Above Guideline Rent Increase
In Toronto, a landlord may apply for an Above Guideline Increase (AGI) when certain extraordinary expenses have been incurred that are not covered by Ontario’s annual rent increase guideline. AGI applications are submitted to the Landlord and Tenant Board and are governed by the rules set out in the Ontario Residential Tenancies Act.
Common reasons for an AGI application include significant capital expenditures that extend the life of a building, such as roof replacements, elevator modernization, balcony restoration, plumbing upgrades, window replacement, or major mechanical system improvements. Landlords may also apply when there have been extraordinary increases in municipal taxes and charges beyond prescribed thresholds.
The AGI process requires landlords to provide detailed documentation demonstrating the nature, cost, and eligibility of the work or expenses. Tenants must be notified of the application and have the opportunity to review supporting materials, submit evidence, and participate in any hearings before a decision is made.
If approved, the Landlord and Tenant Board may permit a rent increase above the annual provincial guideline, subject to statutory limits and phased implementation requirements. The intent of the AGI framework is to help landlords recover the costs of major investments that preserve, improve, or maintain rental housing while ensuring tenants are afforded procedural fairness and the opportunity to challenge applications they believe are unwarranted.
Ultimately, the Board determines whether the requested increase is justified based on the evidence presented by all parties.
Click here for the Landlord’s application for the above guideline increase.Â
This document is publicly available to all tenants on the LTB website.
Capital expenditure does not include "work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex."
Source: Tribunals Ontario website accessed 2026-06-05:
https://tribunalsontario.ca/documents/ltb/Interpretation%20Guidelines/14%20-%20Applications%20for%20Rent%20Increases%20above%20the%20Guideline.html
The following additional commentary is from GeminiAI
Determining if a renovation qualifies for an **Above Guideline Increase (AGI)** under Section 126 of the *Residential Tenancies Act* (RTA) depends heavily on whether the work is considered a "necessary capital expenditure" or "substantially cosmetic."
Under the RTA and the rules of the Landlord and Tenant Board (LTB), the short answer for most cosmetic upgrades is **no**.
## 1. Replacing Wallpaper and Carpets: Generally, replacing wallpaper and carpets in common areas does **not** qualify for an AGI. The LTB typically views these as:
* **Cosmetic in nature:** Work that is primarily intended to improve the appearance of the building rather than its structural integrity.
* **Routine Maintenance:** Painting, cleaning, and replacing floor coverings like carpets are often considered part of a landlord's ongoing obligation to maintain the building in a good state of repair.
**The Exception:**If the landlord can prove the carpet replacement was necessary for **health and safety** (e.g., the old carpet was a tripping hazard or mold-infested) or **accessibility** (e.g., replacing thick carpet with smooth flooring to aid wheelchairs), they *might* have a case. However, simply "refreshing" the look will almost always be rejected as an eligible capital expenditure.
## 2. Renovating the Lobby to look "Upscale": If a landlord renovates a lobby specifically to make it more "upscale," "prestigious," or "luxurious," this work is **expressly ineligible** for an AGI.
According to **Section 126(8.1)** of the RTA and LTB guidelines, a capital expenditure is not eligible if it is:
> *"Work that is substantially cosmetic in nature or is designed to enhance the level of prestige or luxury offered by a unit or residential complex."*
### What qualifies vs. What doesn't
To be eligible for an AGI, the landlord must demonstrate that the work was **necessary** for one of these four reasons:
1. **Protecting the physical integrity** of the building (e.g., structural repairs).
2. **Maintaining health, safety, or housing standards** (e.g., fire safety upgrades).
3. **Providing access** for persons with disabilities.
4. **Promoting energy or water conservation** (e.g., high-efficiency lighting).
| Item | Likely Eligible? | Reason |
| --- | --- | --- |
| **New Chandelier** | No | Cosmetic/Luxury |
| **Marble Flooring** | No | Prestige/Luxury |
| **Automated Doors** | **Yes** | Accessibility |
| **New HVAC/Insulation** | **Yes** | Energy Conservation |
## Summary : If the landlord's goal is simply an "upscale" aesthetic, the LTB will likely deny the application. If you are a tenant facing an N1 notice for an AGI, you can challenge it at an LTB hearing by arguing that the work was "substantially cosmetic" or "designed to enhance prestige" rather than being a necessary repair.
