What the new Residential Tenancies Act rules mean for owners who rent out space
Credit: Homeowner.ca
On July 1, 2026, a new section of Ontario's Residential Tenancies Act, 2006 came into force, and it quietly rewrote one of the most common summer disputes between renters and the people they rent from. Tenants now have an explicit right to install and use a window or portable air conditioner in any unit where the landlord does not already supply cooling. That is the change most headlines led with. It is not the change that matters most to owners.
For the many Ontarians who rent out a basement suite, a secondary unit, or a small investment property, the consequential half of this reform sits on the landlord's side of the ledger. If you pay the electricity for the unit, the same law that lets your tenant put in an AC also lets you recover what that AC costs to run — through a rent add-on that skips the ordinary 90-day notice, the once-a-year limit, and the Landlord and Tenant Board approval process entirely. It is a genuinely new mechanism, and it behaves unlike any other rent increase in the Act.
This piece explains what changed, who it applies to, and how the cost-recovery tool works in practice. It is a plain-language summary of the amendments, not legal advice, and it deliberately stays out of installation tutorials, by-law specifics, and exact dollar calculations — the parts of this story that turn on your particular unit and lease.
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The reform arrives through Schedule 7 of the Helping Homebuyers, Protecting Tenants Act, 2023, which adds a new section 36.1 — titled simply "Air conditioning" — to the Residential Tenancies Act, 2006. The Act received Royal Assent back in June 2023, but its provisions sat dormant until the province set an activation date. That date arrived through Order in Council 617/2026, which named July 1, 2026 for the core AC provisions and staggered a second set of related changes to September 21, 2026.
The distinction between "passed" and "in force" is not a technicality here. It is the reason a law from 2023 became a live obligation for landlords and tenants only this month. For a broader picture of how rights and duties differ across the country, our province-by-province guide to landlord and tenant rights puts Ontario's regime in context.
Section 36.1 gives a tenant the right to install and use a window or portable air conditioner where the landlord does not supply cooling. The right is explicit, but it is not unconditional. Before installing, the tenant must notify the landlord in writing. Where the landlord's cost-recovery power could apply, that notice must also include whatever information the tenant has about the unit's energy efficiency and their anticipated usage — the data a landlord later needs to price the electricity.
The statute also builds in property protection. The tenant has to ensure the unit and its installation do not damage the rental unit or the building, that it is installed safely and securely, and that the installation is not barred by any municipal property standards by-law or other applicable law. And the landlord is not left to simply hope for compliance: a reasonable inspection to verify these conditions counts as a permitted reason to enter the unit under the Act's existing entry rules.
Landlords keep only a narrow veto. Section 36.1 lets an owner prohibit an installation "in the prescribed circumstances" — but those circumstances have to be set out in regulation, and none have been prescribed yet. Until they are, refusing a compliant install on preference alone is not an option the Act supports.
Here is the part built for landlords. If a tenant installs and uses a window or portable AC on or after July 1, 2026 in a unit where the tenancy agreement obligates the landlord to supply electricity, the landlord may increase the rent to recover the cost. The increase is capped at the landlord's actual electricity cost for running the air conditioner or, where the actual cost cannot be established, at a reasonable estimate based on the efficiency and usage details the tenant provided.
That cap is the whole point. This is a pass-through, not a surcharge. The law does not authorize a flat "AC fee" or a convenience premium — the number has to track the electricity the unit actually draws, which is why the summer shift to time-of-use pricing on Ontario hydro bills feeds directly into what a reasonable estimate looks like. There is also a lease-based off-switch: if the tenancy agreement expressly says a tenant may install a window or portable AC with no rent increase, the recovery power does not apply at all.
What makes this add-on unusual is how far it sits outside the ordinary rent-increase machinery. Under Ontario's normal rules, most rent can rise only once 12 months have passed, only with 90 days' written notice, and only up to the annual guideline — 2.1% for 2026 — unless a landlord wins a narrow above-guideline application at the Board. The AC charge answers to none of that. The table below lays the two side by side.
The reversibility in that last row is a landlord obligation, not a courtesy. The Act makes the AC charge a two-way figure. When the tenant removes the air conditioner, or seasonally stops using it — over the winter, for instance — the landlord must decrease the rent by the amount attributable to the AC. When seasonal use resumes, the landlord may raise it again. Because the ordinary constraints do not apply, this up-and-down can happen more than once in a year.
Treat the AC add-on as a seasonal line item, not a permanent bump. If you raise rent for a tenant's summer cooling and then leave it there through a winter of non-use, you are no longer charging a cost you are incurring — and the statute requires the reduction. The practical discipline is to tie the charge to the cooling season and adjust it off when the season ends.
The new section reaches the housing types small owners are most likely to hold. Ontario's tenancy rules apply to most private residential units, including single and semi-detached houses, apartments, condominiums, and secondary units such as basement apartments. Two carve-outs matter. Rental units in mobile home parks and land lease communities are excluded from section 36.1 entirely. And air conditioners a tenant installed before July 1, 2026 are grandfathered: they remain subject to the safety and compliance conditions, but not to the new written-notice and efficiency-information requirements — and a landlord cannot reach back to raise the rent for a unit that was already in place.
If this feels like one more Ontario rule that shifted underneath homeowners this year, it is part of a pattern; the province's updated CO alarm requirements for 2026 landed in the same window and carry their own compliance wrinkles for anyone who rents out space.
Two open threads are worth tracking. The first is those "prescribed circumstances" that would let a landlord prohibit an installation — until the province publishes regulations defining them, the landlord veto is effectively theoretical. The second is the September 21, 2026 tranche of the same Order in Council 617/2026, which brings further Schedule 7 changes online and is the next date on the compliance calendar.
If you rent out a unit where you pay the hydro, this is the summer to settle your AC position in writing. Decide now whether you would rather recover the electricity cost or waive it — a lease can document either choice, though it cannot contract out of the tenant's underlying statutory right. With extreme heat warnings already blanketing southern Ontario, the requests are going to arrive before the paperwork does.
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About the Author
Ryan is the founder of Homeowner.ca and a proud Canadian homeowner based in Guelph, Ontario. Over his 25-year career in digital publishing, he has focused on transforming complex information into clear, practical guidance that helps people make confident, well-informed decisions.
