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Rental deposit in Germany – these rules apply

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Renting can be expensive for Expats in Germany. Most landlords in Germany will require that you put down a rental deposit. Here you can find out what the landlord can do with this deposit – and what he should pay attention to himself.

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 countires) 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.

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.

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.

rental deposit
Apartments for rent in Germany

Investment of the rental deposit

The rental deposit is usually a cash deposit. However, this does not mean that the deposit must be handed over in cash. The deposit is usually paid into a deposit account or a savings account. Such investments bring little or no interest any more. However, tenants and landlords can also agree on other forms of investment such as ETFs or equity funds. These often promise higher returns, but also involve the risk of price losses, which is why this option is rarely used in practice.

Renting in Germany

Repayment of the rental deposit

After the end of the tenancy, the tenant receives the money back. However, only if the landlord makes no claims, for example due to defects in the rented apartment . However, once the tenant has moved out, the landlord does not have to repay the deposit immediately.

How long the landlord can take his time is not regulated by law. Since claims, for example due to defects, expire after six months, the deposit must be repaid by then at the latest, unless the landlord asserts claims beforehand.

However, many courts also consider six months to be too long if there is no apparent reason for the deposit to be withheld. If the tenant and landlord agree that there are no claims when the apartment is returned, the landlord must pay out the deposit very quickly. Again, there is no statutory deadline, but more than a few weeks would then be an inappropriately long period.

The landlord may withhold a reasonable part of the deposit beyond the six-month limit if it is foreseeable that an additional payment will be due in the next operating cost statement. This proportion must be plausibly estimated and the landlord must actually settle the ancillary costs within the statutory period – i.e. no later than twelve months after the end of the accounting period – and then offset any additional payment against the retained deposit.

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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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