During the tenants' meeting on Thursday, May 27th AT 7 pm, it was discussed that the tenants would retain a paralegal to represent the tenants at the June 16th Zoom meeting. To cover the cost of this representation, tenants were requested to contribute $100. This contribution can be made by cheque made payable to "Cash" with a notation on the cheque that this is for the legal services for the AGI. Also, make sure that you add your apartment number on the cheque. The cheque may be delivered to: Nancy (apt 709) or Linda (1002).
Regarding the major expenses of the proposed
Above Guideline Increase at 2500 Bathurst for your consideration
Payment fee to building organization
A fee for representation has been requested;
it would be good to have a proper bank account for this purpose of tenants participation towards disputing the above guideline to be able to give checks or e-transfers. Where there are cash payments, receipts should be issued accordingly and it should be made clear that the money is refundable if there is no fee paid for an agent to represent the matter,
Paralegal
The paralegal representative(s) should submit to the tenancy a planned strategy.
An estimated fee for paralegal representation was mentioned to be between $6-8000.00. This estimate seems high considering what may and may not be involved with this claim;
The first meeting with the LTB is described supposedly (by Kelly) as a ‘mediation’ and will simply be to enter a dispute of the landlords claim. If the landlord will upon finding the tenant disputing the increase, he may decide to withdraw his application in part or whole.
The second scheduled appearance before a tribunal adjudicator may be a simple matter of determining if the landlords of the following is a valid claim:
> Do the corridor carpets fall under a replacement schedule and can that claim can be challenged.
> Was the work done to the lobby necessary? Was the work an upgrade advantageous to the landlord, or perhaps a combination of necessary and upgraded work may be determined?
The second meeting with the LTB will be a ‘Tribunal Hearing’.
Fees for representation of these above guideline increase should take into consideration that the matters at hand do not require the preparation often associated with structural issues and Engineers testimony as there was no structural work being claimed here.
The work – carpeting – lobby
The work at hand included the removal of surface materials and preparation of surfaces to install carpets in corridors and tiles in lobby. NO skilled labour is required for this except laying of lobby tiles may require some degree of skilled labour (appx 1000sqft).
An estimated square footage of the lobby is 1000sq ft. The estimated square footage of the corridor carpet replacement is 4000sq ft. The removal, preparation and replacement of these flooring items requires NO skilled labour however tile laying in the lobby may require tile layers.
The cost for the work described as ‘demolition’ seem an excessive amount of $123, OOO.00
Breakdown of materials, quantities and labour
The landlord should submit a breakdown that includes receipts for cost/quantities of material and labour.
Designer Fees
Typical charge for designer is $8 to $25per square foot, which usually covers drafting plans, lighting layouts, and material selections. Note, that in an apartment building all corridors are the same material selection leaving only the lobby area (1000sqft) to receive design attention.
The fees for the interior designer seems excessive at $50,000.00
Summary of costing of proposed increase
The total claim for increase by the landlord seems excessively high at $804,000.00
Carpeting and Wallpaper
If I were to be generous with costs and estimation, I would estimate the removal and replacement of corridor carpeting at $200.000.00
Wallpaper required repair or replacement and would likely qualify for AGI. The amount claimed for labour and materials should be checked.
That would leave the lobby renovation at an estimated cost of 600.000.00
Lobby work at an estimated area of 1000sqft would suggest a cost of
lobby work of $600.00 sqft
Example; New construction; 2026 Cond/Apt., Hard Construction Costs per Sq. Ft. (GTA) Including labour and materials; Up to 12 storeys: $245 – $390 / sq. f;t. (Canadian Cost Guide-Ontario). Note – this is for new construction
It is my opinion that cost of this work as proposed in the above guideline increase whether necessary or not is excessively high.
NOTE; The above contains unconfirmed estimates for discussion purpose only. Confirmed estimates are needed for accuracy. Other smaller items of the claim are not addressed here and are held in abeyance.