Ontario leasing guide

Last month's rent deposit in Ontario

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.

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.

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.

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.

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This 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.

More guides: The standard lease · N1 rent increase · All landlord guides