Written by Firas Swaida, RE/MAX Realty Services Inc., Brokerage. Updated July 2026.
At the start of a residential tenancy in Ontario, a landlord is allowed to ask for the first month’s rent and a rent deposit, which almost always takes the form of the last month’s rent. That deposit cannot be larger than one month’s rent, or one week’s rent if you pay by the week. A landlord can also ask for a refundable key deposit, as long as it is no more than what it actually costs to replace the key, fob, or entry card. That is essentially the full list of money a landlord can require up front.
A landlord in Ontario cannot ask for a separate security deposit or damage deposit, a pet deposit, a cleaning deposit, or several months of rent paid in advance. A landlord also cannot force you to hand over post-dated cheques or sign up for automatic debit as a condition of getting the unit. Those payment methods can be offered and agreed to, but they cannot be demanded. None of these limits change from one city to another, because they come from provincial law.
These rules sit inside the Residential Tenancies Act, 2006, and they are enforced by the Landlord and Tenant Board (the LTB). This guide explains each rule in plain language for landlords, investors, and tenants across Mississauga and the wider GTA. It is educational and general. For a specific situation or an active dispute, confirm the details with the Landlord and Tenant Board or get advice from a licensed paralegal or a lawyer.
What a rent deposit is and the one-month limit
The money most people call “last month’s rent” has a formal name in Ontario law. It is a rent deposit. A landlord is entitled to collect one, and it protects the landlord by covering the final rental period if a tenant leaves without paying that last stretch of rent.
Where the rule comes from
The rules for rent deposits are set out in the Residential Tenancies Act, 2006. The Landlord and Tenant Board applies that Act to most private rental homes in the province, including apartments, condominiums, rented houses, and basement units. Because the law is provincial, a rent deposit works the same way in Mississauga as it does in Brampton, Toronto, or anywhere else in Ontario. There is no separate municipal deposit and no local surcharge that a landlord can add on top.
How much a landlord can collect
The cap is simple. If you pay rent by the month, the deposit cannot be more than one month’s rent. If you pay by the week, it cannot be more than one week’s rent. A landlord who asks for more than that is asking for something the law does not allow.
- Monthly tenancy: the deposit cannot exceed one month’s rent.
- Weekly tenancy: the deposit cannot exceed one week’s rent.
- Any request for two, three, six, or twelve months of rent up front is not permitted.
So if the agreed rent on a Mississauga condo is $2,400 a month, the largest rent deposit a landlord can collect is $2,400. Add the first month’s rent of $2,400, and the total a tenant hands over at the start is $4,800. Nothing beyond that first-and-last structure is required by law.
When the deposit can be collected
Timing matters, and it protects tenants from a surprise demand later. A landlord can ask for the rent deposit on or before the day the tenancy agreement is made. If a landlord does not collect a deposit at that point, they lose the right to demand one afterward. A tenant who has already moved in cannot be told, three months later, to suddenly produce a last month’s deposit.
The deposit is for the last month, never for damage
This is one of the most misunderstood parts of Ontario law, and it catches both first-time landlords and tenants who moved here from places with different rules. A rent deposit has exactly one job.
The deposit pays the final rental period
The rent deposit can only be applied to the rent for the last month, or last week, before the tenant moves out. It is not a general fund the landlord can dip into. When the tenancy is ending, the deposit becomes the rent for that final period, and the tenant does not pay rent separately for it.
It cannot be used for damage or cleaning
A landlord cannot keep the deposit, or any part of it, to repair damage, to clean the unit, to replace a broken appliance, or to cover unpaid utility bills. The law is direct on this point. The deposit is for the last month’s rent and nothing else. Even if a tenant leaves real damage behind, the landlord cannot help themselves to the deposit to pay for it.
That surprises people who expect a damage deposit to work the way it does in other provinces or countries. In Ontario there is no such thing. If a tenant causes damage beyond normal wear and tear, the landlord’s route is to document it and apply to the Landlord and Tenant Board for an order. Photographs from a move-in and move-out inspection, dated and detailed, are worth far more to a landlord than any attempt to hold back the deposit.
The annual interest a landlord must pay
Holding a tenant’s deposit is not free money for a landlord. Ontario law requires the landlord to pay the tenant interest on the rent deposit every year.
The interest rate equals the rent increase guideline
The interest rate is not something a landlord picks. By law it is the same as the province’s rent increase guideline for that year. The guideline is set annually by the Ontario government and is based on the Ontario Consumer Price Index, a measure of inflation. Because it changes every year, the interest owed on a deposit changes too.
For 2026 the guideline is 2.1 percent, and for 2027 it has been set at 1.9 percent. Those figures were accurate at the time of writing, but the number moves each year, so always confirm the current guideline on the Ontario government website or with the Landlord and Tenant Board before you calculate anything. Do not rely on last year’s figure.
