Security Deposits & Rent Deposits in Ontario
Ontario has some of the strictest rules in Canada governing what landlords can collect at the start of a tenancy. Many landlords and tenants are unaware of these limits — and violations are common.
What Deposits Are Allowed in Ontario?
| Deposit Type | Allowed? | Maximum Amount |
|---|---|---|
| Last Month's Rent (Rent Deposit) | ✅ Yes | One month's rent (or one rental period) |
| Key / FOB / Access Card Deposit | ✅ Yes | Actual replacement cost only |
| Damage / Security Deposit | ❌ No | Prohibited under the RTA |
| Pet Deposit | ❌ No | Prohibited under the RTA |
| First & Last Month Deposit | ⚠️ Partial | Only last month — first month is rent, not a deposit |
Interest on the Rent Deposit
Landlords must pay interest on the rent deposit each year at the provincial rent increase guideline rate. This interest is typically applied as a credit against the deposit — you do not receive a cheque each year.
- If the guideline is 2.5%, a $2,000 deposit earns $50 interest annually.
- The interest accumulates and is applied when the tenancy ends.
- Failure to pay interest can be raised at the LTB.
Applying the Deposit at End of Tenancy
The rent deposit must be applied to the last period of the tenancy only. A landlord cannot:
- Keep the deposit as compensation for damages
- Refuse to apply it to last month's rent and demand rent separately
- Deduct cleaning costs from the deposit
What About Damages?
If a tenant causes damage beyond normal wear and tear, the landlord must pursue compensation through the LTB — there is no deposit to deduct from. This is why many Ontario landlords file an L2 application at the end of a tenancy.
Key Deposit Rules
- Must be refundable when keys are returned
- Cannot exceed the actual cost of replacing the key/FOB
- Cannot be charged for multiple keys beyond actual cost
Dispute about deposits or deductions?
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