For the first time since 2008, the interest rate has risen to a level where interest will be owed on a damage deposit returned to tenants in B.C.
In the province’s Residential Tenancy Regulation, it is set that landlords are to pay interest on damage deposits at a rate 4.5 per cent lower than the prime lending rate on the first day of the calendar year.
The prime lending rate in B.C. on Jan. 1 was 6.45 per cent, meaning landlords in B.C., upon the return of the damage deposit, will owe interest of 1.95 per cent for 2023.
“This has always been a requirement going back four decades. However, because the prime rate has been below the threshold of 4.5% since 2008, it was not required for the period of 2009-2022,” B.C.’s Ministry of Housing said in a statement to CHEK News.
“As the Bank of Canada has increased its policy rate from 0.25% to 4.25%, it has once again triggered the interest payable on rental security and damage deposits in B.C.”
Antonia Mah, a tenants advocate with the Together Against Poverty Society, says getting interest back on a damage deposit is good news for renters.
"A tenant doesn't get to invest or really do anything with the money that a landlord holds as their pet or security deposit," Mah said. "So generally speaking, any money from interest rates that is being paid to a tenant is good for renters."
The last time interest was owed on security deposits was in 2008, when a tenant was owed 1.5 per cent interest.
The interest will accrue through the year, then be owed back to the tenant upon move out, however, it may not continue accruing interest in 2024, depending on the prime lending rate.
The Residential Tenancy Branch has an interest rate calculator to help calculate the amount owed, which can be found here.
Mah notes the interest rates in previous decades used to be higher when the prime lending rate was higher.
"In the 1980s, the average interest rate on security deposits was 8.2 per cent, and then in the 90s, the average was 3.16," she says. "So compared to previous decades, the rates for 2023 are very low."
LandlordBC told CHEK News it had no formal comment on the interest rate being triggered for damage deposits.
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