Last Month's Rent Deposit

LMR

In Ontario, the only rent deposit a landlord may take: up to one period's rent, applied to the last rent period and earning yearly interest.

A last month's rent deposit is the rent deposit an Ontario landlord may collect at or before the start of a tenancy. It is limited to one rental period's rent. For a monthly tenancy, that means one month's rent. For a weekly tenancy, it means one week's rent. If the rental period is shorter than a month, the smaller amount applies.

The deposit has one purpose. It can be applied only to the rent for the last rental period before the tenant moves out. It is not a damage deposit, and the landlord cannot use it to pay for repairs or cleaning. Ontario does not allow damage deposits or pet deposits, and a lease term requiring one is void.

The landlord must pay the tenant interest on the deposit every year. The rate is the same as the rent increase guideline for that year. In Ontario, the guideline is 2.1% for 2026 and 1.9% for 2027. When the rent goes up, the landlord can ask the tenant to top up the deposit so it matches the new rent. The landlord can use the interest owed to the tenant toward that top-up.

A key deposit is different. A landlord may charge a refundable deposit for keys, remote entry devices or access cards. It must be returned when the tenant hands back the keys at the end of the tenancy. Extra keys can be charged at no more than their actual cost.

These rules come from Ontario's Residential Tenancies Act, 2006, and the Standard Lease records the deposit amount. Other provinces handle deposits differently, and many allow a security or damage deposit. Disputes about Ontario deposits or unpaid interest go to the Landlord and Tenant Board.

General information only, not legal, tax, or financial advice. Rules change and vary by province; confirm the current details with the relevant authority before you rely on them.