Security deposit in rental properties: What you need to know as an owner

The Good Landlord Act sets clear requirements for the security deposit, with potentially big consequences for you as a landlord if you don't know these rules. In this article, you will find everything you need to know to comply with the law and avoid problems.
 

Maximum amount of security deposit

1. The deposit cannot be more than twice the bare rent. Note that this is the rent without service charges.

 

What can the deposit be used for?

1. Repairing damage: The deposit may be used to cover the costs of repairing damage for which the tenant is liable. It is important that these costs were actually incurred and directly related to the repairs.
2. Overdue payments: The security deposit may also be used to settle some arrears, such as rent, service charges or the energy performance fee.
3. Restrictions: The deposit may not be used to cover other types of arrears, such as contractual penalties or other costs.

 

Maximum time limit for refunding the deposit

1. Is there no damage and no overdue (rent) payments? Then the security deposit must be repaid within 14 days.
2. Are there damages or overdue payments? Then the deposit, after deducting costs, must be repaid within 30 days. The tenant should receive a clear breakdown of the costs.

 

Late repayment or too high a deposit? Serious consequences lurk.

1. If the deposit is not settled and paid on time, the tenant can object to any deduction. By law, you must then pay out the full deposit and you can try to collect the relevant charges or arrears from the tenant afterwards. To what extent a landlord can reasonably and equitably invoke a longer period, for example because damage bills have not been received within 30 days, is yet to be determined by case law.
2. If you fail to comply with the rules for the security deposit from the Good Landlord Act, you risk a municipal fine that could exceed €10,000. Tenants who are not satisfied with the handling of the security deposit can easily report this to the municipal hotline. They will then check whether any rules have been broken and can impose fines.

 

What about existing leases?

1. The maximum amount of the deposit only applies to leases concluded after 1 July 2023. So, for existing leases, the agreements on the deposit do not need to be adjusted. However, the rules on refunding the deposit apply to all leases.

 

Legal basis

1. You can find the legal rules for the deposit in Article 261b of Book 7 of the Civil Code and in Article 2 of the Good Landlord Act.

 

Need advice or help?

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