First and Last Month’s Rent in Canada: What You Need to Know

The phrase “first and last month’s rent” appears in Canadian rental listings as casually as the number of bedrooms or the pet policy. But for families new to the Canadian rental process, the financial reality behind those five words is one of the biggest surprises of the entire search.

You find the right unit. The landlord approves your application. And then comes the number: not one month’s rent to get started, but two months upfront – before you have set foot in the building, before you have collected a single paycheque in Canada, and often before your family has even landed.

On a two-bedroom apartment at CAD2,300 per month, that is CAD4,600 due at signing. At CAD2,800 per month, it is CAD5,600. Before utilities. Before furniture. Before the bank account, the health card, and the dozen other things that need to happen in the first two weeks of Canadian life.

This article explains exactly what first and last month rent means in Canada, how deposit rules vary by province, what landlords can and cannot legally ask for, and how to protect yourself at every stage, from signing to moving out.

What First and Last Month’s Rent Actually Means

When you sign a lease in Canada, your landlord may require two months’ payment at the time of signing. The two payments serve different purposes, and understanding that difference before you sign protects you from confusion and from paying money you are not obligated to pay.

First month’s rent is payment for your first 30 days in the unit. It is not a deposit. It is rent, collected in advance, for the period beginning on your move-in date.

Last month’s rent is a deposit held by the landlord and applied to your final month of tenancy when you eventually move out. You do not pay rent again for that last month. The deposit you paid at the start of the tenancy covers it.

This is the question that comes up most often in newcomer communities: Does the last month deposit come back to you at the end, or does it become the final month’s payment?

The answer is the latter. It is pre-paid rent, not a refundable deposit. When you give notice and leave, your last month is already paid. Nothing is returned, and nothing further is owed for that period.

Worth knowing: Always ask for a written receipt when you pay both the first month’s rent and the last month’s deposit. A receipt confirms the amount, the date, and the purpose of payment. Keep it for the full duration of your tenancy, it is the document you need if any dispute arises when you move out.

Deposit Rules Across Canada: Province by Province

Deposit rules in Canada are not the same across every province. Families settling outside Ontario need to know how the rules differ before they sign anything.

Province / Territory	What Landlords Can Collect	Damage Deposit Permitted?
Ontario	Last month’s rent deposit + key deposit (actual replacement cost only)	No
British Columbia	Security deposit up to half a month’s rent + pet damage deposit up to half a month’s rent	Yes
Alberta	Security deposit up to one month’s rent	Yes
Saskatchewan	Security deposit up to one month’s rent (only 50% collectible at signing; balance within two months)	Yes
Manitoba	Security deposit up to half a month’s rent + pet damage deposit up to one month’s rent	Yes
Quebec	No deposit of any kind permitted	No
Nova Scotia	Security deposit up to half a month’s rent*	Yes
New Brunswick	Security deposit permitted — verify current cap with New Brunswick Residential Tenancies	Yes
Prince Edward Island	Security deposit up to one month’s rent	Yes
Newfoundland and Labrador	Security deposit up to three-quarters of a month’s rent	Yes
Yukon	Security deposit permitted — verify current cap with Yukon Residential Tenancies	Yes
Northwest Territories	Security deposit permitted — verify current cap with NWT Rental Office	Yes
Nunavut	Security deposit permitted — verify current cap with Nunavut Rental Office	Yes

Ontario is one of the strictest provinces when it comes to protecting tenants from large upfront costs. British Columbia and Alberta both permit security or damage deposits, Ontario does not.

If a landlord in Ontario asks for anything beyond first month’s rent, last month’s rent deposit, and a refundable key deposit, that request is not legal under the Residential Tenancies Act.

What Ontario Landlords Can and Cannot Ask For

In Ontario, the Residential Tenancies Act (RTA) is specific about what a landlord can legally collect when you sign a lease.

Permitted in Ontario:

• First month’s rent
• Last month’s rent deposit — equal to one month’s rent, held against your final month of tenancy
• A refundable key deposit — equal to the actual cost of replacing the keys, no more

Not permitted in Ontario:

• Damage deposits
• Security deposits
• Pet deposits
• Cleaning fees
• Move-in administration fees
• Any additional month’s rent beyond first and last

If a landlord in Ontario requests a third payment, described as a “security deposit,” “damage deposit,” or anything similar; that request is illegal under the RTA. A tenant who has paid an illegal deposit can file a T1 application with the Landlord and Tenant Board (LTB) to recover the money.

Worth knowing: Ontario differs significantly from British Columbia and Alberta on this point. Do not assume deposit rules from another province apply in Ontario and do not assume Ontario rules apply if you are renting elsewhere in Canada.

The Real Cost and Why the Budget Can Shift Quickly

Paying close to CAD5,000 upfront before landing in Canada is significant by any measure. What makes that sum worth it is what it replaces: the cost – financial and emotional, of temporary housing during the most logistically demanding stretch of the entire settlement journey.

The first two weeks in Canada typically involve registering for a Social Insurance Number, setting up a bank account, getting a health card, registering children for school, finding your way around a new city while managing jet lag, and absorbing the sheer volume of decisions that arrive all at once.

Walking into your own space from day one removes one significant pressure from that list. Having a stable base while everything else settles is not a small thing and it is worth budgeting for seriously before the rental search begins.

The challenge many families run into is that the budget shifts during the search. A family that plans for a one-bedroom apartment at CAD2,300 per month needs CAD4,600 ready at signing.

If that search does not produce the right result and moves to a two-bedroom at CAD2,800 per month, the requirement becomes CAD5,600. A difference of CAD1,000 that was not in the original plan, arriving at exactly the wrong time.

This is one of the most consistent sources of financial stress in newcomer communities, and it is entirely predictable if you plan for it in advance.

