Blog Post

Ontario Proposes to Restrict Landlords from Passing Cap and Trade Costs to Tenants

On March 23, 2017, the Ontario Ministry of Housing issued a Notice in the Regulatory Registry proposing changes to the General Regulation under the Residential Tenancies Act, 2006. These changes would stipulate that a landlord's carbon costs within natural gas bills cannot be included when calculating above-guideline rent increases. This change is proposed in response to the commitment in the Climate Change Action Plan that the Ministry of Housing would mitigate the costs of Cap and Trade on tenants.

As we have discussed in earlier posts, Ontario natural gas consumers will pay Cap and Trade costs as part of their "distribution" charges on natural gas bills. The Residential Tenancies Act, 2006 permits landlords to apply to the Landlord and Tenant Board for higher than usual (above guideline) rent increases where the landlord experiences an extraordinary increase in operating costs (such as utilities). The Ministry of Housing's Notice indicates that landlords will not be permitted to include the impact of increased natural gas bills arising from Cap and Trade costs in a request for above-guideline rent increases. In effect, the landlords will be required to absorb the impacts.

The Ministry of Housing's Notice invites interested parties to submit comments by April 5, 2017.