What is the rental deposit in Germany? Find out how it works and other “Kaution” laws

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How does the apartment rental deposit (Kaution) work in Germany? Why do landlords in Germany take a deposit? Can I get my rental deposit back if I change my mind? Can I lose my rental deposit? What can I do if my landlord does not return my deposit? Read more here on what the rental deposit in Germany entails and what you should pay attention to.

Rental deposit in Germany: The landlord of an apartment can usually demand a maximum of three months’ rent as a rental deposit from his tenant. However, the landlords in Germany (just like in most western countries) may only ask for a deposit if this has been agreed in the rental agreement. 

This money is used to secure claims that the landlord may one day address to the tenant – for example because of outstanding rent payments or because the tenant has damaged the apartment. The tenant can choose to pay the rent security in one fell swoop or in three equal monthly installments together with the first three rents. Find out how apartment rental deposit (Kaution) works in Germany.

rental deposit

What is a rental deposit in Germany?

The rent deposit is deposited by the tenant with the landlord at the beginning of the tenancy and is intended to protect the landlord against damage caused by the rent. It may amount to a maximum of three net cold rents. There are different types of rental deposit, eg cash deposit, bank guarantee or rental deposit insurance.

Rent damages are for example:

  • unpaid rent
  • unpaid operating costs
  • Expected additional payments from the utility bill
  • damage to the apartment caused by the tenant

The amount of the rental deposit is limited

Important for both sides: As a rule, the deposit may not be higher than three months’ rent minus operating costs. This is how it is regulated by the German Civil Code (§ 551 BGB). According to this, the deposit may “not exceed three times the rent for one month without the operating costs shown as a lump sum or as an advance payment.”

However, the landlord is not allowed to simply spend the money given to him. Instead, he has to keep the rental deposit separate from his own assets. This is to protect the tenant from the fact that the deposit is lost in the event of the landlord’s bankruptcy.

Is the landlord asking more than three months rent deposit?

If the tenant offers a deposit of more than three months’ rent, this may be permissible. 
Even if the tenant wants to have handicapped-accessible conversions carried out, which are to be dismantled after moving out, the landlord can make his consent dependent on the tenant paying an extra deposit in the amount of the expected dismantling costs.

Is the landlord asking more than three months rent deposit?

If the tenant offers a deposit of more than three months’ rent, this may be permissible. 
Even if the tenant wants to have handicapped-accessible conversions carried out, which are to be dismantled after moving out, the landlord can make his consent dependent on the tenant paying an extra deposit in the amount of the expected dismantling costs.

What do you have to pay attention to with the rental deposit?

In most cases, anyone who lives for rent has come into contact with the term “rent deposit”. It is a security deposit for the landlord and is intended to protect him financially against damage to the living space or loss of rent. Why is this important? For many landlords, loss of rent and other rental damages are a high risk for the financing of their property; for some, even retirement savings are at stake.

Would you like to know more about the repayment of the rental deposit? Find out everything about the background, deadlines and regulations in our article on rent deposit repayment.

To clear up a misunderstanding right away: There are no legal requirements in tenancy law that you have to pay a deposit when you rent an apartment. However, this procedure is common in Germany and you will hardly find a rental apartment without paying this deposit. In any case, the rental agreement must state the amount, type and method of payment .

rental deposit

The amount of the rental deposit is limited

Important for both sides: As a rule, the deposit may not be higher than three months’ rent minus operating costs. This is how it is regulated by the German Civil Code (§ 551 BGB). According to this, the deposit may “not exceed three times the rent for one month without the operating costs shown as a lump sum or as an advance payment.”

What does rental security mean?

A security deposit is an amount of money or a guarantee that the tenant deposits with the landlord at the beginning of a tenancy. This is secured up to an amount of three net cold rents if the tenant does not meet his obligations under the rental agreement. These obligations may include cosmetic repairs, utility bills, or rent payments. The rental security is also generally known under the term “rent deposit”.

However, the landlord is not allowed to simply spend the money given to him. Instead, he has to keep the rental deposit separate from his own assets. This is to protect the tenant from the fact that the deposit is lost in the event of the landlord’s bankruptcy.

What is the maximum amount of the rental deposit in Germany?

The law regulates how high the rental deposit can be: a maximum of three net cold rents . The amount of the rental deposit must be specified in the rental agreement.

Small calculation example: If the rent is 620 euros and the rent including heating is 710, the rental deposit may not be higher than a maximum of 1860 euros. This applies to both the cash deposit and the rent guarantee. A guarantee certificate may not be issued for a higher deposit amount either.

Only the net cold rent serves as the basis for calculation . It must therefore be specified in detail in your rental agreement. This helps to avoid errors when calculating the rental deposit.

