If you have just arrived in Canada and are renting your first home, you will often hear “you have no credit history, so pay several months up front” or “pay a damage deposit”. Ontario law clearly limits what a landlord may collect. This post is general information based on the text of the Residential Tenancies Act, 2006 and ontario.ca guidance, not legal advice. For a dispute, check with the Landlord and Tenant Board (LTB) or a legal clinic.
The answer first: what a landlord may collect
| Item | What the law says | Section |
|---|---|---|
| Rent deposit (last month’s rent) | No more than one month’s rent (or one rent period, whichever is less). It must be used as the rent for the last month | RTA s. 106 (2), (10) |
| Damage deposit, pet deposit, cleaning fee paid in advance | Not allowed. The only security deposit a landlord may collect is the rent deposit | RTA s. 105 (1) |
| Key, remote or card deposit | Allowed, but refundable and not more than the direct replacement cost | O. Reg. 516/06 s. 17 |
| Interest on the deposit | Paid to the tenant every year at the rate of that year’s rent increase guideline | RTA s. 106 (6) |
A landlord cannot require “several months up front”. Asking a newcomer without credit history for a guarantor is common, but the deposit the law allows stops at one month.
The lease must be the government standard form
- Most residential tenancy agreements signed on or after April 30, 2018 must use Ontario’s standard lease. If a landlord hands you a different form, you can ask for the standard one.
- You must receive a copy of the signed lease within 21 days after you sign it and give it to the landlord (RTA s. 12). If you asked in writing for the standard lease and 21 days pass without it, there is a rule that lets you withhold up to one month of rent that comes due after that (s. 12.1). Read the LTB guidance before you take that step.
- Even if section 15 “Additional terms” says “no pets”, “no guests” or “damage deposit”, a term that takes away a right the law gives you is void. If the unit is a condo, section 2 will say so and you must follow the condo rules.
- The ontario.ca guide to the standard lease includes a Korean-language explanation PDF. Read it once before you sign.
How much, and how often, rent can go up
For most homes, all three conditions must be met before rent can rise.
- Once a year: at least 12 months must have passed since you moved in or since the last increase (RTA s. 119).
- 90 days’ written notice: on the official form (N1), at least 90 days ahead (RTA s. 116). Without the notice, the increase is void.
- No more than the guideline: 2.1% for 2026 and 1.9% for 2027 (ontario.ca guideline table). By law the guideline can never exceed 2.5% in any year (RTA s. 120). To raise rent above it, the landlord must apply to the LTB for approval.
| Reference calculation | Amount |
|---|---|
| Rent $2,500, 2026 guideline 2.1% | Increase $52.50 → new rent $2,552.50 |
| 2026 interest on a $2,500 deposit | $52.50 (one year) |
| Period | Value (%) |
|---|---|
| 2021 | 0% |
| 2025 | 2.5% |
| 2026 | 2.1% |
| 2027 | 1.9% |
Why these years: 2021 was the COVID-19 rent freeze (0%), 2025 hit the 2.5% legal cap, 2026 is now, and 2027 is the next year, already announced.
According to ontario.ca, the 2021 guideline would have been 1.5% without the freeze. By law the guideline can never be more than 2.5% (RTA s. 120).
Source: Ontario, Residential rent increases (checked Oct 30, 2026). Bars start at zero.
Exception: new buildings and most new basement apartments occupied for the first time after November 15, 2018 are exempt from the guideline (O. Reg. 516/06). The once-a-year and 90-day-notice rules still apply. Check this especially when renting a new condo.
What to check before you sign
- Confirm who the landlord (or the agent acting for them) is and that they own the home. A lawyer or agent can check the owner’s name in the public land registry.
- Write what the rent includes (hydro, heat, water, parking, internet) in the matching boxes of the standard lease. A spoken promise is hard to prove later.
- Pay only one month as a deposit, and a key deposit only up to the replacement cost. Get receipts.
- Take photos and video of the unit before you move in. Because there is no damage deposit, any claim the landlord makes when you leave goes to the LTB, and your record matters.
- Tenant insurance (your belongings and liability) can be agreed in the lease and is usually not expensive. Read the terms and decide.
Common mistakes
- Paying six months up front “because I have no credit history” — the landlord cannot require it. If something is needed, think about a guarantor first.
- Signing a non-standard form and never getting a copy — you have the right to a copy within 21 days.
- Accepting a spoken “I will raise it by $200 next year” — without the guideline and 90 days’ notice it is void.
- Living for years without ever receiving deposit interest — you are owed it every year, and you can claim it through the LTB.
Sources (open the originals)
- Residential Tenancies Act, 2006 — e-Laws — checked Oct 30, 2026
- O. Reg. 516/06 under the Residential Tenancies Act — key deposits, rent control exemptions — checked Oct 30, 2026
- Ontario, Guide to Ontario’s standard lease (includes a Korean PDF) — checked Oct 30, 2026
- Ontario, Residential rent increases — checked Oct 30, 2026
About the author
Joonghyun Ahn is a Sales Representative with HomeLife Frontier Realty Inc., Brokerage, based in Thornhill and serving the whole GTHA. Every post is general information, not legal, tax or financial advice. Check with a professional before you decide.