Student Family Housing Last Month’s Rent (LMR) Top-Up
Two factors influence this calculation:
- The rent change differential for new rent effective on September 1st each year; and
- The amount of interest a tenant earns on their rent deposit (rate earned for any given year and the number of days on deposit).
- Student Family Housing, like other landlords in Ontario, collects a deposit at the start of the tenancy, to cover the last month of rent.
- As rents go up each year, the deposit must be topped-up to equal the current rental rate. The full amount for the new rent must be on deposit to pay the last month at the time a tenant decides to vacate.
- The landlord must pay tenants interest on the rent deposit every 12 months.
- The rate of interest a landlord must pay is determined by the Ministry of Housing and published on the Ontario Landlord Tenant Board website on an annual basis. The interest rate between January 1 and December 31, 2020 was 2.2%.
- Student Family Housing rents, which are not governed by the Residential Tenancies Act (RTA), increased by 3.5% effective September 1, 2020.
- A tenant moves into a two-bedroom unit on February 1, 2020. The rent at the time of move-in is $1305. A deposit of $1305, representing last month’s rent, is collected at the start of the tenancy.
- On September 1, 2020 rent for a two bedroom is increased to $1351. The differential is $46. The rent deposit on file is now short by $46.
- However, the tenant has earned 2.2% on the deposit from February 1 to September 1:
- $1305 X 2.2% X 213/366 days
- Interest earned is $16.71
- The tenant owes $46 but has a credit for interest earned of $16.71. The LMR Top-up required is $46 less $16.71 = $29.29.
- The above is a simple calculation to illustrate the principles. Other factors may impact specific calculations such as parking deposits, the timing of payment of prior year top-ups etc.
- For 2021, rental rates for existing tenants will not increase on September 1, 2021. Interest on the LMR deposit will however be earned at a rate of 1.5%.