All you need to know about the security deposit for tenants

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All you need to know about the security deposit for tenants

Most landlords require a security deposit, often called a rental deposit, from a new tenant before they will even consider signing a lease with them. This initial deposit serves as a guarantee to the landlord and can be claimed in the event of late payment of rent or eviction of the tenant due to property damage. Please tell me how much this deposit is. As a tenant, what are your responsibilities and privileges? What to do in case of a dispute? Find out more here.

The maximum amount is equal to three months rent

Luxembourg law does not require landlords to demand a rental guarantee before a new tenant moves in. However, this practice is frequent, almost systemic.

However, the maximum amount of a rental guarantee must be respected in cases where such a guarantee is required. The ceiling is set at three times the amount of monthly rent that landlords can charge in the territory. For example, if your monthly rent is €500, your security deposit cannot exceed €1,500.

How do I get the money for the down payment?

Once you have moved in, there are a host of new costs that await you. Given the difficulty you have in controlling your costs, it seems logical that this rent guarantee is a bad idea. You can rest easy knowing that there are options to reduce the financial impact of this payment.

If you need help finding financing for a rent guarantee, you can contact the Department of Housing's Housing Assistance Division. If you do not qualify for this benefit (you cannot own or usurp another property, you must rent the property as your primary residence, you must have a deposit agreement with a financial institution, and your income cannot exceed the limits), you will not be able to finance the rental guarantee on your own.

Another option that may work for everyone is to use a bank guarantee. Rather than actually paying the rent, the tenant asks the bank to temporarily hold the funds. Depending on the terms of the lease (in the case of a "first demand" guarantee), landlords may sometimes have the authority to withdraw the rent from the tenant's bank account without the tenant's consent.

The rental guarantee is a new option that has recently entered the Luxembourg market. After receiving payment of a premium, an insurance company or mutual insurance company issues a rental guarantee.

When will my security deposit be returned to me after I move out?

In most cases, the full amount of the security deposit paid to move into an apartment will be returned. However, once you have returned the keys, your landlord will close the books and may deduct from the security deposit any charges such as utility adjustments or repairs discovered during an inventory of the property upon your departure.

If you and your former landlord can't agree on the security deposit, try discussing it first. However, if you want to avoid going to court, there are mediation systems available.