Investing the rental deposit

Immobilienab 9 J.

In Germany the landlord must invest your deposit (max. 3 months' cold rent) with interest – separately from their own assets. Alternatives: deposit account, rental deposit guarantee, deposit securities account.

Everything you need to know about the rental deposit (Germany):

Legal rules:

• Maximum: 3 months' net basic rent (e.g. with €600 basic rent: max. €1,800)
• Instalments allowed: 3 equal monthly instalments
• The landlord must invest it separately from their own assets
• Interest: at least at savings account level

Alternatives to a cash deposit:

• Rental deposit securities account: the deposit is invested in ETFs instead of a savings account. With €1,800 and a 7% return: approx. €2,500 after 5 years – the extra return belongs to YOU
• Rental guarantee (e.g. kautionsfrei.de): you pay 3–5% of the deposit per year as a fee. Advantage: no capital tied up. Disadvantage: the costs add up over the years
• Bank guarantee: the bank stands surety for you. Cost: 1–3% of the deposit/year

Did you know? The landlord MUST keep the deposit separate and interest-bearing (§551 Civil Code). The interest belongs to the tenant – many landlords ignore this.

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