Security deposit rules in Ontario: what landlords and tenants need to know
In Ontario, landlords cannot collect security or damage deposits under the Residential Tenancies Act, except for a last month’s rent deposit.This guide covers Ontario tenancy law only. For other provinces, see our [rental laws guides].
Ontario's security deposit rules are among the most restrictive in Canada. Under the Residential Tenancies Act, 2006, damage deposits are prohibited entirely. What landlords can collect is tightly limited.
Are Damage Deposits Allowed in Ontario?
No. Damage deposits are illegal in Ontario. A landlord cannot collect any deposit intended to cover potential damage to the unit.
What Can a Landlord Collect?
The only deposit permitted in Ontario is a last month's rent deposit, capped at one month's rent. This deposit must be used exclusively for the tenant's final month of rent. It cannot be applied to damages, cleaning costs, or any other expense.
Does the Landlord Owe Interest on the Deposit?
Yes. Landlords must pay annual interest on the last month's rent deposit. The interest rate is the same as the rent increase guideline for that year: 2.1% for 2026, according to the Ontario government. This interest is typically applied as a credit against the last month's rent rather than paid out directly.
Are Key Deposits Allowed?
A refundable key deposit is permitted, but it cannot exceed the actual replacement cost of the key. It must be refunded when the key is returned.
What Other Deposits Are Prohibited?
Landlords cannot collect pet deposits, cleaning deposits, or any other form of security deposit. Any amount collected beyond what the RTA permits is considered an illegal charge. Tenants can file a T1 application with the Landlord and Tenant Board (LTB) to recover illegally collected amounts within 12 months.
What Can Tenants Do if Charged an Illegal Deposit?
If your landlord has collected a deposit that is not permitted under the RTA, you can apply to the LTB for a refund. Keep records of any payments made and any communications with your landlord.
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