What Deposits Can a Landlord Legally Collect in Ontario?
Deposit rules confuse both sides of the Ontario rental market, and plenty of illegal charges get collected simply because nobody checks. So what deposits can a landlord collect in Ontario? The legal list is short: a rent deposit capped at one rental period, and a refundable key deposit. Damage deposits and pet deposits are not legal here, full stop. Here's how it all works.
The deposits a landlord can collect in Ontario
Under Ontario's Residential Tenancies Act:
Rent deposit (last month's rent): collectable on or before signing, capped at one month's rent (or one rental period). It can only be applied to the last period of the tenancy, not to damage, cleaning, or anything else
Key deposit: legal, but must be refundable and can't exceed the actual replacement cost of the keys or fobs
First month's rent: not a deposit, just rent paid in advance for the first period
That's the whole list. The LTB's brochures lay out the same rules in detail.
What's not legal
Damage deposits, by any name
Pet deposits or non-refundable pet fees
Cleaning fees collected upfront
Blank cheques or extra months of "security"
Charging for a standard lease document or application processing
A tenant who paid an illegal deposit can pursue it at the Landlord and Tenant Board. Landlords sometimes collect these charges out of genuine confusion with other provinces' rules (British Columbia and Alberta allow damage deposits; Ontario doesn't). Confusion isn't a defence, so both sides should know the list.
Interest on the rent deposit
Here's the detail almost everyone forgets: landlords owe tenants interest on the last month's rent deposit every year, at a rate tied to Ontario's annual rent increase guideline. In practice, many landlords apply the interest by topping up the deposit when rent increases, which the rules allow. Tenants can ask for unpaid deposit interest going back years, and it does come up at the LTB. Landlords who track it annually stay clean; the Ontario government's renting pages publish the current guideline each year.
What about "extra deposits" tenants offer?
In competitive rental markets, applicants sometimes offer six or twelve months of rent upfront to win a unit. The rules here are nuanced: a landlord can't require more than first and last, and accepting a tenant's voluntary prepayment sits in grey territory that's been litigated. The clean practice for landlords is to require only what the law allows. Tenants offering prepayment to compensate for thin credit history should get advice first, because the practice has real risks for both sides.
This isn't legal advice. Deposit disputes turn on specifics, so talk to a paralegal, lawyer, or the LTB about your situation.
Common mistakes
Landlords collecting a "pet deposit" that a tenant can reclaim later, with interest in some cases
Tenants applying last month's deposit to a random month mid-tenancy (it belongs to the final period)
Landlords forgetting deposit interest for years, then facing the accumulated claim
Both sides treating the key deposit as a mini damage deposit. It only covers the keys
Assuming rules from another province apply in Ontario
If you're a landlord setting up a tenancy properly, or a tenant looking at a lease with charges you don't recognize, reach out and I can point you in the right direction. More rental content is in my Renting category.
Rules current as of July 2026. Confirm current guideline rates and rules before acting.
