Alberta landlords will pay interest on damage deposits thanks to this 20-year-old policy

For the first time since 2009, landlords will have to pay an interest rate on tenant security deposits.

Starting January 1, 2024, the provincial government will set the rate at 1.6%. It’s been at zero for the last 14 years, but a hike in provincial interest rates triggered a change.

The Security Deposit Interest Rate Regulation includes a permanent formula that sets the yearly interest payable on security deposits.

That policy was passed by an order of council in 2004.

The formula takes the interest rate that ATB Financial is charging for its cashable one-year guaranteed investment certificate (GIC) on November 1 of the previous year and takes away three percentage points.

ATB Financial’s rate for one-year GICs on November 1 was 4.6%, meaning that the rate for security deposit interests will be set at 1.6% from January 1, 2024, until December 31, 2024.

You might also like:
• A one-bedroom apartment in Edmonton is nearly $700 less than the national average: report
• One-bedroom prices in Calgary up 26% from this time last year: report
• So depressing: Average rent in Canada climbs past $2,100, hitting a new high

“Landlords must pay any interest owing to their tenants annually at the end of each tenancy year,” reads a notice from the Ministry of Service Alberta and Red Tape reduction.

“Unless both parties agree in writing that the interest will not be paid annual, which case the interest must be compounded annually.”

The last time there was interest charged on damage deposits was 2008 when the rate was set at 0.5%.

Landlords and tenants can use this calculator to figure out how much interest is owed based on the regulated rates.

The government said there will be more information and resources about the rate and the policy available at a later time.