One of the biggest impacts we've seen in a long time is the rate of interest to be paid on tenant security deposits by landlords, effective January 1, 2024, will be set at 1.6%.
By an Order in Council passed on September 8, 2004, the Security Deposit Interest Rate Regulation includes a permanent formula setting the yearly interest rate payable on security deposits. 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 subtracts 3% from that rate.
ATB Financials rate for cashable one-year GICs on November 1, 2023 was 4.60%. As a result, the interest rate for security deposits held under the Residential Tenancies Act or Mobile Home Sites Tenancies Act for 2024 will be 1.6%.
Landlords must pay any interest owing to their tenants at the end of their tenancy upon refund of their deposit, or annually at the end of each tenancy year, whichever comes first, unless both parties agree in writing that the interest will not be paid annually, in which case the interest must be compounded annually.
This is the first time since 2009 that the interest rate for security deposits has been more than 0%. Landlords and tenants can use the security deposit interest calculator to determine the amount of interest that is owed based on the regulated interest rates. The calculator can be found at http://www.servicealberta.gov.ab.ca/interest-chart.cfm
Service Alberta and Red Tape Reduction will be releasing additional educational and awareness materials for landlords and tenants. These resources will be made available at https://www.alberta.ca/information-for-landlords-and-tenants.
For more information, contact the Service Alberta and Red Tape Reduction Consumer Contact Centre at 1-877-427-4088, or by email at rta@gov.ab.ca.
If you currently hold a tenants security deposit, you need to ensure it is in an interest bearing trust account in order to abide by the RTA.
CIR REALTY has already ensured we are abiding by this regulation and will be calculating and refunding tenants as required by Service Alberta.
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