Community housing providers must carefully set market rents to maintain financial stability while fulfilling their mission of providing affordable housing. By aligning rent increases with provincial guidelines, funding agreements, and service manager negotiations, providers can ensure their housing remains sustainable for years to come. 

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