Rent deposits in Ontario: what landlords can and can't ask for
Ontario rent deposit rules explained: last month's rent deposits, interest owed each year, key deposits, and why damage and security deposits aren't allowed.
By Leap Editorial · Sep 25, 2026 · 2 min read
Deposits cause a lot of confusion, partly because the rules in Ontario are different from other provinces and countries. Here's how they work for residential rentals.
The last month's rent deposit
The main deposit allowed in Ontario is a rent deposit, which is used for your last month of rent.
- It can't be more than one month's rent, or one period's rent if you pay weekly.
- It must be used for the last rental period before the tenancy ends, not for damage or unpaid rent during the tenancy.
- The landlord must pay you interest on it every year, at the same rate as the annual rent increase guideline. The landlord can instead use that interest to top up the deposit so it matches a new, higher rent.
For example, if the guideline is 2.1% and your deposit is $2,500, the interest for that year is $52.50.
Key deposits
A landlord can collect a refundable key or fob deposit. It can't be more than what it would reasonably cost to replace the keys, and it must be returned when you give the keys back.
What's not allowed
- Damage deposits. Not allowed for residential tenancies in Ontario.
- Security deposits beyond the rent deposit.
- Pet deposits.
- Post-dated cheques or automatic payments as a requirement. You can choose to provide them, but a landlord can't make them a condition.
If you've paid a deposit that isn't allowed, you can ask for it back, and if needed apply to the Landlord and Tenant Board.
What about prepaying rent?
A landlord can't require you to prepay rent beyond the last month's deposit. Some tenants choose to offer it, especially with no Canadian credit history. If you do, get a receipt and only pay after you've signed a lease and seen the unit. See renting with no credit history.
Condo move-in fees
Some condo buildings charge a move-in fee or an elevator deposit. These are set by the condo corporation, not your landlord. Ask before you book your move.
Commercial spaces are different
These rules are for homes. Commercial leases are governed by different law, and larger deposits are common. See our commercial lease guide.
General information, not legal advice. For your situation, contact the Landlord and Tenant Board or a community legal clinic.
Frequently asked questions
Can my landlord keep my last month's rent deposit for damage?+
No. In Ontario the rent deposit must be applied to your last month of rent. It can't be used to cover damage.
Does my landlord have to pay interest on my deposit?+
Yes. Each year the landlord must pay interest on the last month's rent deposit at the rent increase guideline rate, or use it to top up the deposit to match the current rent.
Are damage deposits legal in Ontario?+
No. Damage and security deposits are not allowed for residential tenancies in Ontario. A refundable key deposit is allowed.
