If you are renting in Ontario and your landlord asked for a security deposit, a damage deposit, a pet deposit, or a cleaning deposit – that request was against the law.
Ontario is unusual this way. Alberta permits a security deposit of up to one month’s rent; British Columbia allows a damage deposit of up to half a month’s rent. Ontario allows neither.
What a landlord can legally collect in Ontario
| Payment | Allowed? | Limit |
|---|---|---|
| Last month’s rent deposit | Yes | One month’s rent (or one rental period) |
| Key deposit | Yes | Actual replacement cost of the key or fob – nothing more |
| Security deposit | No | – |
| Damage deposit | No | – |
| Pet deposit | No | – |
| Cleaning or “move-out” deposit | No | – |
| Post-dated cheques as a condition of renting | No | – |
The Residential Tenancies Act permits exactly two deposits. Everything else is an illegal charge, whatever the lease calls it.
The last month’s rent deposit
This is the one deposit most tenants pay, and it is widely misunderstood.
- It can only be collected at or before the start of the tenancy – a landlord cannot demand it mid-tenancy.
- It can only ever be applied to the last month’s rent. It is not a repair fund. A landlord who deducts a broken blind from it has acted unlawfully.
- It earns interest annually, at the same rate as the rent increase guideline. For 2026 that rate is 2.1%.
- When rent rises, the landlord can ask you to top the deposit up to match the new rent. In practice the interest owed is often applied to the top-up.
Interest is owed every year, not at the end of the tenancy. Many landlords have never paid it, and many tenants have never asked. It accrues regardless.
Key deposits
A key deposit is legal only if it is refundable and no more than what a replacement key, fob or garage remote actually costs. A $50 deposit for a $6 key is not a key deposit – it is an illegal security deposit with a different label.
Unlike the rent deposit, a key deposit does not earn interest. It sits in trust until you hand the keys back.
Damage: what happens without a deposit?
Landlords are not left without a remedy – they simply cannot pre-collect. Where a tenant causes damage beyond normal wear and tear, the landlord applies to the Landlord and Tenant Board for an order, with photographs, invoices and the lease as evidence.
Normal wear and tear is never chargeable: faded paint, worn carpet in a hallway, minor scuffs. Holes in walls, broken fixtures and pet damage are a different matter.
The practical protection for landlords is a detailed move-in inspection report, dated, photographed, and signed by both parties. That evidence wins Board applications. A deposit the landlord was never allowed to hold does not.
How to get an illegal deposit back
File a T1 application with the Landlord and Tenant Board. The Board can order the landlord to repay any illegal charge, and it can also order repayment of rent-deposit interest that was never paid.
You can apply while still living in the unit, and you can go back over the tenancy – this is not limited to your final month. Retaliating against a tenant for filing is itself an offence.
Bring the lease, proof of what you paid, and any messages where the landlord described the payment.
Frequently asked questions
Can landlords still ask for a deposit in Ontario? Only two: last month’s rent, and a key deposit limited to the actual replacement cost of the key or fob. Security, damage, pet and cleaning deposits are all illegal here.
How much is a security deposit in Ontario? There is no legal security deposit. The last month’s rent deposit is capped at one month’s rent, or one rental period.
Do landlords have to pay back a deposit with interest? The last month’s rent deposit earns interest annually, at the rent increase guideline rate – 2.1% for 2026. It is owed every year, not at the end of the tenancy, and many landlords have never paid it.
What is the point of a key deposit? To cover replacing a key or fob that is never returned, and nothing else. Get the amount in writing at move-in: tenants who cannot show what they paid have a much harder time recovering it, and the landlord owes no interest on it.
Do you pay rent in the last month of the tenancy? No, if you paid a last month’s rent deposit – that is exactly what it covers. It cannot be applied to damage or to arrears from any other month.
Do you get a damage deposit back if you are evicted? There is no lawful damage deposit in Ontario to get back. If one was collected, it was illegal and you can apply to recover it whether or not you were evicted.
What are landlords not allowed to do in Ontario? Collect illegal deposits, enter without 24 hours’ written notice except in an emergency, change locks without providing keys, shut off utilities, or evict without a Board order. Illegal lockouts carry a maximum fine of $100,000 for an individual.
How do I get an illegal deposit back? Through a T1 application at the Board. You do not have to wait until you move out, and the claim can reach back across the whole tenancy rather than just the final month.
Speak to us before you sign
LD Law LLP advises Ontario landlords and tenants on residential and commercial tenancies, lease drafting and Board applications.
1551 Bloor Street West, Toronto · 416-747-9900
General information about Ontario law as of August 2026. Not legal advice.