If the landlord demands a deposit of more than three net cold rents, the tenant does not have to pay the excessive amount. If he has already paid too much, there is over-collateralization and he can claim back the overpaid amount. If, in the case of a guarantee, the amount entered on the guarantee document is higher than the permitted three net rents, it is invalid. The security only applies to the amount of the permitted three net cold rents.

Even if you have rented your apartment “warm” at a fixed price, the regulations apply: the basis for the payment of the rental deposit for private tenants remains the three net rents. The landlord must therefore calculate out the estimated “heating component” and add the net cold rent to the rental agreement.

The landlord has the right to increase your rent under certain conditions. Irrespective of the new rental amount, the rental deposit remains as agreed upon when the rental agreement was concluded. If there is another clause in your rental agreement, it is invalid.

According to 551 BGB, the tenant also has the right to pay the rental deposit in three equal monthly installments, beginning with the beginning of the tenancy.

The only exception to the maximum permissible rental deposit: If a higher rental deposit is offered voluntarily, this is also valid and the landlord can access it in full in the event of damage. Most common example: The tenant is a trainee or student and would not get the apartment due to his low or non-existent income. If the parents offer a guarantee in addition to the rent deposit, for example, that exceeds the maximum amount of the deposit, this is permissible.

rental deposit

What happens if the rental deposit is not paid?

The case of non-payment of the rental security is regulated by law in § 569 Para. 2 a BGB: Non-payment of the rental deposit by the tenant entitles the landlord to extraordinary termination of the tenancy without notice. A prior warning is not required. However, this only applies to tenancies that were concluded after a tenancy law reform came into force in 2013. For all older tenancies, the legal situation is not clearly clarified. Most courts see a right to termination without notice as justified here as well. However, the tenant must be warned in writing beforehand.


Prerequisites for termination without notice due to non-payment of the rental deposit are:

  • that the provision of a rental deposit was expressly agreed in the rental agreement
  • the tenant must be in arrears with the payment of the security deposit in the amount of at least two monthly rents
  • the reason for the termination must be explicitly stated in the letter of termination.

How is the rental deposit created?

According to tenancy law, landlords in Germany are obliged to deposit the rental deposit in accordance with Section 551 (3) of the German Civil Code.

That means:

  • It must be kept strictly separate from the landlord’s other assets in an insolvency-proof rental deposit account or rental deposit savings account.
  • Your deposit must be with a bank at the normal interest rate for savings deposits with three months’ notice.
  • The deposit can also be deposited as a savings deposit in the name of the landlord or your name (savings book) with simultaneous pledging to the landlord. The landlord is free to make this decision.

The widespread opinion that the rental deposit should only be made in the name of the tenant persists, but it is wrong. As long as the landlord invests the rental deposit separately from his assets, this fully complies with the applicable legal provisions.

The interest gains are due to the tenant, are added to the rental deposit amount and are also taxed by him through the interest deduction. The tenant receives a tax certificate on the amount, which he can in turn offset against his income tax. The landlord must regularly inform the tenant of the status of the interest, which means a certain amount of effort for him.

Due date of the rental deposit: By when does it have to be paid?

The rental deposit is due at the beginning of the tenancy, i.e. the day that is specified in the rental agreement as the time the rental begins. If the payment is made in cash or by transferring a sum of money, it does not have to be made in full immediately, it can be paid in 3 equal installments. It is only important that the first of the three installments is in the landlord’s account at the beginning of the tenancy. The second and third installments are due at the beginning of the 2nd and 3rd month of rental.

Here is an example to clarify: Assuming that the contract is signed on June 15, 2021 and the rental period begins on July 1, 2021. Then the 1st installment is due on July 1st, 2021. The second installment is due on August 1st. The 3rd installment of the rental deposit must be paid by September 1st. be paid.

Tenancy law states that the tenant has the right to pay the rental deposit in three installments. The landlord must not prohibit him from doing so. The landlord may not make the signing of the rental agreement dependent on whether the tenant pays the full deposit immediately. In practice, of course, it often looks different: the landlord wants the full deposit as soon as possible and looks for a tenant who does not have to pay it off first. A good alternative here is the rental deposit guarantee. Instead of the cash deposit, the landlord receives a guarantee from a bank or insurance company as rent security, the tenant pays a small contribution for this, but is allowed to keep the deposit money.

What types of rental deposit are there?

Tenants in Germany have various options for providing their rental deposit. Which one suits you? When making your choice, pay attention primarily to your financial possibilities and then talk to your landlord. Because he has to agree with your decision.


