The province is shielding Ontario's 1.3 million tenants from the spike in their rents that could have come with the implementation of the harmonized sales tax in July.

Utilities will be subject to a 13 per cent tax under the new HST system, which would have allowed landlords to apply for above-guideline rent hikes due to a regulation loophole.

However, the Liberal government announced Monday that it is closing that loophole.

Landlords had warned the HST could boost residential rents by as much as three per cent -- or about $300 -- per year.

But after the announcement, HST will only be factored into rents through any rises in the Consumer Price Index, which is used to calculate rental increase guidelines.