Ontario last-month rent deposits and prohibited deposits

The Residential Tenancies Act generally limits an upfront security deposit to a rent deposit of no more than one month or one rent period, whichever is less. It must be applied to the last rent period. Damage and pet deposits are generally prohibited; limited refundable key deposits have distinct rules.

Last-month rent deposit: interest and top-ups

For a tenancy covered by the Residential Tenancies Act, section 106 requires the landlord to pay interest on the last-month rent deposit each year. The rate is the annual Ontario rent-increase guideline in effect when that interest payment is due. The landlord may also lawfully top up the deposit after a rent increase, and the Act permits applying the interest toward that top-up.

The rent deposit is applied to the final rent period, not held as a damage fund. Keep the lease, payment records and any annual interest statements. If you believe an illegal charge or unpaid deposit interest is owed, read the current T1 instructions and relevant time limits before filing.

Forms and practical next steps

Before acting

1. Check whether the rental law covers your kind of home.
2. Use the latest official form and make sure the legal reason on it fits your situation.
3. Check the LTB instructions for how and when to file, deliver papers and share evidence.
4. If you face eviction or a deadline is close, get help quickly.