Ostensibly it was included in the law to encourage future development; s.6(2) allows certain rental units to be exempt from the annual rent increase guideline which approximates CPI inflation. The argument was that if the exemption wasn't provided, NOBODY would build new high-rise rentals.
residential purposes before November 1, 1991.
Section 6(2) is badly written, and as a result is subject to a lot of different interpretations. Divisional Court, a mid-level appellate court where Landlord and Tenant Board (the “Board” or “LTB”) decisions go for appeal, has only dealt with it a couple of times:
6(2)(c) is the subsection most landlords normally rely on for support. It deals with the building. Most think of it as new buildings constructed after 1991, condos primarily but not necessarily. It reads, “no part of the building, mobile home park or land lease community was occupied for residential purposes before November 1, 1991.” But if you examine the wording carefully, I think it’s meant to capture an older building used for a commercial or industrial purpose before 1991, but that was converted to residential use post-1991. After all, if it’s NEW post-1991, then how could any part of it have been residential pre-1991? Wouldn’t the legislature simply have said “not built prior to 1991” if that was its intention?
My advice to a landlord lucky enough to have an exempt unit is to be up-front when signing the lease, including a clause where the parties acknowledge that the annual guideline does not apply, and that any new rent will not constitute a premium. I believe it's better to act in good faith up-front and avoid fights a year down the road.