Security Deposit Interest in Berkeley

Berkeley’s Rent Stabilization Ordinance requires housing providers to pay interest on security deposits for all covered rental units — both fully covered and partially covered (like SFRs and condos).

The Interest Year

• Runs from November 1 to October 31.

• Example: The “2025 interest year” means deposits held between November 1, 2024, and October 31, 2025.

How Rates Are Set

• Each year the Rent Board publishes the required rate.

• Rates are based on the average rate of 6-month Certificates of Deposit (CDs) during the interest year.

• Current and past rates are posted on the Rent Board’s website.

When and How to Pay

• Annually: Deposit interest must be paid or credited to tenants by January 31 following the close of the interest year.

  • BPOA strongly recommends making the payment or issuing the credit before December 31. The Rent Board typically publishes the new interest rate in late October or early November, so it’s best to address this promptly to avoid forgetting or missing the January deadline.

  • Payment may be made by check or as a rent credit.

  • Housing providers should use BPOA’s Notice of Annual Security Deposit Interest Payment to document this payment.

• At Move-Out: When a tenancy ends, accrued deposit interest through the move-out date must be paid along with the deposit accounting.

Missed Payments and Penalties

• Tenant’s immediate remedy: If you miss the January 31 deadline, the tenant can reduce their February rent by 10% of their security deposit without penalty.

• Back payments: Tenants can also demand payment for all past missed years.

  • All prior years = calculated at the official Rent Board rate for each year.

  • Most recent missed year = calculated at the 10% penalty rate.

• Example: If you missed 2022, 2023, and 2024, you owe:

  • 2022 at the posted 2022 rate

  • 2023 at the posted 2023 rate

  • 2024 at the 10% penalty rate

Best Practice: Once the Rent Board publishes the new rate in late October or early November, make the payment or issue the credit before December 31 to stay ahead of the January 31 deadline.