Question: As a landlord, when do I have to pay interest on a security deposit?

Answer: Paragraph 17 of the NVAR Deed of Lease states that “the Security Deposit will be placed in a federally insured depository and accrue interest to the account holder in the manner and to the extent required by law.” As with all landlord tenant questions, you must first ascertain whether your lease is subject to common law or whether it is subject to the Virginia Residential Landlord Tenant Act (VRLTA). If your lease is subject to common law, then there is no statutory requirement for the payment of interest on deposits. The parties are free to negotiate the issue. However, if your lease is subject to the VRLTA, then interest is due if the lease term is for more than 13 months. Interest is calculated at 1 percent below the Federal Reserve Board Discount Rate as published January 1 of each year. The Code has published calculated rates for the following years:

Year(s) Rate is in Effect Interest Rate
July 1, 1975 - December 31, 1979 3.0 %
January 1, 1980 - December 31, 1981 4.0 %
January 1, 1982 - December 31, 1984 4.5 %
January 1, 1985 - December 31, 1994 5.0 %
January 1, 1995 - December 31, 1995 4.75 %
January 1, 1996 - December 31, 1996 5.25 %
January 1, 1997 - December 31, 1998 5.0 %
January 1, 1999 - June 30, 1999 4.5 %
July 1, 1999 - December 31, 1999 3.5 %
January 1, 2000 - December 31, 2000 4.0 %
January 1, 2001 - December 31, 2001 5.0 %
January 1, 2002 - December 31, 2002 0.25 %
January 1, 2003 - December 31, 2003 0.0 %
January 1, 2004 - December 31, 2004 1.0 %
January 1, 2005 - December 31, 2005 2.25 %
January 1, 2006 - December 31, 2006 4.25 %
January 1, 2007 - December 31, 2007 5.25 %
January 1, 2008,- December 31, 2008 0.75%
January 1, 2009,- December 31, 2009 0.00%
January 1, 2010,- December 31, 2010 0.00%
January 1, 2011,- December 31, 2011 0.00%
January 1, 2012,- December 31, 2012 0.00%
January 1, 2013,- December 31, 2013 0.00%

Virginia law was changed in 2014, removing the requirement that interest accrue on security deposits held by landlords unless otherwise agreed in writing.