What is a Deposit and why do I have to pay it?
When renting an apartment in Germany most landlords require the tenant to pay a deposit before moving in. The deposit is designed to protect the landlord against any damages such as:
- rent not paid
- utility costs not paid
- any damages caused by the tenant while living in the apartment.
Find all the information you need about deposits for apartments in Germany in the following article.
- 1 What is a Deposit and why do I have to pay it?
- 2 How high is the maximum deposit?
- 3 By when do I have to pay?
- 4 How may I pay?
- 5 What happens during tenancy?
- 6 What happens after termination of contract?
- 7 How long can the landlord wait with the refund?
- 8 Can I ask the landlord to refund earlier?
- 9 So I have to pay twice?
How high is the maximum deposit?
The maximum deposit the landlord may ask of you may be as high as 3 months worth of rent without utilities. This limit is set by law and may not be changed by the landlord. If your tenancy contract requires you to pay more than the legal limit you may refuse to pay any amount of money exceeding the legal limit of 3 months worth of rent.
By when do I have to pay?
The deposit needs to be paid by the time you move in. Never pay a deposit day, weeks or months in advance, especially if you have not yet personally met the landlord or visited the apartment. If the landlord requires you to pay a deposit months in advance it is a clear indication of a fraudulent scheme.
If the deposit is paid in cash or by bank transfer you have the right to pay the deposit in three separate, monthly installments. If you do so, only the very first installment has to be paid by the day that you are moving in.
How may I pay?
The deposit may be paid in cash, via bank transfer or even by security/guarantee. Nowadays some companies even offer paying the deposit upfront for you and thereby loaning you the money whereupon you have to repay the company in smaller installments over the next few months. However, the landlord does not have to accept any kind of deposit. If your contract states that the deposit needs to be paid in cash than the deposit has to be paid in cash unless you negotiate a different form of payment with the landlord.
What happens during tenancy?
By German law the landlord has two set aside the deposit on a different account that will pay out the usual interest. Any interest accrued of the time of you living in the apartment has to be paid out to you. There are only minor exceptions to this rule, e.g. for apartments or rooms in German student housing.
What happens after termination of contract?
When you move out of the apartment the landlord has to balance the pay deposit against all damages. The remainder of the deposit has to be paid out to you. The landlord has 6 months and under certain conditions even up to 12 months to check for any damages. After that landlord has to provide you with a written balance statement showing all payments made by you and the damages the landlord claims.
How long can the landlord wait with the refund?
The first written balance statement needs to be provided by the landlord within 6 months after you moving out of the apartment. After that the remainder of the deposit needs to be paid out to you. The landlord may only reserve a small amount of the deposit that might be needed to cover any subsequent payment for utilities. The reason is that the actual costs for utilities in any given year in Germany will usually be calculated at the end of the following calendar year. Therefore, the landlord at the time of you moving out might not know whether or not all payments for utilities have been made by the time you our moving out.
Here is a possible example:
You moved into your apartment in July 2015 and lived there for 3 years. You paid 500.00 EUR in rent and 100.00 EUR for utilities. In the past years you've always used a little bit more heating so at the end of the year you always had to make an additional payment for utilities of 150.00 EUR. The deposit was three times the rent, i.e. 1500.00 EUR. You move out at the end of June 2018.
- Rent 500.00 EUR
- Utilities 100.00 EUR
- Deposit 1,500.00 EUR
- Additional utilities 150.00 EUR at end of every year
In this scenario the landlord may wait until December after you moving out until he pays out the majority of the deposit. Even after December he may reserve a small amount of the deposit because in the past years you always had additional payments for utilities of 150.00 EUR. Because of the past experience the landlord can expect that you will have to make additional payments on utilities this year again. Since you've only lived in the apartment for half a year, he can reasonably expect that you will have to pay half of what you had to pay additionally in the previous years, i.e. 150.00 EUR / 2 = 75.00 EUR. Therefore in the scenario the landlord may reserve 75.00 EUR until 12 months after you moved out. The remainder (1,425.00 EUR) the landlord has to pay out by the end of December 2018.
Can I ask the landlord to refund earlier?
Sure enough you can ask your landlord to refund the deposit earlier. However, most landlords in Germany will refuse to do so unless they know that no damage has been caused and that there are no additional payments for utilities to be expected.
So I have to pay twice?
Indeed. If you move out of your current apartment and into a new apartment it means that you might have to pay the new deposit before you have been refunded your old deposit. That's why you essentially have to pay two deposits - one for the old apartment and one for the new apartment. Always consider this before planning on moving into a new apartment.
Do you have any further questions regarding deposits for German apartments? Would you like to have another aspect covered in this article? Or do you have any other legal subject that troubles you in Germany? Then drop us an email.
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This page gets updated with new questions regularly.