Let’s take a closer look at the different models:

  • Escrow account: Despite better alternatives, the so-called cash deposit is still the most common form of deposit transfer today. It doesn’t just mean handing over cash. The transfer to an escrow account under the name of the tenant also belongs to the umbrella term “cash deposit”. Here the landlord sets up an account in your name. The money stays there until your tenancy ends. After the end of the tenancy, you will get the money back – provided the landlord no longer has any claims against you as a result of damage.
  • Savings book: The pledged savings book also has something to do with your bank. In this case, the tenant can set up his rental deposit account himself, albeit with very low interest rates. To do this, the tenant opens a savings account in his name and pledges it in favor of the landlord, i.e. hands this over to the landlord as security for the rent. After the end of the tenancy and if the landlord no longer has any claims against the tenant, the interest-bearing credit will be paid out to the tenant.
  • Bauspar contract: Bauspar contracts can also be used as security for rent. You should make sure that the bank offers special conditions, because in the event of damage it must be possible to get part of the money paid out.
  • Rental deposit deposit: If the landlord and tenant agree, the rental deposit can also be placed in a rental deposit deposit. These funds are not subject to such strong price fluctuations as is the case with equities or mixed funds, but are invested more securely and more solidly. However, you will incur additional costs for fees and taxes.
  • Day loan: The day loan is bought by the tenant in his name in the form of a debt book account and then pledged to the landlord free of charge.
  • Private rent guarantee: In this case, a private person stands as a guarantor for rent arrears or property damage and assumes the payment in the event of damage. A common example is when parents vouch for their child. We have summarized everything about the advantages and risks, rules and facts of this guarantee for you in our chapter on the rent guarantee. There you will also find a free template to download.
  • Rental deposit insurance: As the name suggests, an insurance policy guarantees your rental deposit. That means: Instead of a sum of money, you deposit a guarantee certificate from the insurance company with the landlord as rent security. You can keep the money for the cash deposit. You pay an annual fee for this service, which depends on the amount of the rental deposit. At kautionsfrei.de it is 4.7 percent of the rental deposit amount. Do you also want to save the money for the rental deposit? Calculate your contribution to the rent guarantee easily with a deposit calculator online.
  • Bank guarantee: A bank guarantee (also known as a bank guarantee or rental guarantee) is the same as rent deposit insurance, except that instead of the insurance, a bank guarantees your rental security. However, banks often charge high fees for the guarantee. In addition, you usually have to be a customer of the bank where you apply for a bank guarantee. Some banks also require a blocked deposit in the amount of the rental deposit, i.e. money that you own but can no longer use. In this case one asks oneself: What is the point of a bank guarantee at all?
rental deposit

How can I get the rental deposit back from the landlord?

Renting an apartment can be frustrating: the rent deposit is rarely repaid immediately after the end of the lease , but you usually have to deposit the rent deposit for the new apartment at this point. The reason for the temporary withholding of the rental deposit is: The landlord has a “reasonable period” of up to 12 months to check exactly whether and which claims you may still have. These are often:

  • Amounts of money from ancillary costs that have not yet been settled
  • Agreed but not implemented cosmetic repairs
  • rent debts

In practice, the money for the rental deposit can easily take up to a year to come . Depending on the individual case, the landlord may keep the rental deposit even longer.

What happens to the rental deposit when the tenancy is terminated?

If you terminate your tenancy , you will receive your rent deposit back from the landlord . If you invest cash, you also have the right to receive interest payments.

However, the landlord may withhold the money if there are still outstanding claims from the tenancy, for example

  • if agreed repairs for which the renter is responsible have not been carried out
  • rent debts exist
  • or open utility bills are available

The landlord has up to 6 months, possibly even up to 12 months , to check whether there are still outstanding claims .

For you as a tenant, this is a double financial burden , because when you move into the new apartment, a rental deposit is due again, but you have not yet received the old rental deposit back from your former landlord.

With a rental deposit guarantee, you don’t have these problems. You deposit a guarantee certificate with the landlord instead of an amount of money. This amount is then not missing from your account during the waiting period. The landlord still has a full security deposit.

When can the landlord keep the rental deposit?

After the end of the tenancy, the landlord has the right to withhold part or all of your rental deposit in the event of damage. Reasons for this can be:

  • You are in arrears with your rent payment (net cold rent).
  • You are in arrears with the payment of the additional costs (operating costs).
  • You have intentionally or unintentionally caused damage to the living space through improper handling, which the landlord must now have repaired.
  • You failed to carry out the agreed cosmetic repairs before you moved out.

Can I also pay the rental deposit in Germany in installments?

Yes, you can: Section 551 paragraph 2 of the German Civil Code even entitles you to pay your rental deposit in three equal monthly installments . The first installment is due at the beginning of the tenancy, the other two in the following months.

An example: You sign your rental agreement with a deposit of 1800 euros on September 25th, 2021

  • You pay the first installment of 600 euros on October 1st, 2021, because your tenancy begins on this day.
  • You pay the second installment of 600 euros on November 1st, 2021.
  • The third and last installment of 600 euros is due on December 1st, 2021.
Expaturm
Expaturmhttps://www.expaturm.com/
Expaturm aims to help educate Expats in Germany on key issues that they will have to deal with while living in Germany by providing everything you need to know about Banking, Healthcare, Lifestyle, and Housing in Germany

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