Tenants residing in older apartment buildings in Ottawa were anticipating a decrease in their rent starting on January 1. However, confusion arose as landlords provided conflicting information regarding whether tenants should indeed pay less following a property tax adjustment by the City of Ottawa to address discrepancies in tax rates between buildings constructed before and after 2001.
Last autumn, the city notified renters in older buildings with seven or more units about an impending rent reduction due to lower property taxes paid by landlords. Subsequently, some landlords sent letters to tenants disputing the city’s notification and advising them to continue paying their regular rent amounts.
This conflicting communication has left tenants uncertain about what to do. The situation is evolving, and legal experts are outlining potential courses of action for renters.
The City of Ottawa informed eligible tenants about a rent reduction following a 4.5% property tax decrease for multi-residential units enacted by city council in April 2025. This reduction triggered an automatic rent decrease as per the Ontario Residential Tenancies Act when property taxes declined by more than 2.49%. For 2026, this reduction translates to approximately 0.89%, equivalent to around $16 monthly or $192 annually for someone paying $2,000 in rent.
Councilor Theresa Kavanaugh emphasized the city’s intention to provide financial relief to renters in older buildings, particularly those on fixed incomes. The city issued rent-reduction notices to over 1,000 multi-residential property owners, affecting an estimated 57,000 tenants who were notified between October and November 2025 of the rent reduction effective January 1.
Landlords are contesting the rent reductions due to increases in other municipal charges on their tax bills despite lower property taxes. Some landlords have initiated applications challenging the rent reduction at the Ontario Landlord and Tenant Board, with expectations of more applications being filed. Legal representatives for landlords argue that the board may consider factors beyond property tax changes, potentially leading to a ruling in favor of landlords.
While it is recommended that tenants continue paying the reduced rent, they may face retroactive payments if landlords prevail in their challenges. However, tenants are not obliged to forgo the rent reduction as per legal experts. The situation remains uncertain, but tenants are advised to follow through with the decreased rent payments and set aside the saved amount in case the board rules differently in the future.