How the guideline is set and capped
The government announces the guideline by August 31 each year, and it applies to increases that take effect the following calendar year. It is worked out from the Ontario Consumer Price Index, and it is capped at 2.5 percent. Even in a high-inflation year, the guideline cannot climb above that ceiling, which means the interest rate on a rent deposit is effectively capped at 2.5 percent as well. That is one more reason the figure needs a fresh check each year rather than a guess.
A simple example
Say a tenant paid a $2,000 rent deposit and the guideline for the year is 2.1 percent. The interest the landlord owes for that year is 2.1 percent of $2,000, which is $42. The landlord is expected to pay that $42 to the tenant once a year, on the anniversary of the tenancy.
How interest and a rent increase fit together
Here is where the two rules connect in a tidy way. When a landlord lawfully raises the rent, they can also ask the tenant to top up the deposit so it matches the new rent. The landlord is allowed to apply the interest owed toward that top-up.
Using the same numbers, if the rent rises by 2.1 percent from $2,000 to $2,042, the deposit needs to grow by $42 to stay level with the new rent. The $42 of interest the landlord owes can be applied straight to that $42 top-up. No cash needs to change hands, the deposit stays equal to one month’s rent, and both sides are square.
What happens if the landlord skips the interest
If a landlord does not pay the required interest for twelve months, the tenant is allowed to deduct the amount from a rent payment. It is sensible for a tenant to include a short note with that payment explaining the deduction, so the landlord understands why the rent that month is lower. A tenant who is unsure about the figure can call the Landlord and Tenant Board for help before taking the deduction.
Deposits and charges that are not allowed in Ontario
Ontario keeps a short, firm list of what a landlord can require. Anything outside that list is off the table, no matter what a lease says. A term in a lease that contradicts the Act simply will not be enforced by the Board.
Deposits a landlord cannot ask for
- Security or damage deposits. There is no separate damage deposit in Ontario. The only deposit that acts as security is the rent deposit, and it can be used only for the last month’s rent.
- Pet deposits. A landlord cannot require money as a pet deposit, even in a building that allows pets. Most no-pet clauses in a lease are also void under the Act, although a landlord can still act if a pet causes damage or a serious problem, and condominium rules may restrict certain animals.
- Cleaning deposits. A landlord cannot hold money against future cleaning.
- Advance rent beyond first and last. A landlord cannot require extra months of rent paid ahead of time as a condition of renting.
Charges a landlord cannot require
- Late fees or penalties for paying rent late.
- Interest on unpaid rent.
- A fee or commission for renting the unit to you.
- A charge for a rent receipt. Receipts must be given free when asked for, including to a former tenant within twelve months of moving out.
Payment methods cannot be forced
A landlord cannot insist on post-dated cheques, and cannot require automatic debit or credit card payments as a condition of the tenancy. These can be suggested, and a tenant is free to agree to them, but a tenant cannot be refused the unit or evicted for declining. Once a payment method is agreed, it cannot be changed unless both sides agree.
If a tenant paid an illegal deposit or charge, they can apply to the Landlord and Tenant Board to get it back, generally within one year. That is a good moment to get advice from a paralegal, a lawyer, or a community legal clinic.
Key deposits
There is one more deposit a landlord is allowed to collect, and it is narrow. A key deposit.
What a legal key deposit looks like
A key deposit is permitted only if it is refundable and only if it is no more than the actual cost of replacing the key. The same rule covers fobs, entry cards, garage remotes, and other devices that open doors. When the tenant returns the keys at the end of the tenancy, the landlord must return the deposit.
Where key deposits cross the line
The moment a key deposit is set higher than replacement cost, it starts to look like a disguised security deposit, and that is not allowed. A fob might cost $25 to $75 to replace, so a key deposit in that range is reasonable. A demand for $200 or $300 for a single key or fob is very likely illegal, because it is far more than a replacement actually costs. Refundable and realistic are the two words a landlord should keep in mind.
First and last month at move-in
“First and last month’s rent” is the phrase almost every Ontario renter hears, and it causes a lot of confusion because only half of it is a deposit.
What “first and last” actually means
The first month’s rent is not a deposit at all. It is simply the rent for the first month a tenant lives in the unit, applied to that first month. The last month’s rent is the rent deposit, held until the final rental period. Put together, a tenant usually pays two months’ worth at the start. One month is used up immediately as rent, and one month sits as the deposit until the end.
This arrangement is legal and extremely common. It is legal precisely because the first month’s payment is used as rent for the first month, and the last month’s payment is capped at one month and reserved for the final period.
