Ontario leasing guide
Last month's rent deposit in Ontario
By Steve Stavros Liadakis, Ontario landlord for 30+ years · Updated August 10, 2026
Ontario landlords can collect a rent deposit, usually called "last month's rent", but the rules are strict, and several common practices (damage deposits, using the deposit for cleaning) are not allowed. Here's what you can and can't do.
The short version
In Ontario you can collect a rent deposit of at most one month's rent, and it can be applied to the last month of the tenancy only, never to damage, cleaning, unpaid utilities, or arrears during the tenancy. You owe the tenant interest on the deposit every year, at the same rate as the annual rent increase guideline. After a rent increase you can ask the tenant to top the deposit up to match the new rent, and the interest you owe can go toward that top-up. Damage, security, and pet deposits are not allowed in Ontario.
On this page
You can collect a rent deposit
You may ask for a rent deposit at or before the start of the tenancy. It can't be more than one month's rent (or one rent period for weekly tenancies).
It's only for the last month's rent
A rent deposit can be applied to the last month of the tenancy only. It cannot be used for damage, cleaning, unpaid utilities, or rent arrears during the tenancy. Trying to keep it for anything else isn't allowed.
You must pay interest every year
You owe the tenant interest on the deposit each year, at the same rate as the annual rent increase guideline. In practice, many landlords apply the interest toward a top-up (below) or pay it out annually.
Topping up after a rent increase
Because the deposit should equal one month's rent, when the rent goes up you can ask the tenant to top up the deposit to match the new rent. The interest you owe can be used toward that top-up.
Worked example: interest and a top-up
Interest and top-ups are the two parts landlords get wrong, and they interact. Here they are together on one tenancy.
- Deposit collected
- $1,999.00
- Collected on
- 2026/09/01
- Equal to
- one month’s rent
| Interest owed after one year, at the 2027 guideline of 1.9%$1,999.00 × 1.9% | $37.98 |
| Rent rises to $2,036.98, so the deposit may be topped up by$2,036.98 − $1,999.00 | $37.98 |
| Applying the interest to the top-up leaves | $0.00 |
Because the interest rate and the top-up are both the same guideline percentage of the same amount, they cancel out almost exactly, which is why the usual practice is to apply one to the other rather than move money twice. What you cannot do is quietly keep the interest: if you are not topping up, it is payable to the tenant every year.
Deposits you can't charge
- Damage deposits, security deposits, or pet deposits, none are allowed in Ontario.
- A key deposit is allowed only as a refundable amount equal to the actual cost of replacing the key or fob, no more.
Frequently asked questions
How much can a landlord collect as a rent deposit in Ontario?
At most one month's rent, or one rent period for weekly tenancies. In Ontario you may ask for the rent deposit at or before the start of the tenancy.
Can a landlord use the last month's rent deposit for damage or cleaning in Ontario?
No. In Ontario a rent deposit can be applied to the last month of the tenancy only. It cannot be used for damage, cleaning, unpaid utilities, or rent arrears during the tenancy.
Do landlords have to pay interest on a rent deposit in Ontario?
Yes. You owe the tenant interest on the deposit each year, at the same rate as Ontario's annual rent increase guideline. If you are not applying the interest toward a deposit top-up, it is payable to the tenant every year.
Can I ask a tenant to top up the rent deposit after a rent increase in Ontario?
Yes. Because the deposit should equal one month's rent, when the rent goes up you can ask the tenant to top up the deposit to match the new rent, and the interest you owe on the deposit can be used toward that top-up.
Are damage deposits or security deposits legal in Ontario?
No. Damage deposits, security deposits, and pet deposits are not allowed in Ontario. A key deposit is allowed only as a refundable amount equal to the actual cost of replacing the key or fob.
Track deposits and interest in Keystead
Keystead records each tenancy's rent deposit alongside the lease and ledger, so the amount, the interest owing, and top-ups after a rent increase are all in one place instead of a spreadsheet you have to remember to update.
Start a free trialThis guide is general information, not legal advice, and rules can change. Confirm the current requirements with the Landlord and Tenant Board or a licensed paralegal.
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