Last updated: October 16, 2026. This page covers Ontario residential tenancies only. It is general information, not legal advice.
What “unit partially exempt” means
Most Ontario rental units are covered by the annual rent increase guideline, which caps how much a landlord can raise the rent each year. Some units are exempt from that cap. The N2 is the notice used for them. “Partially” matters: the unit is exempt from some of the Act’s rent-control rules, such as the guideline. For most exempt units the rest of the Residential Tenancies Act, 2006 still applies. Some social, non-profit and similar housing is exempt from more of the Act.
The units that can be exempt include:
- New buildings. A unit in a building where no part was occupied for residential purposes on or before November 15, 2018, and a unit entirely located in a new addition to a building under the same test (section 6.1 of the Act).
- Some new units in houses. A new self-contained unit in a detached, semi-detached or row house that had no more than two residential units on or before November 15, 2018, but only if further conditions in section 6.1(3) are met.
- Some social, non-profit and similar housing. Certain units listed in section 7 of the Act and in section 6 of Ontario Regulation 516/06, such as some non-profit, community and government-owned housing, and units run by educational or religious institutions.
Three limits are easy to miss:
- The section 6.1 exemptions (new buildings, additions and some new units in houses) do not apply to a tenancy agreement entered into on or before November 15, 2018 (section 6.1(4)). A later tenancy of the same unit can qualify (section 6.1(5)).
- The landlord has to prove that the exemption applies (section 6.1(6)).
- A unit being rented as a house, a basement apartment or a condo is not exempt just because of what it is. The ordinary guideline rules cover those units unless one of the exemptions above applies.
N1, N2 and N3: which form
| Form | Used for |
|---|---|
| N1, Notice of Rent Increase | Units covered by the rent increase guideline (other than care homes) |
| N2, Notice of Rent Increase (Unit Partially Exempt) | Units that are exempt from the rent increase guideline |
| N3, Notice to Increase the Rent and/or Charges for Care Services and Meals | Care home units covered by the rent rules, for rent and for care service and meal charges |
A landlord who wants an increase above the guideline on a covered unit uses a different route: an agreement with the tenant for capital work or a new or additional service (the N10) or an application to the LTB for an above-guideline increase. Those routes are not for N2 units.
Rules that still apply to an N2 increase
- 90 days’ written notice. The landlord must give the tenant at least 90 days’ written notice of the increase (section 116). For some geared-to-income units, the 90-day notice rule does not apply to increases that follow a rise in the tenant’s income (section 7(3) and O. Reg. 516/06, s. 6(5)).
- The right form. The notice has to be on the form approved by the Board and state the new rent.
- 12 months between increases. An increase is allowed only if at least 12 months have passed since the last one, or since the unit was first rented to that tenant (section 119). The 12-month rule does not apply to some geared-to-income units, or to units run by educational or religious institutions (section 7(2); O. Reg. 516/06, s. 6(4)).
- Proper service. For example, the notice can be handed to the tenant, handed to an apparently adult person in the unit, left in the mailbox, slipped under the door or through a mail slot, or mailed. The Board’s instructions also list fax and courier. Mail is treated as given on the fifth day after mailing (section 191). The Board’s instructions say the notice cannot be posted on the door.
- Void if invalid. An increase is void if the landlord has not given the notice the Act requires (section 116(4)), and the landlord must give a new notice before taking the increase. But if the tenant pays the increased rent for at least 12 months in a row without applying to the LTB within the first year, the increase is deemed not void (section 135.1).
If you are a landlord
- Confirm that the unit is actually exempt and keep the proof, because you carry the burden.
- Count 12 months from the last increase or the start of the tenancy.
- Complete the N2 with the tenant, the unit, the new rent and the date it starts, which has to be at least 90 days after the notice is given. If you mail it, the notice is treated as given on the fifth day after mailing.
- Serve it by a permitted method and keep proof of service. You do not file the N2 with the LTB.
If the exemption turns out not to apply, the guideline applies, and an increase above it is not allowed unless the LTB has approved it or the tenant has agreed to it as the Act permits. The tenant may be able to recover any excess. Get advice before relying on the N2 for a unit you are not sure about. YLAW’s landlord and tenant paralegal service can help you check, or call 437-995-9529 for a free consultation.
If you are a tenant who received an N2
- Check the date and the notice. If the notice gives less than 90 days, or comes within 12 months of your last increase, the increase may not be valid.
- Ask whether the unit is really exempt. If you think the landlord has used the wrong form on a unit the guideline covers, you can ask the LTB to decide whether the Act’s exemption applies by filing an A1 application (section 9).
- If you paid more than the law allows. You can apply to the LTB for a refund with a T1 application. An application generally has to be made within one year after the money was collected (sections 135, 135.1 and 136).
- Do not ignore the notice. A tenant who receives a rent increase notice and does not give notice to end the tenancy is treated as accepting whatever rent increase the Act allows once the landlord’s and tenant’s rights under the Act have been exercised (section 118). Disputing the increase does not require moving out.
Sources
- Residential Tenancies Act, 2006 and O. Reg. 516/06
- Landlord and Tenant Board: forms (N1, N2, N3, T1, A1)
- Ontario: rent increases and the guideline
N2 Notice of Rent Increase: Frequently Asked Questions
What is an N2 notice in Ontario?
It is the Landlord and Tenant Board form a landlord uses to give a tenant notice of a rent increase for a unit that is exempt from the rent increase guideline.
Is there a limit on how much rent can go up on an N2 unit?
No percentage cap applies, because the unit is exempt from the guideline. The notice rules still apply, and in most cases so does the 12-month rule.
Which units are exempt from the rent increase guideline?
Mainly units in buildings first occupied for residential purposes after November 15, 2018, some new units in houses, and certain social, non-profit and similar housing. The new-building exemption does not apply to a tenancy agreement made on or before November 15, 2018. The landlord has to prove the exemption applies.
How much notice does a landlord have to give?
At least 90 days’ written notice on the Board-approved form, and at least 12 months since the last increase (or since the tenancy began). Some geared-to-income, educational-institution and religious-institution units have different rules.
Does a landlord file the N2 with the LTB?
No. The landlord serves the notice on the tenant and keeps proof of service.
What if the landlord did not give a valid notice?
The increase is void, and the landlord must give a new notice before taking it. But if the tenant pays the increased rent for 12 months in a row without applying to the LTB, it is deemed not void (section 135.1). A tenant can apply to the LTB for a refund of money charged in breach of the Act, generally within one year.
Do I need to be a tenant in an apartment to receive an N2?
No. What matters is whether the unit is exempt from the guideline, not the type of building. A basement apartment or a condominium unit is covered by the guideline unless an exemption applies.