What a landlord still cannot do at move-in
Asking for first and last is fine. Asking for first, last, and a damage deposit is not. Asking for first, last, and three extra months as a cushion is not either. A landlord who wants more comfort about a tenant’s ability to pay has other tools that do not involve extra deposits, and those tools sit outside the deposit rules.
Screening is different from deposits
A landlord is generally allowed to ask for a rental application, references, a credit check, and proof of income, and may ask for a guarantor. None of these are deposits, and they are a normal part of choosing a tenant. Screening does have to respect the Ontario Human Rights Code, so a landlord cannot use it to discriminate against an applicant. Requesting reasonable information to assess an application is one thing. Demanding extra money up front is another, and the money side is where the deposit limits apply.
Record the deposit in the standard lease
Most private residential tenancies that started on or after April 30, 2018 must use Ontario’s standard lease. The lease records the rent, what is included in it, and the rent deposit, which gives both sides a written record they can rely on later. If a landlord who is required to use the standard lease does not provide one, the tenant can ask for it in writing, and if it still does not arrive within 21 days the tenant may withhold one month’s rent under the specific steps set out in the rules. Keep the signed lease, your receipts, and a record of any interest paid or applied.
What happens to the deposit at the end of the tenancy
Because the rent deposit is the last month’s rent, the ending of a tenancy is usually straightforward. A few situations are still worth spelling out.
The normal ending
In most tenancies, the deposit is simply applied to the final month. The tenant gives proper notice, the last month arrives, the deposit covers that month’s rent, and no separate payment is made. Interest that has built up over the years should already have been paid or applied along the way.
When a tenant can ask for the deposit back
Sometimes a deposit should be returned rather than used. A tenant can ask for it back if they already paid the last month’s rent in full some other way, or if the landlord refused to let them move in after taking the deposit. If a landlord will not return a deposit that should be refunded, or uses it for something other than the last month’s rent, the tenant can apply to the Landlord and Tenant Board, generally within one year.
Damage at the end does not come out of the deposit
It is worth repeating, because it trips up so many landlords. Even at move-out, the deposit cannot be redirected to damage or cleaning. If there is damage beyond ordinary wear and tear, the landlord documents it and applies to the Board for compensation. A careful move-in and move-out inspection, with dated photos and a written condition report signed by both sides, is the landlord’s real protection here.
Rules that protect both landlords and tenants
It is easy to read the deposit rules as purely tenant protections, but they give landlords real benefits and clear footing too.
What the rules give tenants
- A hard cap of one month, or one week, on the deposit, so no one is asked for an unaffordable sum up front.
- Certainty that the deposit is safe and will be used only for the last month’s rent.
- Interest on the deposit every year.
- Freedom from illegal charges and from being forced into a particular payment method.
- A clear path to the Landlord and Tenant Board if something goes wrong.
What the rules give landlords
- A guaranteed last month’s rent, so a tenant cannot skip the final month and leave the landlord short.
- The right to top up the deposit when rent rises, keeping it level with the current rent.
- A predictable framework that keeps good-faith landlords out of costly disputes.
- The ability to screen applicants properly, within human rights limits, before handing over keys.
Following the rules is cheaper than breaking them
For a landlord, staying inside the rules is simply good financial sense. Illegal deposits and charges can be ordered returned by the Board, and offences under the Residential Tenancies Act carry fines of up to $50,000 for an individual and up to $250,000 for a corporation. A landlord who collects only what the law allows, pays the interest, and keeps clean records almost never ends up on the wrong side of an order.
Keep a clear paper trail
Good records settle most disagreements before they ever reach a hearing. A landlord should hold on to the signed lease, a note of the deposit collected, and a running record of the interest paid or applied each year. A tenant should keep proof of every payment and ask for receipts, which a landlord has to provide free of charge, even after the tenancy has ended. If a disagreement does reach the Landlord and Tenant Board, the side with dated documents and photos stands on much firmer ground than the side relying on memory.
What this means for investors and tenants in Mississauga
Mississauga has one of the busiest rental markets in the GTA, with condominium towers around Square One and along the waterfront, purpose-built rentals, and a large number of basement apartments in family neighbourhoods. The deposit rules apply to almost all of them in the same way.
For investors and landlords
If you own or plan to buy a rental condo or a house with a basement suite in Mississauga, build your numbers around what the law actually permits. You can collect first and last month, plus a modest refundable key or fob deposit, and nothing more. You cannot lean on the deposit as a damage cushion, so plan for wear and tear as a normal cost of owning a rental, and protect yourself with proper inspections and the Ontario standard lease instead.
One point that often gets mixed up is rent control versus deposits. Units first occupied for residential purposes after November 15, 2018, including many newer Mississauga condos and purpose-built rentals, are exempt from the rent increase guideline. That exemption is about how much you can raise the rent, not about deposits. The deposit rules still apply to those newer units in full: the one-month cap, the annual interest, and the ban on damage and pet deposits do not disappear just because a building is exempt from rent control.
