Ottawa's old apartments get a forced 0.7% rent cut Dec 31

Tenant letters started going out yesterday. Between October 1 and December 15, the City of Ottawa mails notices to tenants in buildings with seven or more units whose property taxes fell, and the rent cut lands on December 31. If you own a duplex through a sixplex, this post is not about your rent roll. It is about the building you might buy next.

The mechanism, with the City's own numbers

Council is in year two of a four year plan to bring the multi-residential tax ratio down to 1.0, the same as a house. Staff say this year's step, from 1.3 to 1.2, cuts taxes on that class by 3.49 per cent. The cost moves to everyone else: a 0.34 per cent increase on all other classes, about $18 a year on a $415,000 home.

Ontario's Residential Tenancies Act then does the rest. When a rental complex's municipal taxes fall by more than 2.49 per cent, rents fall automatically by the tax cut multiplied by 20 per cent for seven or more units (15 per cent for six or fewer). The 20 per cent is the province's assumption of what taxes are as a share of rent.

3.49% x 20% = 0.698%. Call it 0.7%. On a $2,000 apartment that is about $14 a month, which matches the City's figure of $13.90. Tenants need no permission and no order from the Landlord and Tenant Board.

Who actually gets hit

The City's own 2025 notification memo counts 1,016 affected properties and 57,165 units, and staff are again saying about 57,000 tenants this year. Three wards carry the load: Somerset (8,994 units), Bay (8,591) and Rideau-Vanier (7,164). That is 24,749 of 57,165 units, or 43 per cent, in three wards.

The suburbs barely register. Barrhaven's two wards have 2 buildings and 101 units. Kanata's two wards have 8 buildings and 659 units. Buildings from 2001 on are already in the new multi-residential class at 1.0, so nothing is coming for them.

The 20 per cent is where the investor math lives

The province assumes taxes are 20 per cent of your rent. Yours might not be. The landlord's net effect is simple to write down: rent x tax cut x (your tax share of rent minus 20%).

Take a 12 unit building at $1,500 a unit. Annual rent is 12 x $1,500 x 12 = $216,000.

At a 20% tax share, taxes are $43,200. A 3.49% cut saves $1,508. The 0.698% rent cut costs $1,508. You break even.

At 15%, taxes are $32,400 and the cut saves $1,131. You still give back $1,508. You are down $377 a year.

At 25%, taxes are $54,000 and the cut saves $1,885. You are up $377.

The numbers are small on one building. The point is the sign. A building with low taxes against its rent loses on every step of this plan, and old Ottawa buildings with long term tenants and modest rents are where a low tax share can hide.

The LTB lists this very gap, taxes not equal to 20 per cent of total rent, as grounds for a landlord to apply to vary the reduction (Form A4). The deadline is the later of March 31 of the following year or 90 days after the notice. Filing does not stop the reduction while it is decided, and you need the tax bill and a full rent roll to make the case. That is a paralegal or lawyer conversation, not mine.

It stacks on the 1.9% guideline

Ontario set the 2027 guideline at 1.9 per cent, which I covered in the 2027 guideline post. The rent cut is permanent, so any increase is calculated on the reduced rent.

Take $1,500 a month. After the cut it is $1,500 x 0.99302 = $1,489.53. Add the full guideline: $1,489.53 x 1.019 = $1,517.83. That is a 1.19 per cent net increase, not 1.9. The tenant's rent goes up $17.83 a month, not $28.50.

That assumes the unit is covered by the guideline at all, and that the 12 months and 90 days of notice rules are met. Check the unit before you promise anyone a number.

The exit, and why it is worth less than it was

A tenant who takes possession after December 31 does not get the reduction. A unit that turns over in January re-lets at whatever the market pays, and the 0.7 per cent disappears for that unit. CMHC puts Ottawa's annual turnover at 16.6 per cent, which I wrote about in the turnover post. That is roughly one unit in six.

It used to be a clean way out. With vacancy at 3 per cent and asking rents sliding, re-letting at market is not the escape it was.

What I would check before buying a seven plus building

Ask for the municipal tax bill and the rent roll before you write the offer. Divide one by the other. Under 20 per cent, price in the cuts. Over 20 per cent, the plan is quietly in your favour. The plan has two more 0.1 steps on the schedule, and if each trims taxes by a similar amount, the same arithmetic repeats.

If you own six units or fewer, none of this changes your rent. Your building is in the residential class, and the only thing you get from the plan is the small increase everyone else pays.

I sell houses and investment property. I do not give tax or legal advice, so take the A4 question and your own tax share to a paralegal, lawyer or accountant before you act on any of it.

If you are looking at a seven plus building and want a second set of eyes on the rent roll before you offer, call me at 613-262-6545 or write to fil@613realtor.ca.