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Owners will be required to pay interest. refunds on security deposits to tenants

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This is the first time in 14 years that tenants in Alberta will receive annual interest on the security deposits they pay to landlords . (Archive photo)

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For the first time in more for a decade, tenants in Alberta will receive annual interest on the security deposits they pay to landlords thanks to rising provincial interest rates.

In a letter dated Nov. 20, the Ministry of Service Alberta and Red Tape Reduction says landlords must pay tenants 1.6 per cent annual interest on security deposits starting Jan. 1, 2024.

The Ministry explains that the interest rate is calculated by subtracting three percentage points from the ATB Financial interest rate for regarding Guaranteed Investment Certificates (GICs).

In this case, this rate was 4.60% as of November 1, 2023.

Landlords must pay interest owed to their tenants annually at the end of each rental year, unless both parties agree in writing that interest will not be paid annually.

A quote from Dale Nally, Ministry of Alberta Services and Red Tape Reduction

This is the first time in 14 years that the owners will have to pay tenants interest on security deposits, according to the ministry's letter.

Interest rates have been so low for a number of years that if you subtract three percent, the interest is zero percent, says Anna Lund, associate professor of law at the University of Alberta.

As interest rates have started to rise, homeowners will now have to pay some of that interest.

A quote from Anna Lund, Professor of Law, University of Alberta

In its letter, the province says landlords are allowed to keep any additional interest earned on security deposits above 1.6%.

Security deposits provide a safety net for landlords if tenants damage their property or fall behind on their rent payments. Their amount cannot exceed one month's rent, recalls Anna Lund.

She points out that the interest on the security deposit that tenants must get back at the end of the year does not represent a large sum of money. For example, if the deposit is $2,000, that's $32.

However, she believes it is important that customers know their rights and know how to assert them.

C& #x27;is an area of ​​law that so many people who have no legal training encounter. Often in situations where you have a dispute with your landlord, there are a lot of other things going on in your life that make those kinds of things really difficult to deal with.

A quote from Anna Lund, Professor of Law, University of Alberta

With information from Helen Pike

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