Security Deposits in Ontario: What Landlords Can and Cannot Collect

Property Management in Ontario

Ontario's rules on security deposits are among the most restrictive in North America — understanding what you can and cannot collect prevents LTB orders to return overpayments.

Ontario's Residential Tenancies Act strictly limits what landlords can collect from tenants before occupancy. The only deposit permitted is a rent deposit equal to no more than one month's rent (or one rental period, whichever is less). This deposit can only be applied to the last month's rent — it cannot be used for cleaning, damage, or any other purpose.

Key Responsibilities and Best Practices

Key deposits are permitted, but only in the amount that covers the actual cost of replacing the key. A landlord cannot charge a large 'key deposit' as an indirect security deposit. The amount must reflect the true replacement cost of the physical key.

Damage deposits, cleaning deposits, and pet deposits are explicitly prohibited in Ontario. A landlord who collects these deposits can be ordered by the LTB to return them, potentially with interest. This is a frequent source of LTB applications against landlords by departing tenants.

How D&D Property Management Helps

The permitted rent deposit must be held by the landlord and applied to the last month's rent of the tenancy. The landlord is required to pay interest on the rent deposit each year, at the same rate as the annual rent increase guideline. This interest is typically credited against the last month's rent rather than paid out.

For pet-related concerns, landlords can include a no-pets clause in a lease, though the enforceability of such clauses is limited under Ontario law. A better approach for managing pet risk is thorough tenant screening and establishing clear lease conditions about property care, since pets themselves are not grounds for eviction in most circumstances.