Rental Deposits in Ontario: What Landlords Can and Cannot Collect

Ontario Rental Deposit Guide · Updated for 2026

Featured photo by Aaron Lefler on Unsplash.

Ontario tightly regulates deposits connected to residential tenancies. A landlord generally cannot create extra “security” charges simply because they appear in a lease or rental application.

Last Month’s Rent Deposit

A landlord may require a rent deposit on or before entering into the tenancy agreement. The amount cannot exceed the lesser of one month’s rent and one rental period. For a monthly tenancy, that normally means no more than one month’s rent.

What Is the Deposit For?

The rent deposit is applied to the final rent period before the tenancy ends. It is not a general damage deposit and should not be treated as a pool of money for cleaning, repairs or unpaid utility bills.

Damage and Pet Deposits

Ontario’s Standard Lease guide states that tenants do not have to provide deposits such as pet or damage deposits. A lease term attempting to require a prohibited deposit may be unenforceable even if both sides signed the document.

Key Deposits

A refundable key deposit may be permitted, but it should reflect the expected replacement cost of the keys or access device rather than operate as an additional security deposit.

Interest on the Rent Deposit

The Residential Tenancies Act contains rules requiring annual interest on a rent deposit. The deposit may also need to be topped up when lawful rent increases. Landlords should keep clear records so the amount and any interest adjustment can be reconciled correctly.

Can a Tenant Voluntarily Prepay Rent?

Prepaid rent can raise separate legal questions from a landlord-required security deposit. Landlords should be cautious about making large prepayments a condition of approval and should obtain legal advice where the arrangement is unusual.

Quick Checklist

• Do not require a damage deposit.
• Do not require a pet deposit.
• Keep last-month-rent deposits within the statutory limit.
• Use rent deposits only for the last rent period.
• Keep key deposits reasonable and refundable.
• Provide receipts when required.
• Keep records of deposit interest and lawful rent changes.

Read the Ontario Standard Lease guide and explore our Landlords & Tenants hub.

Ontario Rental Deposit FAQ

Can an Ontario landlord charge a damage deposit?

Generally no. Ontario restricts security deposits and the standard lease guide specifically identifies damage deposits as not permitted.

What is a last month’s rent deposit used for?

It is applied to the final rent period before the tenancy ends, not to general repairs or damage.

General information only: Rental deposit disputes can be fact-specific. Confirm current rules with the Government of Ontario or Tribunals Ontario.