Last Month's Rent Deposit Ontario: What's Legal in 2026

In Ontario, a landlord can collect only two kinds of deposits: a rent deposit (often called "last month's rent") of no more than one month's rent, or one rent period if you pay weekly, and a refundable key deposit that can't exceed the cost of replacing your keys or fobs. Damage, pet and cleaning deposits are not legal. Your landlord must also pay you interest on the rent deposit every year at the rent increase guideline rate.

Here's how each rule works in practice, with examples and a checklist for move-in and move-out.

Key takeaways

• Two legal deposits only: last month's rent and a refundable key deposit.
• Rent deposit cap: one month's rent, or one rent period if that's less (one week for weekly tenants).
• It must be used for your last rent period. It can't be kept for damage or cleaning.
• Yearly interest at the guideline rate: 2.1% for interest due in 2026, 1.9% for 2027.
• Key deposit: refundable when you return your keys; limited to the actual replacement cost.
• Post-dated cheques and automatic withdrawals can't be required.
• Illegal charge? You can apply to the Landlord and Tenant Board (LTB) with Form T1, generally within one year.

This is general information, not legal advice. For your situation, contact the Landlord and Tenant Board or a community legal clinic through Legal Aid Ontario or Steps to Justice.

What landlords can and can't collect

The rent deposit, explained

When it can be requested

A landlord can only ask for a rent deposit on or before you enter into the tenancy agreement. They can't decide halfway through your tenancy that they now want one.

How much

The maximum is the lesser of one month's rent or one rent period. If you pay monthly, that's one month. If you pay weekly, it's one week.

What it's for

Only one thing: rent for your last rent period before the tenancy ends. You don't pay rent that month; the deposit covers it. The landlord can't use it to repair damage, pay for cleaning or cover a utility bill.

If a landlord believes you caused damage beyond normal wear and tear, they have to pursue that separately (for example, through an application to the LTB). They can't just hold onto your deposit.

If you never move in

If a landlord takes a deposit but doesn't give you possession of the unit, they must return it. This is one reason to be cautious about paying anything before you've signed a lease and verified who you're dealing with. Our guide to Toronto rental scams covers the warning signs.

Interest on your last month's rent

Every year, your landlord must pay you interest on your rent deposit. The rate is the rent increase guideline in effect when the interest is due:

• Interest due in 2026: 2.1%
• Interest due in 2027: 1.9%

How it's paid

The landlord can:

• pay it to you directly (cash, e-transfer or a rent credit), or
• add it to your deposit, which is common when rent goes up, so the deposit keeps matching one month's rent

Worked example

You moved in on February 1, 2025, paying $2,000 a month with a $2,000 rent deposit.

• On February 1, 2026, a year of interest is due: $2,000 × 2.1% = $42.
• Your rent rises to $2,042 that same day, after a properly noticed 2.1% increase.
• The landlord may keep the $42 and add it to your deposit, which now equals your new rent of $2,042. Nothing is paid out, but you haven't lost anything: your last month is still fully covered.

If your rent doesn't go up, the landlord should pay you the interest or credit it to your rent.

If the landlord doesn't pay

You can deduct the unpaid interest from your next rent payment, or apply to the LTB with Form T1. Not paying annual interest on a rent deposit is also listed as an offence under the Act. Keep a simple record of your deposit amount and each year's interest.

Key deposits: refundable, with a cap

A landlord may ask for a key deposit for keys, fobs, access cards or remotes. The rules:

• It must be refundable. You get it back when you return the keys at move-out.
• It can't exceed the expected direct cost of replacing the keys or devices.
• The landlord can only keep it to replace keys or fobs you don't return.
• A landlord can charge for extra keys you ask for, but only up to the actual cost.

Photograph your keys and fobs at move-in, and get a written note when you hand them back.

Post-dated cheques and automatic payments

A landlord or lease can't require you to provide post-dated cheques or set up automatic withdrawals. You can choose to offer them, but the landlord can't refuse to rent to you, or try to evict you, because you said no. Many Toronto landlords accept e-transfer; agree on the method in writing (Section 5 of the Ontario Standard Lease covers payment).

"Can I pay several months up front?"

Newcomers and international students without Canadian credit history are often asked to prepay months of rent. Under the RTA, a landlord can't require more than the legal rent deposit. Some tenants choose to offer prepaid rent voluntarily to strengthen an application. If you do:

• make it your choice, in writing, and get a receipt
• never prepay before you've verified the landlord and signed the lease
• understand that money paid up front is harder to recover if something goes wrong

Our guides for international students renting in Toronto and renting with no credit history go deeper on alternatives like references and proof of funds.

If you paid an illegal deposit or fee

It happens more often than it should, especially in a competitive market. If you've paid a damage deposit, a pet deposit, a non-refundable key deposit or a deposit larger than one month's rent, here's a calm way to handle it:

1. Gather proof. Receipts, e-transfer confirmations, the listing and any messages where the charge was requested.
2. Ask in writing. Send a short, polite message asking for the amount back and noting that the Residential Tenancies Act only allows a rent deposit and a refundable key deposit.
3. Give it a reasonable deadline, such as two weeks.
4. Apply to the LTB using Form T1 if it isn't resolved. The LTB generally only orders refunds of illegal charges paid within the past year, so don't let it slide.
5. Report it to the province's Rental Housing Enforcement Unit if the landlord refuses or keeps doing it.

You don't have to move out to do any of this, and a landlord can't legally evict you for asserting your rights.

Move-in and move-out deposit checklist

At move-in

• Rent deposit is no more than one month's rent (or one rent period)
• Key deposit is refundable and reasonable
• No damage, pet or cleaning deposit
• You have receipts for every payment
• You've taken dated photos and video of the unit

Each year

• Interest was paid or added to your deposit

At move-out

• You gave proper notice so the deposit covers your final month (see how to end a tenancy with Form N9)
• You don't pay rent for the last period; the deposit covers it
• Keys and fobs returned, with written confirmation, and key deposit refunded

Rent with fewer surprises

Most deposit problems start with an unverified landlord or a lease that doesn't follow the rules. On ColivEase, listings go through landlord or agent verification and AI scam checks, and the AI lease check can flag deposit clauses that don't line up with Ontario law before you sign.

Looking for a place, or roommates to share it with? Start on ColivEase and keep your deposit where it belongs: covering your last month.