Interest Rates Must be Paid On Security Deposits

Effective January 1, 2024,  landlords are now required, under the Alberta Residential Tenancies Act, to pay tenants 1.6% interest on security deposits. to pay tenants 1.6% interest on security deposits.  

Key Considerations 

• Interest Rate: As stipulated by the Residential Tenancies Act, the interest rate on security deposits is currently 1.6 percent. This rate is subject to change based on updates to provincial regulations or economic factors. On the government website there is an online interest rate calculator to determine how much interest is required on security deposits. 
• Calculation Method: Unless otherwise stipulated, interest is calculated annually and applied to the security deposit at the end of each year. To provide full disclosure, property managers are encouraged to indicate the specifics of interest calculation and payment in their lease agreements.
• Exemptions: Certain types of rental arrangements or properties may be exempt from the requirement to pay interest on security deposits. Additionally, interest does not have to be paid if both parties agree in writing.  

 
Outlook 

It is always important for property managers to adhere to the provincial regulations in the Residential Tenancies Act, and to maintain open communication with their landlord and tenant clients regarding any new processes. While the re-introduction of interest payments on security deposits may add an additional financial obligation for property managers, it also promotes transparency and accountability within the rental market. Property managers will need to properly reconcile trust account statements to include the interest earned in all subledgers.  

If you have any concerns or inquiries regarding security deposits or the interest that needs to be paid, please reach out to Service Alberta.