Toronto rental prices have dipped slightly. Could a property tax hike change that?  

Toronto's average rental price appears to be plateauing around the $2,800 per month mark, new data shows, but there are some concerns a proposed property tax increase could see that price climb.

City of Toronto staff are currently proposing a nine per cent residential property tax increase (which reaches 10.5 per cent once the city building fund is added in.) Budget committee chair and Coun. Shelly Carroll has said this will mean the average household in Toronto could see an annual tax increase of roughly $360.

Ontario rental laws allow landlords to seek what's known as an Above Guideline Increase (AGI) if there's an "extraordinary increase" in a municipal tax rate, and this would qualify.

Some councillors have already been warning renters that landlords may pass the cost of a bigger tax bill down to them — even though AGIs would not be automatically applied. Ontario's Landlord Tenant Board confirmed in an email to CBC Toronto that landlords would need to apply for an increase and give 90 days warning before the first increase.

"We want to make sure that there's an equity lens on how we're attacking the budget and then making sure that we get through 2024 not creating more more need and more burden," Carroll said Tuesday.

"We're doing our level best to make sure that we have a balance there."

Douglas Kwan, the director of advocacy and legal services at the Advocacy Centre for Tenants Ontario, says there are a few factors that could mitigate the increase but it can be tough for landlords to hike rent based solely on the tax increase.

"They have to demonstrate exactly what portion of the property taxes that they are currently paying and whether that 10 per cent is truly extraordinary," Kwan said.

"I can expect an increase in the number of applications for [AGIs] ... whether or not they are successful, that's another story."

Average rental prices in the city have seen a slowdown in the past three months for the first time since August 2021, but rent remains high, according to a report from Rentals.ca published this month.

In December, the average asking rental price in Toronto increased by 2.1 per cent from exactly a year ago, reaching an average of $2,832, which is down from $2,913 in November and $2,902 in October.

Toronto took third place on the organization's national rent ranking list, following Vancouver and Burnaby, B.C.

The remaining spots on the top 10 were all taken by other cities in Ontario including Mississauga, North York, Burlington, Scarborough, Brampton, Guelph and Ottawa.

WATCH | CBC Toronto's Shawn Jeffords breaks down what you need to know about the city's proposed budget, including what it might mean for renters:

How Toronto’s potential 10.5% property tax increase could affect renters

12 months ago

Duration 4:56

City of Toronto staff proposed a 10.5 per cent property tax increase this week – basically, more than $300 per year added to the bill of the average home – and warned without funding from the federal government that could climb as high as 16.5 per cent. CBC’s Shawn Jeffords breaks down the budget process, including how the increase could impact renters as well as home and condo owners.

Kathrin Jassmann said she considered herself lucky when she found a one-bedroom apartment near High Park for under $2,000 in April 2022 — but even paying roughly $1,900 for rent hasn't been easy.

"I really don't do anything anymore because I'm saving my money. And it's not just rent, It's food… it's everything," Jassmann said..

"I don't go out anymore. I don't go for dinner anymore. I don't do any activities anymore. You know, anything that costs money."

Jassmann says she has gotten more and more worried about rent increases with time.

"I really would like to move out of the city because I need to find [somewhere] that is more affordable to live, but I don't have the option because I work in the city, so it's difficult." she said.

Geordie Dent, the executive director of the Federation of Metro Tenants' Association, said while he opposes the use of AGIs, most tenants should not be fearful of rent increases as a trigger effect of the tax hike.

"My message to regular renters is relax a little bit," Dent said in an interview.

"[AGIs] are only issued if they meet a threshold…  it's not an automatic rent increase."

City council will meet to approve the final budget on Feb. 14. Here's how to have your say on Toronto's proposed property tax hike.