Do I have to pay a deposit when I rent a new place?
Question & AnswerDo I have to pay a deposit when I rent a new place?
There are only two kinds of your landlord is allowed to ask for when you rent a new place to live:
- rent deposit
- key deposit
A rent deposit cannot be more than one month’s rent on a yearly or rental, or one week’s rent on a rental. The deposit must be used for your final of rent. It cannot be used for damage or other costs.
A rent deposit is sometimes called a security deposit or a last month’s rent deposit (LMR).
A key deposit cannot be more than the actual cost to replace the keys. If you return the keys when you move out, the landlord must give you back the deposit.
If you want extra keys, your landlord can charge you for the cost of making the extra keys.
Instead of keys, your building might use entry cards, fobs, or other devices. The rules for these things are the same as for keys.
A landlord cannot ask you for any other type of deposit. They cannot ask for:
- pet deposits
- damage deposits
- any deposit amount that is more than a last month’s or last week’s rent
- post-dated cheques or any other kind of pre-authorized payment
- a key deposit that is more than what it would cost to replace the keys
Interest on deposits
Each year, the landlord must pay you on your deposits. Interest is extra money to make up for the fact that you can’t use your money because the landlord is holding it as a deposit.
The interest rate is equal to the guideline rent increase for the year in which the interest payment is due. For example, if you paid a last months’ rent deposit on August 1, 2016, the landlord must pay you interest on August 1, 2017. The rent guideline for 2017 is 1.5%, so the landlord must pay you 1.5% interest on your deposit. A year after that, the landlord must pay you 1.8% interest, because the rent guideline for 2018 will be 1.8%.
Your landlord pays the interest by giving it to you or by adding it to your deposit. If they do not do this, you can deduct it from your next rent payment or apply to the to make them pay it.