Some Ottawa renters will receive an automatic rent reduction on Jan. 1: Here’s what you need to know

City of Ottawa building in downtown Ottawa. (CTV News Ottawa)

Thousands of Ottawa renters will be eligible for a reduction in their rent next year, thanks to a change in the municipal tax rate for older multi-residential properties.

The City of Ottawa sent a “notice of rent reduction – municipal taxes reduced” letter to tenants living in older apartment buildings in October, notifying them the rent for their rental units will be automatically reduced by 0.89 per cent as of Jan. 1, 2026.

A tenant paying $2,000 per month in rent will see rent drop $16 a month under the automatic rent reduction, according to the city.

CTV News Ottawa looks at what you need to know about the automatic rent reduction.

What is the issue?

The City of Ottawa currently has two tax classes for multi-residential class properties in Ottawa.

The tax ratio for multi-residential properties built prior to 2001 is 1.4094, while the new multi-residential class for properties built after 2001 has a ratio of 1.0000.

“Generally, properties in the multi-residential class tend to have lower rents and a higher tax ratio when compared to properties in the new multi-residential class,” city staff said in a report in April.

According to staff, the multi-residential tax ratio is 1.0000 in Vaughan and Markham, 1.2656 in Mississauga, 1.7000 in Kingston, 1.7050 in Brampton and 1.8993 for Toronto.

Why is there a rent reduction?

In April, council approved a report titled “2025 Tax Policy and Other Revenue Matters,” which included a reduction in the multi-residential tax ratio for buildings built prior to 2001 to 1.000 over four years, starting with reducing the ratio to 1.3 in 2025 and by 0.1 a year until ratio parity is achieved.

“By lowering the multi-residential tax ratio to 1.3 in 2025, a multi-residential property would experience a 7.4 per cent decrease or a 4.5 per cent decrease after the approved 2025 budgetary increase,” staff said.

Coun. Shawn Menard moved the motion directing staff to explore lowering the multi-residential ratio.

“We wanted to bring some tax fairness to renters in Ottawa,” Menard said in a media release in October. “For years, multi-residential properties have been taxed at a punitively high rate in this city, even though many of these buildings are far more cost-effective for the city, in terms of services and infrastructure.”

Who is eligible for the rent reduction?

According to Coun. Menard, tenants in an estimated 57,165 apartment units are eligible for the rent reduction on Jan. 1, 2026.

The change only affects buildings built prior to 2001 and does not apply to many non-market housing buildings, including public housing, non-profit housing projects, non-profit housing cooperatives, vacation homes.

Tenants must live in the unit as of Dec. 31, 2025, to be eligible to automatically reduce their rent on Jan. 1.

The wards with the highest number of eligible units are Somerset (8,994 units), Bay ward (8,591), Rideau-Vanier (7,164 units), and Alta Vista (5,682).

Automatic rent reduction

Ottawa’s deputy city treasurer says the City of Ottawa’s move to decrease the multi-residential property tax by 4.5 per cent triggers the automatic rent reduction for tenants who occupy their unit on Dec. 31, 2025, and they may “automatically reduce their rent effective Jan. 1, 2026.”

“Under Ontario’s Residential Tenancies Act, 2006 (RTA), tenants are entitled to an automatic rent reduction when a landlord’s municipal property taxes decrease by more than 2.49 per cent,” Joseph Muhuni said in an email to CTV News Ottawa.

“This requirement applies to most multi-residential properties with seven or more units. When a qualifying tax reduction occurs, the City of Ottawa notifies both landlords and tenants of the decrease in taxes. The legislation provides that the rent reduction takes effect in the year following the reduction in taxes.”

Muhuni says tenants do “not require permission from their landlord or the Landlord and Tenant Board to apply the automatic rent reduction.”

“However, it is encouraged that landlords and tenants discuss and coordinate the change before December 31. If a landlord does not apply the reduction, tenants have the right to file Form T3 – Tenant Application for a Rent Reduction with the LTB to formally request it.”

How much is the rent reduction?

According to the City of Ottawa, a 4.5 per cent reduction in property taxes in 2025 equates to a 0.89 per cent “forced rent reduction in 2026.”

If you are paying $2,000 per month in rent, you will see an estimated $16 a month automatic rent reduction. The city says that it’s a saving of $192 over the year.

Do tenants pay taxes?

The Landlord and Tenant Board said most tenants do not pay property taxes separately from their rent, and the rent charged to a tenant includes a portion which helps the landlord cover property taxes.

According to the board, municipalities must send a notice of rent reduction to landlords and tenants of residential complexes that have seven or more rental units when municipal property taxes have been reduced by more than 2.49 per cent.

“While municipalities are not required to send notices to landlords and tenants of complexes that have 6 or fewer units, the automatic rent reduction rules apply to these complexes as well,” the board said.