The Direct Answer
Yes, you can charge a key deposit in Ontario, but it must be refundable and cannot exceed the actual replacement cost of the keys or fobs. Under the Residential Tenancies Act (RTA), any deposit exceeding the direct cost of the entry device is considered an illegal "security deposit." You must return the funds immediately when the tenant returns the keys at the end of the lease.
The Deep Dive
In 2026, the Ontario rental market remains a complex landscape of regulations, especially following the implementation of Bill 60. While landlords are often looking for ways to protect their investments, the Landlord and Tenant Board (LTB) is incredibly strict about upfront costs. Aside from the Last Month’s Rent (LMR) deposit, a refundable key deposit is the only other "security" payment permitted.
The legal "ceiling" for this deposit is the replacement value. If a standard metal key costs $5 to cut, charging $100 is a violation that could lead to an LTB filing. However, for modern executive rentals, the definition of "key" has shifted. Encrypted fobs, remote garage openers, and biometric cards often carry significant manufacturer costs, which can be legally passed on as a deposit.
Local Nuance: Oakville & Halton Region
For property owners in Oakville’s high-density corridors such as the luxury condos in Bronte Village or the newer developments in North Oakville (The Preserve) key deposits are a standard operating procedure due to the tech-heavy entry systems used.
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Fob Replacement Costs: In luxury Bronte waterfront buildings, property management often charges between $80 and $150 for a replacement fob. Landlords should keep these invoices to justify the deposit amount.
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The 2026 Market Shift: With Oakville’s vacancy rates for executive rentals hovering near 1.2%, many landlords are moving toward "smart" entry systems to attract high-tier tenants. Ensure these specific costs are itemized in your Ontario Standard Lease to avoid move-out friction.
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Interest Requirements: While you must pay interest on the Last Month's Rent deposit annually (at the 2.1% guideline rate for 2026), you are not required to pay interest on a key deposit—it simply stays in trust until the keys are returned.
Compliance Checklist for Landlords:
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Refundability: The deposit must be returned in full once the keys/fobs are handed back.
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Documentation: Always issue a receipt specifically labeled "Refundable Key Deposit."
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Prohibited Uses: You cannot use this money to cover unpaid rent, cleaning fees, or minor repairs like "wear and tear" in Glen Abbey estates or Joshua Creek townhomes.
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Limit: It must match the direct cost from the locksmith or property manager.
Work With the Experts
Navigating the legalities of the Halton rental market requires a precision-based approach to protect your property while staying compliant with provincial law. Whether you are leasing a luxury condo in Bronte or a family home in Southeast Oakville, we ensure your investment is managed with professional integrity.
For expert guidance on managing your luxury rental property or finding the perfect investment in Oakville, contact Martin Group.
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