Do Landlords Owe Interest on Deposits in Ontario?

Many tenants wonder whether a landlord in Ontario must pay interest on security deposits or last-months' rent. This is a common renter concern when moving in or out, especially for people managing budgets or disputing deductions. Under Ontario rules, interest on a deposit is not automatically required by the Residential Tenancies Act, 2006^[1], and entitlement depends on what the lease or local bylaws say. This article explains how deposits are treated in Ontario, when interest might apply, the steps tenants can take to request interest or a refund, and how to bring a dispute to the Landlord and Tenant Board^[2]. Practical tips, required forms, and sources are included for Ontario renters.

How deposits and interest are treated in Ontario

In Ontario, the most common "deposit" is a last-months' rent deposit. The Residential Tenancies Act, 2006 governs how deposits are handled, but the Act does not generally require landlords to pay interest on deposits unless the tenancy agreement says otherwise or a municipal bylaw requires it^[1]. Tenants should check their lease for any language about interest, the purpose of the deposit, and conditions for deductions.

Key points about deposits

• Deposits usually function as a credit toward the last months rent, not a cash escrow for damages.
• Landlords cannot charge more than one month's rent as a last-month deposit unless allowed by local rules or a written agreement.
• Any agreement that promises interest should be in writing to make enforcement clear.
• Keep records (receipts, lease clauses, and communications) to support any claim for withheld funds or interest.

What to do if you believe youre owed interest or a refund

Start by reviewing your lease for an interest clause. If the lease promises interest or the landlord agreed in writing, ask the landlord in writing that they calculate and return the interest or adjust the last month's rent credit. If you cannot resolve the issue directly, you can apply to the Landlord and Tenant Board for a decision. The Board handles disputes about deposits, and you may need to use the Boards application forms to start a claim^[2].

If you want practical reading about deposit basics and preparing documentation, see Understanding Rental Deposits: What Tenants Need to Know and for moving-out specifics, see How to Get Your Security Deposit Back with Interest When Moving Out.

When writing to request interest or a refund, include the following: the tenancy dates, the amount of the deposit, where it was held or applied, a clear calculation of interest if promised in the lease, and a deadline for reply (for example, 14 days). If you plan to file with the Board, attach copies of the lease, receipts, and any written exchanges with the landlord.

FAQ

Does Ontario law require landlords to pay interest on security deposits?

No. The Residential Tenancies Act, 2006 does not automatically require interest on deposits; interest only applies if the lease or a local rule requires it.

What if my lease promises interest but the landlord wont pay?

Document your requests in writing, keep all receipts, and then apply to the Landlord and Tenant Board to enforce the lease terms if the landlord refuses.

Which tribunal handles deposit disputes in Ontario?

The Landlord and Tenant Board handles disputes about deposits and related tenancy issues; use the Boards application process to start a claim^[2].

How-To

1. Collect evidence: copies of your lease, receipts for deposit payments, photos and any written messages with the landlord.
2. Contact your landlord in writing asking for the interest calculation or refund and set a clear deadline to respond (for example, 14 days).
3. If unresolved, find and complete the appropriate Landlord and Tenant Board application form to file a dispute^[3].
4. File the application and prepare for a hearing by organizing your evidence and witnesses if applicable.
5. If the Board orders repayment or interest and the landlord does not comply, seek enforcement options that the Board or court system provides.

Key Takeaways

• Ontario does not automatically require interest on deposits; check your lease.
• Keep written records and receipts to support any claim for interest or refund.
• If direct requests fail, apply to the Landlord and Tenant Board to resolve the dispute.

Help and Support / Resources

• Landlord and Tenant Board (Tribunals Ontario)
• Ontario.ca Renting and Tenancies

1. [1] Residential Tenancies Act, 2006 - e-Laws (Ontario)
2. [2] Landlord and Tenant Board (Tribunals Ontario)
3. [3] Landlord and Tenant Board forms and guides