If you are renting an apartment in Germany, one of the first financial questions you will face is the security deposit, known in German as the Mietkaution. Both tenants and landlords often wonder: How much is legally allowed?
German tenancy law provides a clear and strict answer.
The Legal Maximum Under German Law
The rules governing residential security deposits are set out in § 551 of the German Civil Code (Bürgerliches Gesetzbuch, BGB).
The key rule:
A landlord may demand a maximum security deposit of three months’ net rent.
What does “net rent” mean?
In Germany, rent is typically divided into:
- Kaltmiete (basic rent) – rent without utilities
- Nebenkosten (operating costs) – utilities and service charges
- Warmmiete (total rent) – basic rent plus utilities
The deposit may only be calculated based on the Kaltmiete (basic rent) – not the total monthly payment including utilities.
Example
If:
- Basic rent (Kaltmiete) = €800
- Utilities (Nebenkosten) = €250
- Total rent (Warmmiete) = €1,050
The maximum deposit is:
€800 × 3 = €2,400
Even if utilities are high, they do not increase the maximum permitted deposit.
Can the Landlord Demand More Than Three Months’ Rent?
No.
Any clause in a residential rental contract requiring more than three months’ net rent is invalid under German law.
Even if a tenant signs such a contract, the landlord cannot legally enforce payment beyond the statutory limit.
Payment in Installments
German law protects tenants by allowing the deposit to be paid in three equal monthly installments.
- The first installment is due at the beginning of the tenancy.
- The remaining two installments are due with the next two monthly rent payments.
The landlord cannot insist on full payment upfront.
How Must the Deposit Be Held?
The landlord must:
- Keep the deposit separate from their own assets
- Place it in a special bank account
- Invest it at the standard interest rate for savings accounts with three months’ notice
- Credit the interest to the tenant
This protects the tenant in case the landlord becomes insolvent.
When Is the Deposit Returned?
After the tenancy ends, the landlord may retain the deposit only if there are:
- Outstanding rent payments
- Damage beyond normal wear and tear
- Unsettled operating cost statements
The landlord is entitled to a reasonable review period (commonly between 3–6 months). If there are no valid claims, the deposit must be returned, including accrued interest.
Do These Rules Apply to All Types of Rentals?
The three-month limit applies to residential leases.
For:
- Commercial property leases
- Furnished short-term rentals
- Certain special housing arrangements
Different rules may apply, as commercial tenancy law offers greater contractual freedom.
Practical Advice for Tenants
Before signing a rental agreement:
- Check that the deposit does not exceed three months’ net rent.
- Ensure the payment plan allows installments.
- Ask how the deposit will be held.
- Keep proof of all payments.
If a landlord demands more than legally permitted, you may seek advice from a tenants’ association (Mieterverein) or a lawyer specializing in German tenancy law.