Rent Deposits vs Security Deposits: Ontario Tenant Rights Explained

Understanding what your landlord can and cannot ask for when you rent a new place is crucial for protecting your rights as a tenant in Ontario. Many tenants are unsure about rent deposits, security deposits, and the rules landlords must follow. This article explains the legal differences, what’s permitted under Ontario law, what to do if your landlord requests a prohibited deposit, and where to turn if you need help.

What is a Rent Deposit in Ontario?

In Ontario, a rent deposit is a payment required by a landlord, usually at the start of a tenancy, to be applied to your last month’s rent – not the first. This is sometimes called a "last month's rent deposit" or LMR. By law, your landlord can ask for this deposit before you move in, but only up to the amount of one month’s rent (or one week’s rent for weekly tenancies).

• The deposit must NEVER be applied to damages, repairs, or cleaning.
• Your landlord must pay you interest on the deposit each year, at the guideline rate set by the province.
• You cannot use your rent deposit as payment for any month except the last one, unless your landlord agrees in writing.

For more details, see Understanding Rental Deposits: What Tenants Need to Know.

Is a Security Deposit Legal in Ontario?

Security deposits—money held to cover potential damage, cleaning, or key loss—are illegal in Ontario rental housing. Landlords cannot require an additional deposit to cover damages or extra costs, with the only exception being a refundable key deposit. Even then, the key deposit amount must not be more than the cost of replacing the key itself.

• If your landlord asks for a security deposit (for furniture, cleaning, or repairs), you may refuse and point out that it’s not allowed under the Residential Tenancies Act, 2006.
• Any other deposit, such as for "pet cleaning" or "damage," is not allowed.

What to Do If a Landlord Requests a Prohibited Deposit

If a landlord asks for a security deposit or any type of deposit not permitted by Ontario law, you should:

• Politely inform the landlord that Ontario’s Residential Tenancies Act, 2006 does not allow this type of deposit.
• If pressure continues, keep written records of your communications.
• You do not have to pay illegal deposits to secure the rental.
• If an illegal deposit is already paid, you can apply to the Landlord and Tenant Board for its return.

Tip: Before signing any lease or paying a deposit, always read the terms carefully and ask questions if any fees or deposits seem unusual.

Official Forms and How to Use Them

• Application about Tenant Rights (Form T2): If your landlord collects an illegal deposit, use this form to apply to the Landlord and Tenant Board (LTB) for a remedy (e.g., order to return the deposit or compensation). Download Form T2 from the official LTB forms page.
  Example: You paid a $500 "damage deposit" and want it refunded after your landlord refuses to return it.
• Tenant Application (Form T1): If your landlord has not paid interest on your last month’s rent deposit, use Form T1 to apply for compensation. Available at the LTB's official site.

Filing these forms helps protect your rights and can get you back money you're owed.

Key Differences Summarized

• Rent Deposits: Can only be the last month’s rent or week’s rent deposit. Must be applied to the final period of the tenancy and accrue interest annually.
• Security Deposits: Not allowed, except for a key deposit equal to the key replacement cost.

Landlords may not use deposits for maintenance or repair costs. If you've experienced issues related to repairs or cleanliness, the proper way for landlords to address these is through a claim at the LTB—not by demanding deposits up front. For advice on your ongoing responsibilities as a tenant, see Obligations of Landlords and Tenants: Rights and Responsibilities Explained.

Understanding your rights around deposits can help prevent disputes and confusion. If you’re searching for a rental that follows the law, Browse apartments for rent in Canada for listings from reputable landlords.

For an overview of tenant protections, see Tenant Rights in Ontario.

FAQ: Rent and Security Deposits in Ontario

1. Can my landlord ask for a deposit to repair potential damage?
   No. In Ontario, landlords may only collect a deposit for the last month's rent and (optionally) a refundable key deposit, but cannot require security or damage deposits.
2. Does my landlord have to pay interest on my last month's rent deposit?
   Yes. Your landlord must pay annual interest on your last month’s rent deposit, at the guideline rate set by the province.
3. What should I do if I already paid an illegal security deposit?
   You can apply to the Landlord and Tenant Board using Form T2 to request the return of your deposit.
4. Can a landlord keep my last month’s rent deposit for cleaning or repairs?
   No. The rent deposit can only be applied to your last month's rent and must not be used for cleaning, repairs, or damages.
5. Is a pet deposit allowed in Ontario rentals?
   No. Ontario does not allow separate pet deposits for residential tenancies; only the standard last month’s rent deposit is permitted.

Conclusion: What Tenants Should Remember

• In Ontario, rent deposits are allowed only for last month's (or last week's) rent and must earn interest for tenants.
• Security deposits (except key deposits) are not allowed by law and can be reclaimed if wrongly collected.
• If you face pressure about deposits, the Landlord and Tenant Board can help resolve disputes.

Knowing these rules protects you from unlawful fees and provides peace of mind during your tenancy.

Need Help? Resources for Tenants

• Landlord and Tenant Board (LTB) – File complaints, learn your rights, and access official forms.
• Residential Tenancies Act, 2006 – The main law protecting tenants in Ontario.
• Ontario Tenants Rights Hotline: 416-921-9494 (Greater Toronto Area) or 1-888-991-0775 (toll-free)
• Community legal clinics: Visit the Ontario Legal Aid website for local supports.

1. Government of Ontario. Residential Tenancies Act, 2006.
2. Landlord and Tenant Board. Rent Deposits and Other Charges. Official FAQ.
3. Landlord and Tenant Board. Tenant Application about Maintenance (T2) and Tenant Application for a Rebate. Official Forms.