Los Angeles Security Deposit Interest Rate Set at 3.03% for 2026

Owners of rent-stabilized properties in the City of Los Angeles should take note of the interest owed on tenant security deposits. For the 2026 calendar year, the applicable interest rate is 3.03%, down from 4.32% in 2025.

Under the Los Angeles Rent Stabilization Ordinance, landlords must pay interest on security deposits held for at least one year. Owners may use the rate established by the Rent Adjustment Commission or pay the actual interest earned when the deposit is maintained in an interest-bearing account. If the latter method is selected, the tenant must receive documentation showing the interest earned.

Accrued interest may be paid directly to the tenant or credited toward rent on a monthly or annual basis. Landlords must select a payment method and notify the tenant in writing. Any unpaid interest must generally be addressed when the tenancy ends or the property changes ownership.

For example, applying the 2026 rate to a $3,000 security deposit would produce $90.90 in annual interest:

$3,000 × 3.03% = $90.90

Although the rate declined from 2025, it remains considerably higher than most rates recorded over the previous decade. Los Angeles multifamily owners should confirm which units are subject to the RSO, maintain accurate deposit records and incorporate the annual payment into their compliance procedures.

Property owners should consult LAHD guidance and qualified legal counsel regarding their specific obligations. The City’s requirements are established under Los Angeles Municipal Code Section 151.06.02. LAHD also identifies security-deposit interest payments as an RSO requirement on its official RSO overview.