Tenants: all you need to know about the security deposit

Also known as a “rental guarantee” or “surety”, the security deposit is part of the requirements of the majority of landlords when signing a lease with the new occupant. For the landlord, this first payment of money is a security, which he can request if you do not pay the rent on time, or even mobilize when you leave, following damage. What is the amount of this security deposit? What are your rights and obligations as a tenant? How to react in the event of a disagreement? Advice.

A sum limited to three months of rent

No Luxembourg law requires landlords to request a rental guarantee to materialise the entry into the premises of the new occupant. However, this practice remains widespread, if not almost systematic.

However, when you want a rental guarantee to be paid, you must respect its limit. On the Luxembourg territory, landlords may not charge more than three times the amount of rent. For example, if you rent an apartment for €600 per month, your security deposit will be a maximum of €1,800.

“Landlords may not demand more than three times the amount of rent.”

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How to finance the guarantee?

When you move, you undoubtedly have a number of expenses to plan for. Logically, you think that this rental guarantee is not a good idea, in a context where managing your expenses is becoming a problem. Don’t worry, there are several ways to help make this payment less costly for your budget.

Contact the Housing Assistance Department of the Ministry of Housing to make a request for state assistance to finance a rental guarantee. Granted under certain conditions (not being the owner or usufructuary of another dwelling, signing a lease for the use of a principal residence, concluding a deposit contract with a financial institution, having income inferior to the limit, this favour prevents you from financing the rental guarantee independently. To benefit from it, you must rent an apartment that costs less than a third of your monthly income and whose rent does not exceed €1615.

Otherwise, the use of a bank guarantee can also satisfy all parties. Instead of paying the sum the tenant asks his bank to block the amount on his account for a fixed period of time. Depending on the nature of the contract, you can even give the owner the right to obtain his or her due directly from your bank, without even asking for your consent (in the case of a “first demand” guarantee).

A new solution that has recently arrived on the Luxembourg market is the rental caution. The rental caution is granted by an insurance company or a mutual insurance company for the payment of a premium.

I am leaving my home: When do I recuperate my security deposit?

When you pay a security deposit to enter a dwelling, you theoretically recover the full amount when you return it. However, your landlord closes the accounts when you give him the keys and can deduct from the rental guarantee: regularization of charges – or compensation following certain damages observed during the exit inventory.

“Your landlord closes the accounts when you give him the keys and can make deductions from the rental guarantee.”

In case of disagreement about the sum to be returned, first try to discuss with your former landlord in view of an amicable settlement. If not, be aware that there are mediation systems in place to avoid the use of justice.

 

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