Tenants in N.W.T. are owed interest on security deposits. For years, they've received almost nothing

A small change made to the Northwest Territories' Residential TenanciesAct more than a decade ago means the territory's renters are losing money on any security deposits they've paid.

The act requires landlords to pay tenants simple interest on any money the landlord takes for pet deposits or security deposits.

But since an amendment to the article governing the rates came into force in 2010, interest rates for N.W.T. security deposits have not been higher than 0.05 per cent, or 50cents per one thousand dollars of your security deposit.

The current rate is even lower: 0.01 per cent.

At this rate, a tenant who has paid a$1,840 security deposit Yellowknife's average 2023 rent, according to Canada Mortgage and Housing Corporation would be owed 18 cents of interest this year.

At Yukon's current security deposit interest rate, the same tenant would be owed over $95. In Alberta: $29. In Prince Edward Island: $41. In B.C.: $50. InNewfoundland: $18. (Though in Nova Scotia, the current interest rate is 0 per cent, so a tenant would make no money at all.)

Adelle Guigon ended her term as the N.W.T.'s chief rental officer at the end of April after more than seven years in the role.

In an interview soon before she stepped down, she called the low security deposit interest rates "awful" and "embarrassing," but said that she isn't sure how the law should be changed.

"I hadn't really put my mind to it other than considering that I'm not crazy about how low that interest rate is either," she said.

Guigon said she hoped to do a survey of the laws in other parts of the country, and include her recommendations on how the regulation should be changed in her final annual report as rental officer.

Lisa Thurber is the founder of the N.W.T. Tenants' Association, and she wants to seethe law changed so all interest earned on security deposits is credited back to tenants.

"This is the only area where this interest rate is so low. It makes no sense," she said.

"Some of these tenants have been in their units for 10 years, 15 years that's just money that a tenant needs nowadays to put food on the table, to keep the lights on."

She said that in her experience, many landlords don't credit tenants their interest on security deposits every year like they are supposed to. But because rates are so low, she tells tenants it's not worth it to pursue the issue.

The fee forsubmitting an application to the rental officer is $20, and she said no one she has worked with has accumulated enough interest to even recuperate that cost.

What happened

Prior to changes implemented in 2010, security deposit interest rates in the N.W.T.were set by an article in the Residential Tenancies Act to the Bank of Canada's"deposit rate on deposit receipts for 30 days" forJanuary 1 of each year.

Neither the rental office or N.W.T. Department of Justice knew which Bank of Canada rate this was, but security depositrates for this time roughlytracked the Bank of Canada's key interest rates.

But as part of a series of amendments made to the Residential Tenancies Act in 2008, the rule for security deposit interest rates was moved to regulations, and indexed to another much lower Bank of Canada interest rate, the "chartered bank administered interest rate for non-chequablesavings deposits."

Those changes were implemented in September of 2010.

Hal Logsdon, the chief rental officer at the time, included a brief rationale for the change in his 2010 annual report.

"The benchmark interest rate for security deposits was changed to better reflect the interest a landlord could earn on security deposits held in trust," he wrote.

In an email, current chief rental officer Jerry Vanhantsaeme said thenew rate was chosen for "stability," because the rate does not fluctuate as often as the Bank of Canada prime rate.

What would a change mean for landlords

Rob Warburton is a Yellowknife city councillor and landlord with two rental properties.

He said he keeps tenant security deposits in an interest-gathering savings account.The interest isn't very high, and when he factors in his banking fees, it's financially "a wash," he said.

"I don't think I lose money, but I definitely don't make any money on it," he said.

But he said it might be different for N.W.T.'s large landlords.

That's because even small amounts of money can add up quickly for landlords who have many properties.

A landlord who earnedthree per centinterest on security deposits would make about $55 off one tenant who paid that $1,840 Yellowknife rent but if they had 1,000 tenants paying the same price, they would earn over $55,000.

Housing NWT operated about 2,500 units in 2023. NorthviewREIT owned 1,310 units, according to its2023 financial statements.

Ultimately, Warburton said that he does think security deposit interest rates should be higher than 0.01 per cent but wasn't sure what rate he thought would be most fair.

"It should be indexed to something that is more reflective of what a person would expect from,say, a bank account," he said.

Members of the current Northwest Territories legislature have committed to reviewing the NWT Residential Tenancies Act during the life of this government. But Guigon, the outgoing chief N.W.T. rental officer, said the Department of Justice staff could change it without legislative approval.

She told CBC before she left office that she would raise the issue in her final report.

The N.W.T.'s new chief rental officer Jerry Vanhantsaeme said that he is also interested in looking at alternative ways of calculating security deposit interest, but said that he did not yet have enough information to decide whether he would support changes to the current regulation.