Two answers, and the second one is the one students get wrong.
Under Ontario law, a landlord renting a room can lawfully ask for a rent deposit of no more than one month's rent, applied only to your last month of rent, plus a key deposit capped at what the keys actually cost to replace. That is the complete list.
The second answer: whether that list protects you depends on who you are renting from. Every rule below sits inside the Residential Tenancies Act, 2006 (RTA), and a room rental is the single most common arrangement in Ottawa that falls outside it — typically because the person collecting your money is themselves a tenant rather than the owner. Our guide to signing a room rental lease safely in Ontario sets out the two tests that decide coverage, in the right order. Settle that question first; then read this.
This post covers deposits specifically: the lawful limits as they apply to a room, the demands that are not lawful however they are labelled, the interest you are owed, and what to do if you have already paid something you should not have.
What may lawfully be asked
Assuming the Act covers your arrangement:
A rent deposit, maximum one month's rent. One week's rent on a weekly tenancy. It may only be applied to your last rent payment — not to damage, not to cleaning, not to anything else.
For a room, the cap is calculated on your rent for your room, not on the household's total. If you are renting a room at $800 a month, the lawful rent deposit is $800. A request framed as "a month of the house rent" is not the test.
A key deposit, capped at the actual replacement cost of the keys, refundable when you return them. The same rules cover fobs, entry cards and other access devices. A $500 "key deposit" for a $30 fob is not a key deposit.
What may not be asked
| What you are asked for | Lawful? | What to do |
|---|---|---|
| "Damage deposit" | No | Ask for it to be removed from the agreement before signing |
| "Security deposit" | No | Same — the phrase has no standing in Ontario residential tenancies |
| Pet deposit | No | Decline; pet prohibitions in a tenancy agreement are void in Ontario too |
| "First and last, plus damage" | No — the damage portion is not permitted | Pay first and last only; get the written agreement corrected |
| Two or three months up front | No as a requirement | Decline; a voluntary offer is a different matter, and not one to make |
| Non-refundable "holding fee" to reserve the room | No | Treat as a red flag, not a negotiation |
| "Cleaning fee" or "administration fee" charged as a deposit | No | Ask what service it buys and when; if the answer is nothing, it is a deposit by another name |
| Late fees, or interest on unpaid rent | No | CLEO lists both among the things a landlord cannot require |
| Required automatic payment or post-dated cheques | No as a requirement | Offer e-transfer with a receipt instead |
| Key deposit above actual replacement cost | No above cost | Ask what the keys cost to cut, and pay that |
The pattern worth recognising: in Ontario, money taken against future bad behaviour is not permitted. Only money taken against future rent is — and only one month of it.
Interest on your last month's rent
Less known, and it is yours. A landlord holding a rent deposit owes you annual interest at the rent-increase guideline. That is 2.1% for 2026 and 1.9% for 2027 — Ontario publishes the guideline each year, and the 2027 figure is the lowest in several years.
In practice it is often never paid. You can ask for it, and it is commonly applied against a rent increase rather than paid out. Two related points, both of which should be checked against the current statute or a clinic rather than taken from any blog: if your rent rises, the landlord may be entitled to ask you to top up the deposit to the new monthly rent; and the mechanics of how interest is credited differ depending on whether an increase is in play.
On a $800 deposit, 2.1% is about $17 a year. Small — but a landlord who disputes owing it is usually telling you how the rest of the tenancy will run.
The room-rental complication nobody mentions
Here is the sharp edge. When the person taking your deposit is the existing tenant re-letting a room — the most common student arrangement in Ottawa's shared housing — they are frequently collecting "last month's rent" as though they were a landlord, from an occupant the Act does not cover.
If the Act does not reach your arrangement, the consequence is not that the limits are being broken. It is that the limits are not the frame at all. What governs is the written agreement between the two of you, and a civil claim is the enforcement route rather than the Landlord and Tenant Board.
Which produces the only practical instruction that works in both worlds: whatever you pay, document it as though you will need to prove it to a stranger. Amount, date, method, recipient's legal name, and in writing what it is for and the conditions on which it is returned. Where the Act applies, that record supports a Board application. Where it does not, it is the whole of your case.
If you have already paid one
- Write down what happened — amount, date, method, what you were told it was for, and who you paid. Screenshots of the messages, not recollections.
- Ask in writing, once and politely, for the unlawful amount to be returned or re-characterised as last month's rent. Many landlords collecting a "damage deposit" have simply copied a form from somewhere else and will fix it.
- If refused and the Act covers you, a tenant can apply to the Landlord and Tenant Board — a T1 — to recover money the landlord owes, including an illegal charge or deposit, generally within one year. Steps to Justice publishes a guided pathway that walks through the T1 form.
- Get help before you file. CLEO's own advice is to try to get legal help from a lawyer or community legal clinic first. Ottawa has clinics that take student tenancy matters.
- If the Act does not cover you, the route is a civil claim on the written agreement, which is slower and smaller — and the reason the written agreement mattered so much at the start.
Red flags at the moment of payment
Deposit demands are where most money is lost in room rentals, and the losses cluster around a few behaviours:
- A deposit requested before any document exists. A deposit is not a step towards a lease; it comes after one.
- Wire transfer, cryptocurrency or gift cards. Never. Use a traceable method, to a name matching the agreement, with a receipt.
- A name that does not match. If the payee is not the person or company on the paper, stop.
- "Non-refundable to hold it." The most common framing of an unlawful charge, and often the opening move of an outright scam — our guide to spotting an Ottawa room rental scam covers the rest of that pattern, and the student housing red flags guide covers landlords who are real but worth avoiding.
- Pressure to pay today. The pressure is the information. Our 10-step checklist for renting a room in Ottawa sets out the order these steps actually belong in.
Where to check this yourself
Deposits are one of the few areas of Ontario tenancy law written plainly in free, public resources. CLEO (Community Legal Education Ontario) publishes a deposits page under its Paying rent series; Steps to Justice carries the T1 guided pathway; ontario.ca publishes the annual rent increase guideline; and the Landlord's Self Help Centre has fact sheets on shared accommodation — useful, though landlord-side and with some pages several years old. For the statutory text, read the current Act on Ontario's e-Laws, and take a specific agreement to a community legal clinic.
Riverflow Residences leases self-contained furnished studios and one-bedrooms — not rooms — at 550 Wilbrod Street in Sandy Hill, seven minutes' walk from uOttawa, from $1,400 to $1,920 a month, with lease terms on our students page. Apply this post to us exactly as you would to anyone else: ask what the deposit is, ask what it is applied to, and ask for what is billed separately to be itemised in writing before you sign.
If you remember one sentence: in Ontario, a deposit buys your last month of rent and nothing else. Anything asked for beyond that is either unlawful, or a sign that you are outside the law's protection entirely — and both are worth knowing before the money moves.
Riverflow Residences welcomes all students and residents in full compliance with the Ontario Human Rights Code. General information, not legal advice; statements of Ontario law are summaries that may not fit your circumstances, and whether the Residential Tenancies Act applies to a particular room rental is fact-specific. For advice on a specific agreement or payment, contact the Landlord and Tenant Board or a community legal clinic before acting.