Ontario tenants may be entitled to interest on a rent deposit held for the last month of a tenancy. If a landlord charges an unlawful amount, fails to credit required interest, or refuses to return money owed, a renter can take practical steps to seek repayment. This guide explains how Ontario's Residential Tenancies Act, 2006 applies, what records to collect, how to ask the landlord for a correction, and when to apply to the Landlord and Tenant Board (LTB). Understanding the rules can help you protect your rent, avoid missed deadlines, and present a clear claim without withholding regular rent improperly.
Ontario rules for last-month rent deposits
Under the Residential Tenancies Act, 2006, a landlord may generally require a rent deposit for the last rental period, but it cannot be used as a damage deposit. The deposit is normally limited to one month's rent or the rent for a rental period, whichever is less. The landlord must pay interest on the deposit each year at the guideline rate that applies to the relevant year.[1]
When rent increases lawfully, the required interest may help keep the deposit equal to the new last-month rent. A landlord should not demand a separate payment from the tenant simply to create an interest amount that the law already requires the landlord to credit. For a broader explanation of deposit rules, see Understanding Rental Deposits: What Tenants Need to Know.
When a tenant may be owed money
A tenant may have a claim when the landlord has not paid or credited the required annual interest, has demanded an unlawful extra deposit, or has kept a deposit after the tenancy ended without a lawful basis. The exact amount depends on the rent deposit, the applicable guideline rate, rent increases, payments already made, and the timing of the tenancy.
- Compare the original deposit with the last month's lawful rent and the interest credited each year.
- Gather the lease, rent receipts, bank records, landlord messages, and any statement showing the deposit or interest calculation.
- Check the current Ontario rent increase guideline for the years in question.
- Do not assume that an illegal deposit or missing interest automatically permits you to stop paying monthly rent.
Ask the landlord to correct the account
Start with a short written request identifying the deposit, the rental address, the years involved, and the amount you believe is outstanding. Attach copies rather than originals of supporting documents and ask the landlord to confirm the calculation and payment date. Keep your message factual and allow a reasonable time for a response.
Continue paying rent according to the agreement while the issue is being resolved. If the landlord agrees, obtain written confirmation that states whether the amount will be paid to you or credited against the rent deposit. For practical rent-payment guidance, read Tenant''s Guide to Paying Rent: Rights, Responsibilities, and Tips.
Apply to the Landlord and Tenant Board
If the landlord will not resolve the issue, a tenant may apply to the LTB for a rebate or other remedy that is available under the Act. The usual tenant application for money the landlord owes is the T1 application, titled Tenant Application for a Rebate of Money the Landlord Owes. The form asks for details about the tenancy, the money claimed, the relevant dates, and the remedy requested.[2]
Use the LTB's filing instructions to submit the completed form and pay any required fee or request a fee waiver if eligible. Serve the landlord as directed and keep proof of service. If a hearing is scheduled, organize your documents in date order and explain your calculation clearly.
Evidence that can support a T1 application
- Include the written lease or other proof of the tenancy and the amount of the original rent deposit.
- Show rent payments, lawful rent increases, interest credits, and the amount you are asking the Board to order.
- Save emails, letters, text messages, receipts, account statements, and a calculation worksheet.
- Attend the hearing or follow the LTB's instructions if the matter proceeds by another hearing format.
The Board will consider the evidence and the law rather than automatically accepting either side's calculation. A tenant who has already moved out should also review How to Get Your Security Deposit Back with Interest When Moving Out when the dispute involves money held at the end of the tenancy.
How interest and repayment may be calculated
Begin with the deposit amount actually paid, identify each year in which interest was due, and apply the relevant guideline rate. Then subtract any interest that was already paid or credited. If a lawful rent increase changed the amount needed for the last month, show how the credit was applied and identify any remaining balance.
Keep the calculation simple enough that another person can check it. If the landlord's records differ, list the difference and explain which receipt, lease term, or guideline rate supports your number. The LTB can decide the dispute if the parties cannot agree.
FAQ
- How much interest must an Ontario landlord pay on a last-month rent deposit?
- The landlord generally owes annual interest at the Ontario rent increase guideline rate that applies to the relevant year, subject to the facts of the tenancy and any amount already credited.
- Can I use my last-month rent deposit to pay current rent?
- A last-month rent deposit is intended for the last rental period and should not normally be used to pay ordinary monthly rent while the tenancy continues.
- Which Ontario form can I use to recover unpaid deposit interest?
- A tenant will commonly use the LTB T1 application for a rebate of money the landlord owes, including a claim that required rent-deposit interest was not paid or credited.
- What evidence should I bring to the LTB?
- Bring the lease, rent receipts, bank records, rent increase notices, messages with the landlord, proof of the deposit, and a clear calculation of the amount claimed.
How-To
- Collect the lease, deposit receipt, rent records, interest credits, and written communications.
- Calculate the annual interest using the Ontario guideline rates for the relevant years.
- Send the landlord a written request explaining the missing interest or unlawful amount.
- Complete and file the LTB T1 application if the landlord does not resolve the balance.
- Meet every filing, service, and hearing deadline and bring organized copies of your evidence.
Key Takeaways
- Ontario landlords generally owe annual interest on a last-month rent deposit.
- Written records and a clear calculation strengthen a tenant's request for repayment.
- The LTB T1 form is commonly used to claim money a landlord owes.
Help and Support / Resources
- Ontario Landlord and Tenant Board for applications, procedures, and contact information.
- LTB forms and instructions, including the T1 tenant application.
- Ontario residential rent increase guideline for annual guideline rates.
