The new RGI rules: Calculating minimum rent
The new, simplified rent-geared-to-income (RGI) rules came into effect on July 1, 2020. Though service managers had the option to delay implementation of the new rules until July 1, 2021, the new minimum rent came into effect on July 1, 2020. While the new rules have made the process of calculating RGI simpler overall, many find that the most complicated aspect of the new rules is calculating minimum rent (typically applied only once a year at annual review). Read on to get a breakdown of the new minimum rent rules.
Types of minimum rent
There are three different types of minimum rent:
Regular minimum rent of $129. This new minimum rent applies to new RGI tenants who began their tenancy after July 1, 2020 and any RGI tenant who was paying more than $129 as of July 1, 2020. This regular minimum rent will be indexed annually based on the rent increase guideline identified by the Residential Tenancies Act (RTA). This amount will go up by 1.5% to $131 on July 1, 2021.
Transitional minimum rent applies only to RGI tenants who were paying less than $129/month rent before the rule came into effect on July 1, 2020. This will never apply to new RGI tenants who began their tenancy on or after July 1, 2020. Transitional minimum rent is $93 and indexed annually by $8/year until it matches the regular minimum rent. This amount will go up to $101 on July 1, 2021.
Minimum rent for single benefit units is $85 for OW and $109 for ODSP recipients; it is currently only applicable to single people receiving these benefits. If the calculation works out to less than $85 for an OW recipient or $109 for an ODSP recipient, you would bump the rent up to $85 or $109 respectively to meet the minimum rent.
The tricky part: transitional minimum rent
The following conditions must be met for transitional minimum rent to apply:
- The household was in receipt of RGI on July 1, 2020
- The household was not a single person on social assistance
- The household’s RGI was calculated at less than $129 prior to July 1, 2020
- The current calculated rent falls below the transitional minimum rent ($93 for 2020/2021)
If the household meets the conditions above, rent will be the new transitional minimum rent ($93 for 2020/2021).
Transitional minimum rent will increase by $8 per year until it matches the indexed regular minimum rent amount. The following example will illustrate how transitional rent changes over time. In this case, we’re dealing with a simple 30% calculation for someone who was a tenant prior to July 1, 2020 and was paying less than the new minimum rent of $129.
- When the new rules came into effect on July 1, 2020, their rent was calculated at $114, less than the minimum rent of $129. They are subject to the transitional minimum rent but since their calculation is higher than $93, they pay $114.
- On July 1 2021, transitional minimum rent increases to $101. The tenant’s calculation remains $114. They are still subject to transitional minimum rent and will continue to pay $114.
- The transitional minimum rent goes up another $8 to $109 on July 1, 2022. With the same earnings and rent calculation, the tenant continues to pay $114.
- On July 1, 2023, the tenant’s rent is still calculated at $114 but the transitional minimum rent has gone up to $117. The tenant now pays $117 – the higher amount between transitional minimum rent and their RGI calculation.
Let’s fast forward to 2026.
The regular minimum rent has been increasing in accordance with the rent increase guideline. Assuming the increase rate holds at 1.5%, on July 1, 2026, the regular minimum rent is now $141.
- At the same time, the transitional minimum rent has been increasing by $8 per year to catch up. By 2026, the transitional amount is now equal to the regular minimum rent and sits at $141.
- What happens now? The transitional rent is eliminated and the minimum rent sits at $141, increasing yearly in accordance with the rent increase guideline.
Let’s return to our sample case for a moment.
- In 2024, the regular minimum rent sits at $137 and the transitional minimum rent is at $125. The tenant’s income increases and their calculation sits at $130. They are still subject to the transitional amount and will pay $130 – the higher amount between their RGI calculation and transitional minimum rent.
- In 2025, the regular minimum rent is $139 and the transitional amount is $133. The tenant’s calculation has increased to $140. Their calculation is now above the regular minimum rent, meaning that the transitional minimum rent will never apply to them again. They will pay $140, as it is above the regular minimum rent.
The new minimum rent rules mean that there will be some changes to keep track of until the transitional amount equals the regular minimum rent. ONPHA is here to help you through this and any other concerns you may have about adjusting to the new RGI rules. The new, simplified world of RGI administration is our in-depth, online course offering. Work at your own pace over three months to learn everything you need to know about applying the new rules. Don’t have time for a full course? Check out our workshop Forward Thinking: The new simplified RGI rules to get an overview of the new rules and how to implement them. Click here to get a primer on some of the biggest changes to RGI.
Have a question about minimum rent or another aspect of RGI? Contact us at email@example.com. We’re always happy to hear from you, and to help!
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