Rental deposit in Germany: Everything you need to know

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rental deposit

According to the German Tenants’ Association (DMB), tenants do not have to provide a rental deposit automatically, but only if this is expressly agreed in the rental agreement.

When moving into a rented apartment, a rental deposit is due, which can amount to up to three months’ cold rent. The deposit can be paid in several ways. After moving out, the deposit must be paid back

What is a rental deposit?

Rental deposit

Landlords usually require a rental deposit to secure their claims and possible damage, which must be paid before moving in. The amount of the rental deposit can vary and is set out in the rental agreement. During the rental period, the deposit will be kept by the landlord and paid out when moving out.

A rental deposit is a security for the landlord in the event that the tenant defaults on payment.

The rental deposit can be agreed for “normal”, not price-bound rental apartments for any claims of the landlord , for example for:

  • Rent not paid
  • Operating costs not paid
  • Expected additional payments from the utility bill
  • Damage to the apartment caused by the tenant

It is also at the discretion of the landlord to collect a deposit. There is no legal obligation.

A deposit serves to secure the landlord financially against unpaid operating costs, rents or damage. A rental deposit is a voluntary service provided by the tenant that can be requested by the landlord. The upper limit of three net rents applies here.


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Rental deposit amount

The amount of the rent deposit is stipulated by law: In accordance with Section 551 (1) BGB , it may not exceed three monthly net rents , i.e. without the operating costs shown as a lump sum or as an advance payment. 

If you have actually paid a higher deposit, you can claim back the excess amount from the landlord. If your rent is increased over time, the amount of the rental deposit remains unaffected.

According to Section 551 (1) of the German Civil Code (BGB), the tenant has to provide the landlord with securities in the amount of a maximum of three monthly rent. If money is required as security, the payment can be divided into three installments in accordance with Section 551 (2) of the German Civil Code (BGB).

Rental deposit

Deposit the deposit on the rental deposit account

A rental deposit can be deposited as follows:

  • Payment to an escrow account managed by the landlord
  • Bank guarantee from the tenant
  • Pledging of the savings book
  • Bauspar contract as security
  • Guarantee for the tenant
  • Rental deposit insurance

Interest and rental deposit management

The tenant is entitled to any interest income that may arise for the money invested . In the case of a rent deposit payment to the landlord, the landlord takes on the free administration of the money. In the case of a deposit or insurance, however, this is done by the tenant or the insurance company.

The landlord will be given a reasonable inspection period in which he will charge additional costs, cosmetic repairs or rent arrears that have not yet been invoiced. This can take six months or more.

Installment payment of the rental deposit

It is possible to pay a rent deposit in installments – you are even legally entitled to do so according to Section 551 (2) of the German Civil Code (BGB). Thereafter, the rental deposit can be paid in three equal monthly installments , with the first installment being due at the beginning of the tenancy. The further partial payments are to be paid in the following months together with the rent. 

Basically, it is important to have a receipt issued after payment of the deposit amount and to keep it in a safe place.

Rental deposit

Claiming the rent deposit after moving out

If the tenancy is properly terminated, the tenant is entitled to reclaim the rental deposit paid in full, including interest. However, before the deposit is paid out, the landlord must be given a reasonable period of time to examine any claims against the tenant that could lead to part of the deposit being retained. 

In practice, it can therefore take three to six months for your deposit to be repaid. For example, in the case of an outstanding utility bill, this period can even be extended appropriately, depending on the individual case. Should be the creation of the utility bill If you delay even longer than initially assumed, the landlord may only withhold part of your deposit, which corresponds to around three to four monthly advance payments for operating costs.

In a nutshell:

  • After the end of the tenancy, the deposit including interest must be paid back.
  • The landlord has a reasonable deadline for this.
  • In individual cases, the repayment can also require six months or more.

TIP: If you do not have enough money to pay the deposit when you move in, you can offer your landlord a deposit insurance. The advantage: monthly installments and no reclaim when you move out.

In order to prevent the rental deposit from being withheld for a long time, it may be advisable to take out rental deposit insurance that releases you from the cash deposit. In many cases, this will be accepted by your landlord without any problems, saving you the annoyance of waiting for your money.

Here you will find everything you need to know about the deposit in a nutshell:

  • The landlord has the right to demand a deposit of three months’ cold rent from the tenant.
  • The deposit can be made in different ways. The normal case is the cash deposit.
  • After the end of the tenancy, the deposit must be paid back in full.

7  misconceptions about the rental deposit in Germany

Misconception 1: A deposit is always due before you move in

False! There are three ways to pay the deposit:

  • You can transfer the money to the landlord and he puts it in a deposit account. This can be, for example, a savings book or a call money account.
  • You can also pay the rental deposit into a savings account and then pledge it to the landlord. Simply hand the savings book to the owner and enclose a pledge which you receiver when opening an account at the bank.
  • You can give the landlord a bank guarantee: Your bank guarantees that it will be responsible for a certain amount if you default as a debtor.

Misconception 2: The deposit has to be paid all at once

False! The rent deposit does not have to be paid all at once and not even before the start of the tenancy. 

The deposit can be paid in 3 installments; the first installment is due at the beginning of the tenancy. The next two installments are then due together with the next two rental payments.

NOTE: In the case of rental contracts that have been concluded after May 1, 2013, the landlord may terminate the contract without notice if the tenant is in arrears with the security deposit in the amount of two months’ rent. The termination without notice becomes ineffective, however, if the tenant makes up the payment in good time.

Misconception 3: The landlord can put the rental deposit in his private account

Yes and No – In most cases, tenants and landlords agree on what is known as a cash deposit. Here the landlord receives the deposit amount in cash or usually transferred. He then has to invest it in a special account, separate from his other assets. 

German Tenants’ Association warning: Tenants should have a receipt for payment of the deposit. At the latest after the end of the tenancy, when tenants request repayment of the rental deposit, they have to prove that they have actually paid the deposit.

Misconception 4: Landlords are always allowed to access the rental deposit

False! A tenant’s deposit is taboo for the landlord as long as the rental agreement is running. That was decided by the Federal Court of Justice (BGH). A landlord is not allowed to access the deposited money even if he argues with the tenant about the amount of the rent.

BGH clarification: The judges thus upheld a tenant from Bonn who had sued her landlord. When she moved in, she left a deposit of 1400 euros. When the plaintiff later made use of her right to a rent reduction, the landlord had the entire deposited money paid out. In doing so, he relied on an extra agreement in the rental agreement. The BGH declared this clause in the contract to be ineffective: The tenant had to get her deposit back.

Misconception 5: After the termination of rental agreement, the tenant gets everything back

It depends! The landlord has to repay the rent deposit with interest and compound interest. But it should always be put on securely. Because in the event of a loss in value, the landlord is entitled to an additional payment, decided the Berlin-Tempelhof district court (Az .: 17 C 96/13). The amount of the deposit stated in the rental agreement is decisive.

Misconception 6: After moving out, the deposit will be paid back immediately

It depends! The German Tenants’ Association announced that landlords should not delay paying out too long. In certain cases, however, landlords can withhold the rental deposit for up to 6 months – for example because the tenant has damaged the floor and not repaired it.

If the former resident only owes the landlord the money for the utility bill, the landlord may only withhold part of the deposit.

Misconception 7: Rent arrears can be offset against the rental deposit

False! If you do not pay your rent, you cannot put off the landlord with the rental deposit you have paid. 

That was decided by the Munich District Court (Az .: 415 C 31694/11) – during an ongoing tenancy, the tenant has no right to repayment of the deposit. In the worst case, the defaulting party receives notice of termination.

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