Rental deposit: 7 questions – 7 answers

A rental deposit functions as a form of security for the landlord. Source: iStock / Lordn

When an apartment is rented out, the new tenant is often expected to pay a large deposit to the landlord. This security deposit can be the equivalent of up to three months’ rent. answers your most pressing questions on the subject.

What is a rental deposit exactly?

A rental deposit is a contractually agreed sum that is paid by a tenant to a landlord to provide a form of security. This is in case the tenant damages the apartment or falls behind in their rent. Part of Swiss tenancy law, it is regulated by Art. 257 of the Code of Obligations.

Am I obliged, as a tenant, to pay a rental deposit?

Yes, if the landlord requires one. The rental deposit amount is defined in the rental agreement. It can be the equivalent of up to three months’ rent (gross rent) and is usually paid at the beginning of the rental period.

What if I cannot afford the rental deposit?

Rental deposit insurance

In exchange for an annual premium, an insurance company or bank provides the landlord with a guarantee for the sum of your rental deposit. So instead of having to pay a high deposit to the landlord, you simply hand over the surety bond. You will need to obtain the landlord’s consent to use rental deposit insurance, but the landlord can refuse without having to give a reason.

You can find more information about rental deposit insurance here in our magazine: Why choose rental deposit insurance?

Personal loan

It's only worth taking out rental deposit insurance if you have no cash available or need to invest the money elsewhere. A personal loan might therefore provide an alternative to rental deposit insurance. In some cases, it may even work out cheaper. Dominik Weber, financial expert at Comparis: “Rental deposit insurance products tend to provide a poorer deal than personal loans. A personal loan is particularly worth considering if the tenant has a good credit rating and can get a decent interest rate, or if the repayment term of the loan is not too long.” 

Where is the rental deposit usually held?

The rental deposit is usually paid into a blocked account, which can be opened at a bank by either the tenant or the landlord. This account is opened in the name of the tenant and is blocked to both parties for the duration of the tenancy agreement. Each year, the tenant receives an account statement listing the interest accrued and fees charged – which are usually paid by the landlord, although the tenant may be charged up to 50 francs per year.

Under what circumstances can the landlord access the rental deposit?

The bank can arrange to pay the landlord the relevant amount at the end of the tenancy agreement only, and only in the following circumstances:

  • The tenant owes the landlord money for rent or ancillary costs.
  • There is damage to the apartment for which the tenant is responsible.

When do I get the deposit back?

If by the end of the tenancy agreement you have no rent owing and there is no damage to the apartment, the rental deposit is released soon after you have moved out (usually within 30 days) and paid to you.

Tip: If the landlord is happy to release the deposit, get him or her to sign a transfer order for the bank at the apartment handover, as this will speed up the payment process.

How long can the landlord delay the release of the rental deposit?

If repair work needs to be carried out to the apartment at your cost, the landlord needs to ensure this is completed within three months and then produce the final bill. If any ancillary costs are also outstanding, the landlord is permitted to withhold the corresponding amount from the deposit until the end of the settlement period, which is usually 30 June of that year. The absolute final deadline is twelve months after you have moved out – then the rental deposit must be paid out whether or not the landlord has consented. In the event of a dispute, you can seek support from the tenants’ association.

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More articles on the subject of the rental deposit:

Still waiting to get your rental deposit back? Here's what to do
Rental deposit: how you get your money back