Security Deposit updates in 2023
Updated: Mar 23
For almost fifteen (15) years, landlords have collected security deposits at the beginning of a tenancy and have in many cases returned that exact same amount when that tenancy came to an end. In fact, if you have read through the Residential Tenancy Act (RTA), you will know that section 38(1)(c) requires a landlord to "repay...any security deposit or pet damage deposit to the tenant with interest calculated in accordance with the regulations."
The Residential Tenancy Regulations (the "Regulations") referenced in the RTA, in turn, set out at section 4 that "the rate of interest under section 38(1)(c) of the Act that is payable to a tenant on a security deposit or pet damage deposit is 4.5% below the prime lending rate..."
Why has interest not been an issue until now and what's new in 2023? Well, interest rates have shot up across the country...and not just by a little bit. At the time of writing, the prime lending rate for the Province of British Columbia is a whopping 6.45% and as a result, landlords will now need to pay 1.95% interest on the security deposit they collected.
But how can you calculate the interest that you owe or are owed on a security deposit? Fortunately, the Province of British Columbia has made an accurate interest calculator available to the public that allows parties to independently calculate the interest owed based on when a security deposit was collection. We highly recommend that you use this resource when calculating the interest on a particular deposit.
Of course, a landlord and a tenant can always agree to waive interest when it comes to returning security deposits, but we recommend that any agreement that deviates from either the RTA or the Regulations is recorded in writing. If you have any questions about security deposits or would like to find out more about them, feel free to get in touch with us!