Understanding the interest rules for security and pet deposits is critical for avoiding the dreaded “Double Deposit Penalty.” In British Columbia, landlords are legally required to pay interest on deposits they hold, and the amount is tied to annual rates set by regulation. For the 2026 calendar year, that interest rate is officially 0%.
The interest rate for deposits is not randomly chosen. According to the Residential Tenancy Regulation, the annual rate is calculated as 4.5% below the prime lending rate of the Province’s principal banker on January 1 of each year.
On January 1, 2026, the prime rate was 4.45%. Since this is lower than the 4.5% deduction, the rate is set at 0% for the entire year.
This means no additional interest accrues on deposits during 2026.
While 2026 is interest-free, most tenancies span multiple years. This is where many landlords make costly mistakes.
If a tenant moves in during 2023 and leaves in 2026, you cannot simply return the original deposit amount. You must pay the applicable interest for each year the deposit was held, based on the annual rates set for those years.
At 88West Realty, we track these moving rates to ensure your payouts are exact. For reference, the rates for the last few years were:
Once a tenancy ends and the tenant provides their forwarding address in writing, the landlord has 15 days to either:
Return the deposit (with applicable interest), or
Apply to the Residential Tenancy Branch (RTB) to keep all or part of it
If the landlord does not take either of these steps within the 15-day period, they may be ordered to pay the tenant double the amount of the deposit.
Even small administrative mistakes can lead to serious financial consequences, making accuracy and timing essential.