Before you do anything else, calculate first and last month’s rent based on the upper end of your rental range, not the lower end. If you are searching between CAD2,300 and CAD2,800 per month, budget for CAD5,600 upfront.

A search that stays within the lower range means money you keep. A search that moves to the higher range does not leave you short at the moment of signing.

The Interest Rule Most Families Never Hear About

There is a provision inside Ontario’s Residential Tenancies Act that many tenants never learn and that some landlords quietly rely on not being mentioned.

Your landlord is legally required to pay you interest on your last month’s rent deposit every year.

The interest rate is set annually by the Ontario government and matches the provincial rent increase guideline for that year. For 2026, the rate is 2.1%. On a deposit of CAD2,800, that is approximately CAD59 per year, modest in isolation, but real money over a tenancy of several years.

In practice, landlords most commonly apply this interest as a credit when requesting a top-up to the deposit following a rent increase. If your rent goes up, your deposit technically needs to increase to match the new last month’s amount. The interest you are owed offsets some or all of that top-up request.

If your landlord does not pay or credit the interest annually, you are legally entitled to deduct it from your rent payment. If they continue to withhold it, you can file an application with the Landlord and Tenant Board to recover the amount.

A CBC News investigation found that landlords across the Greater Toronto Area had been withholding years of accumulated deposit interest and that newcomer families in particular were among those least likely to know they were entitled to it.

You now know. Keep a record of when you paid your deposit and the exact amount. At each anniversary of your tenancy, your landlord owes you interest at the rate set for that year.

What Happens to the Deposit When You Move Out

When the time comes to leave your unit, your last month’s rent deposit is applied to that final month of tenancy. You serve the required notice period, and your last month is already paid. No additional rent is owed.

If you move to another unit within the same building managed by the same property management company, the deposit does not disappear, it transfers. The balance is adjusted to reflect the new rent amount, and you pay the difference if the new unit costs more.

This is a straightforward process with a professional property management company, and it is one of the practical advantages of renting from a managed building rather than a private landlord.

If you move out of the building entirely, the deposit covers your last month and the tenancy closes. There is no remaining balance to collect.

One important protection: If your landlord attempts to deduct damage costs from your last month’s rent deposit without your written consent, that is a violation of the RTA.

The deposit is for rent only, not repairs, not cleaning, not replacement of any item in the unit. If damage to the unit needs to be addressed, the correct process is a separate application to the Landlord and Tenant Board, not a unilateral deduction from a deposit collected for a different purpose.

Frequently Asked Questions

Is first and last month’s rent required across all of Canada?

No. First and last month’s rent is standard practice in Ontario, but deposit rules vary by province. British Columbia allows a security deposit of up to half a month’s rent. Alberta permits a security deposit of up to one month’s rent.

Quebec does not allow any deposit. If you are settling outside Ontario, check the rules for your specific province before signing anything.

How does first and last month’s rent work in Canada?

When you sign a lease in Canada, your landlord collects two months’ rent upfront. The first month covers your move-in date. The second month is held as a deposit and applied automatically to your final month of tenancy so when you move out, your last month is already paid and nothing further is owed.

Can a landlord in Ontario ask for a damage deposit?

No. Damage deposits are not permitted under Ontario’s Residential Tenancies Act. The only deposit a landlord can legally collect in Ontario is the last month’s rent deposit, plus a refundable key deposit at actual replacement cost.

If a landlord in Ontario requests a damage deposit, that request is illegal and the money is recoverable through the Landlord and Tenant Board.

What happens if I change my mind about a unit before moving in?

If you have paid a last month’s rent deposit and then decide not to proceed before your tenancy begins, the landlord is required to return the deposit to you.

The deposit is tied to a tenancy that has not yet started, it cannot be kept as a penalty for changing your mind before you take possession of the unit.

Can my landlord in Ontario increase the deposit when the rent goes up?

Yes, with conditions. If your rent increases, the landlord can ask you to top up the last month’s deposit to match the new rent amount. However, they must first apply any annual interest owed on the existing deposit before requesting additional funds. The interest owing offsets some or all of the top-up amount.

What do I do if my Ontario landlord asks for more than first and last month’s rent?

Do not pay it. Ask the landlord to clarify in writing what the additional payment is for. If they are requesting a damage deposit, security deposit, or any other amount beyond first month’s rent, last month’s deposit, and a refundable key deposit, the request is not permitted under the Residential Tenancies Act.

If you have already paid an illegal deposit, file a T1 application with the Landlord and Tenant Board.

Does first and last month’s rent mean I get my last month free?

The word “free” is not quite right. Your last month of tenancy is already paid, you paid it as a deposit when you signed the lease. You do not pay rent again for that final month, but it was not free. It was pre-paid at the start of your tenancy.

Know the Number Before You Start the Search

First and last month’s rent is not a surprise that arrives after you find the right apartment. It is a fixed feature of renting in Ontario and one of the largest single financial commitments in the entire settlement process.

The families who handle it most smoothly are the ones who build it into the budget before the search begins, understand what the deposit covers legally, and know what their landlord can and cannot ask for at the point of signing.

Calculate the upfront cost based on the upper end of your rental range. Keep your deposit receipt. Know that your deposit earns interest every year and know that few people will tell you that unless you ask.

With your upfront budget locked in and your funds prepared, your immediate next step is to start browsing the top websites to find rentals in Canada to find a unit that fits your family.

For the full picture of how the rental process works from the moment you start searching to the day you sign, read our complete guide to renting in Canada for newcomer families.

When you are ready to understand how the type of landlord you choose affects everything from your application to how quickly a broken heating system gets fixed, read our breakdown of property management companies versus private landlords.