Ontario tenant fees cheat sheet: what’s legal, what’s not, and how to push back

Ontario listings still ask for damage deposits, “key money,” application fees, and holding cheques because enough renters pay them. The Residential Tenancies Act is not a vibe. At a high level, a landlord may collect a rent deposit for last month’s rent — not a general damage holdback — and must pay annual interest at the guideline rate in effect when that interest is due. For 2026 that guideline is 2.1% (ontario.ca, residential rent increases).

This cheat sheet is educational money math. It is not legal advice, not a substitute for the LTB, and not a promise about your unit (especially if it is exempt from the guideline).

Last-month rent deposit vs damage deposits (high-level RTA rules)

The LTB’s Guide to the RTA describes a rent deposit collected on or before the tenancy begins, capped at one month (or one week if you pay weekly), usable only as rent for the last rental period — not as a damage slush fund. Damage is a separate issue: tenants can owe for damage they cause; that is not a licence to collect a second “security” cheque up front.

If a listing says “first, last, and $1,500 damage,” you are looking at a stack that often mixes a lawful LMR idea with an extra holdback. Do not wire the extra because the photos are nice. See hunting without scams for the deposit-before-viewing pattern.

Key deposits, NSF fees, and other common add-ons

Section 134 of the RTA generally bars extra premiums, key deposits, and “like amounts,” with prescribed exceptions. In practice, a refundable key/fob deposit limited to direct replacement cost is the usual narrow opening people argue about. A round-number $250 “key deposit” that the landlord keeps for scratches is the pattern clinics hear. NSF: some prescribed charges exist for bounced payments — they are not a blank penalty. If the amount looks like a fine, slow down and read the current regulation rather than the Facebook group.

Application and “holding” fees that often cross the line

Ontario’s rental housing offences page flags charging additional fees such as a damage deposit, and forcing a tenant to buy extras to secure a unit. “Application fees,” “credit check fees” marked up beyond cost, and “holding deposits” to pause advertising are the Marketplace classics. A lawful path looks like: view, written tenancy agreement, last-month rent deposit as allowed, then keys. Money that vanishes if you do not “qualify” is a skip.

How interest on rent deposits works at a high level

Landlords must pay interest annually on the last-month rent deposit at the guideline rate in effect when payment is due (RTA s.106 themes; LTB T1 instructions walk through the idea). For interest due in 2026, use 2.1% unless the province has told you otherwise for that due date.

Worked example (labelled): $2,200 LMR × 2.1% = $46.20 for that interest year. Small, but it compounds as unpaid years stack, and T1 lists unpaid interest as a reason. Some tenants deduct unpaid interest from rent as the statute allows — get current advice before you self-help if the relationship is already hostile.

Documenting overcharges and polite recovery scripts

Keep: the listing, texts, e-transfer screenshots, the lease, and a one-page timeline. Script (email):

Hello [name], I’m writing about the $X collected on [date] as a [damage/holding/application] fee. My understanding of the Residential Tenancies Act is that this category is not a permitted charge. Please return $X by e-transfer or cheque by [date 10 business days out]. I would like to continue a good tenancy. If we cannot resolve this, I will look at the LTB’s T1 process.

Polite and specific beats a late-night paragraph about justice. You are asking for money back, not a debate trophy.

When LTB processes enter the picture (overview, not legal advice)

Form T1 is the usual tenant application when a landlord collected an illegal charge, misused a last-month deposit, or owes deposit interest. LTB instructions describe reasons and a general 12-month style outer limit for some claims — confirm the current PDF, fees, and whether you still live there. Mediation happens. Hearings take time. This overview is not a filing kit. Community legal clinics exist because the forms are fiddly and landlords sometimes ignore emails.

Savings math: recovering illegal fees vs moving costs

If the unit is unsafe or the landlord is escalating, money-back math is secondary — leave well. If the only issue is a junk fee and the apartment works, recovering the fee is often the cheaper Canadian move. For guideline vs exempt increases at renewal, use the negotiation scripts.