Home Deposit TOP Landlord ALL Prov.Home Deposit TOP Landlord ALL Prov.

Rent, security deposits and interest

Region: Ontario Answer # 436

The only deposit legally allowed is a rent deposit

Most landlords require that new tenants pay a deposit before they move in. When a landlord asks a tenant to pay the last month’s rent, this is a rent deposit not a security deposit. Security deposits are not allowed in Ontario. Generally, landlords are not allowed to charge tenants additional fees or charges above rent. For example, a landlord cannot charge a “key deposit,” or a repair deposit, or any amount other than a last month’s rent deposit. One exception to this is found under Section 17(3) of the Residential Tenancies Act:  “payment of a refundable key, remote entry device or card deposit” is allowed as long is it is “not greater than the expected direct replacement costs”.

If the landlord charges a rent deposit, it must be held and used to cover the tenant’s last month’s rent. Each time the rent increases, the landlord can require the tenant to top up their last month’s rent deposit to the new amount.

Landlords required to pay annual interest on last month’s rent

Since the landlord does not use the rent deposit until the end of the tenancy, the landlord is required to pay the tenant interest on the deposit. However, if a tenant rents a unit for only part of a year, the interest owing is proportionate to the length of time that the deposit was held by the landlord.

Although landlords are supposed to pay interest to tenants every 12 months, if they do not, the interest owing to the tenant is compounded each year. Interest is payable on the total rent amount being held by the landlord, including any subsequent increases in rent.

If tenants want to collect the interest owing, they may be able to subtract it from their rent if the landlord consents. If a landlord refuses to pay interest to a tenant, the tenant can apply to the Landlord and Tenant Board for an order requiring the landlord to pay, or for an abatement of rent.

For additional information about security deposits, rent deposits and interest, visit the Landlord and Tenant Board.

Help for tenants

A criminal record will affect your ability to be approved for a residential lease. To erase your criminal record, learn more at Pardon Partners. It’s easier than you think.

If you are having financial problems, it may be difficult to rent an apartment or condominium. You can get help to clear your debt and repair your credit. For easy-to-understand debt solutions on your terms, contact our preferred experts 4Pillars and rebuild your financial future. With 60 locations across Canada, they will help you design a debt repayment plan and guide you with compassionate advice. No judgment. For help, visit 4Pillars or call toll-free 1-844-888-0442 .

If you are a tenant, you can add your monthly rent payment to your credit report using FrontLobby . This can:

  • Improve your credit score on average 33pts to 84pts
  • Build good credit faster with a new rent tradeline
  • Unlock credit rewards (better bank loans, credit cards, mortgage rates)

Help for landlords

For legal advice and assistance with a residential tenancy and applications to the Landlord and Tenant Board, contact our preferred Landlord and Tenant experts Nicola (Nick) Giannantonio Legal Services .

If you are a landlord, you can pull tenant credit reports and report monthly rent payments to the credit bureaus using FrontLobby . This helps you:

  • Attract, screen and reward great tenants
  • Ensure rent is paid on-time, every month
  • Recover debts from unpaid rent

FrontLobby Landlord & Tenant ONFrontLobby Landlord & Tenant ON

NG Legal Services Landlord and Tenant ONNG Legal Services Landlord and Tenant ON

4Pillars Landlord & Tenant Ontario All Topics May 20184Pillars Landlord & Tenant Ontario All Topics May 2018

Pardon Partners – Landlord ONPardon Partners – Landlord ON


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