For tenants
If you are renting in Mississauga, you can hold your ground when a landlord asks for more than the law allows. You owe first month’s rent and a last month’s deposit, plus a fair key deposit, and that is the whole list. You do not owe a damage deposit or a pet deposit, and you cannot be forced onto automatic debit. Keep proof of everything you pay, and ask for receipts, which a landlord must provide at no charge.
A note for newcomers
Many people renting or investing in Mississauga are new to Canada, and the deposit rules here can differ sharply from those back home, where large security deposits are often normal. Ontario is more restrictive, which works in a tenant’s favour and gives a landlord a clear rulebook to follow. If English is not your first language, work with people who can explain the details plainly. Our team helps clients in both English and Arabic, so nothing important gets lost in translation.
Frequently asked questions
Is “first and last month’s rent” legal in Ontario?
Yes. A landlord can collect the first month’s rent plus a rent deposit equal to one month’s rent, which is held for the last month. The condition is that the first month’s payment is applied to your first month of occupancy, and the last month’s payment is treated as the deposit.
Can a landlord ask for a security deposit or a damage deposit?
No. Ontario does not allow a separate security or damage deposit. The only deposit that acts as security is the rent deposit, meaning last month’s rent, and it can be used only for the final month’s rent, never for damage.
How much can a landlord collect as a rent deposit?
No more than one month’s rent if you pay monthly, or one week’s rent if you pay weekly. A request for several months of rent up front is not allowed, and asking for anywhere from three months to a full year in advance is illegal.
Can my landlord use my last month’s deposit to fix damage?
No. The deposit is strictly for the last month’s rent. If there is damage beyond normal wear and tear, the landlord has to apply to the Landlord and Tenant Board for compensation rather than taking it from the deposit.
Does my landlord have to pay interest on my deposit?
Yes, once a year, at a rate equal to the rent increase guideline for that year. When rent goes up, the landlord can apply that interest toward topping up your deposit so it matches the new rent.
What if my landlord never pays the interest?
If the interest has not been paid for twelve months, you are allowed to deduct the amount from a rent payment. Include a short note explaining the deduction, and call the Landlord and Tenant Board first if you are unsure how to work out the figure.
Can a landlord charge a pet deposit in Ontario?
No. Pet deposits are not allowed. Most no-pet terms in a lease are also unenforceable under the Act, although a landlord can still take action if a pet causes damage or a genuine safety issue, and condominium rules may limit certain animals.
Can a landlord require post-dated cheques or automatic payments?
No. A landlord can suggest them, and you can agree, but you cannot be required to pay by post-dated cheque or automatic debit, and you cannot be refused a unit for saying no.
Can a landlord ask me to increase my deposit when the rent goes up?
Yes. When rent is lawfully increased, the landlord can ask you to top up the deposit so it still equals one month’s rent. The interest the landlord owes you can be applied toward that top-up.
Can a landlord collect a key deposit?
Yes, but only a refundable amount that is no more than the actual cost to replace the key, fob, or card. You get it back when you return the keys. A key deposit far above replacement cost is likely illegal.
How do I get my deposit back if the landlord keeps it?
If a landlord uses the deposit for something other than the last month’s rent, or keeps a deposit that should be refunded, you can apply to the Landlord and Tenant Board, generally within one year. Community legal clinics and paralegals can help you file.
Do these rules apply to condos and basement apartments in Mississauga?
Yes. The Residential Tenancies Act covers most private rentals in Ontario, including condominiums and basement units, so the deposit rules are the same across Mississauga and the GTA. One common exception is a unit where the tenant shares a kitchen or bathroom with the owner, which may fall outside the Act.
Talk to a Mississauga agent who knows the local market
Deposit rules are only one piece of a larger picture, and getting them right sets the tone for a smooth tenancy. If you are buying an investment property, leasing out a condo or basement suite, or looking for a home to rent in Mississauga or anywhere across the GTA, it helps to work with someone who understands both the local market and the ground rules that govern it.
Firas Swaida, a real estate agent with RE/MAX Realty Services Inc., Brokerage, works with buyers, sellers, investors, and tenants throughout Mississauga and the Greater Toronto Area, in English and Arabic. Firas can walk you through what a fair rental arrangement looks like and connect you with the right professionals for anything that needs a legal opinion.
Call Firas Swaida at (647) 402-4727 to talk about your next move.
One last reminder. This guide is general information, not legal advice, and the rules can change. For a specific question or an active dispute, contact the Landlord and Tenant Board directly, or speak with a licensed paralegal or a lawyer before you act.