The maximum annual rent increase in Ontario will remain at 2.5 percent for the upcoming year.

The provincial government issued this announcement on Friday, stating that the set rate is currently the lowest in the country and below the average inflation rate of 3.1 percent.

The province said: "Under the Residential Tenancies Act, the maximum guideline of 2.5 percent has been set to help protect tenants from rising interest rates that could lead to increasing rent." "Without the cap, the recent inflation rate would have resulted in a 3.1 percent increase in 2025."

The rent increase cap is the maximum amount that a landlord can increase rent during the year for most tenants without the approval of the landlord and tenant board. Rent control applies to units that were occupied for residential purposes before November 15, 2018.

During most of the pandemic, there was a freeze on rent increases. The province raised the rate to 1.2 percent in 2022 and increased it again to 2.5 percent in 2023. Since then, the cap has remained stagnant.