Pennsylvania security deposit interest
Pennsylvania’s interest rule only starts in the third year of a tenancy. Deposits over $100 must be kept in an escrow account at a federally or state-regulated institution, and once the tenancy passes its second anniversary the landlord must pay the tenant the interest earned each year, keeping one percentage point as an administrative fee.
Print this page for a dated statement showing the rate applied to each year and the statute.
How Pennsylvania deposit interest works
The same statute caps the deposit at two months’ rent in the first year and one month from the second year, and bars any increase after the fifth year. Deposits are returned within 30 days with an itemised list; a landlord who misses the deadline owes double the amount withheld.
The rules in brief
- Escrow account required for deposits over $100.
- Interest owed only from the third year (after the second anniversary), paid annually, less a 1% administrative fee.
- Deposit limited to two months’ rent in year one, one month thereafter; no increase after year five.
- Return within 30 days with an itemised statement; double damages for failure.
Set by the escrow account. Whatever the account earns.
Worked examples: one year held
Assuming an account rate of 0.5%. Enter the real rate from the landlord’s notice in the calculator.
| Deposit | Interest-bearing portion | Interest owed |
|---|---|---|
| $1,000.00 | $1,000.00 | $0.00 |
| $1,500.00 | $1,500.00 | $0.00 |
| $2,500.00 | $2,500.00 | $0.00 |
Other Pennsylvania deposit rules
- Maximum deposit: Two months' rent during the first year of the lease; one month's rent in the second and later years (no deposit increase required after five years of occupancy).
- Return deadline: Written list of damages and refund of the balance (with any interest due) within 30 days of termination of the lease or surrender and acceptance of the premises, whichever first occurs.
- Late fees: No statutory cap or grace period for residential late fees in Pennsylvania; the lease controls and fees must be reasonable (Philadelphia and some cities have local rules).
Full page: Pennsylvania landlord and tenant rules.
Frequently asked questions
When does a Pennsylvania landlord owe deposit interest?
Only after the tenant has been in the unit for two full years. From the third year on, the interest earned each year, less 1%, must be paid to the tenant annually.
What if the tenancy lasted exactly two years?
No interest is owed. The obligation begins after the second anniversary.
Can the landlord keep part of the interest?
Yes, one percentage point per year as an administrative expense. If the account earned 3%, the tenant receives 2%.