Moving into a new apartment in Germany comes with an important financial requirement: the rental deposit, known as Mietkaution or simply Kaution. This security deposit protects the landlord against potential damages or unpaid rent, but as a tenant, you have strong legal protections under German law, specifically §551 BGB (German Civil Code).

Whether you're moving to Germany for the first time or switching apartments, understanding how the Kaution works will help you budget correctly and protect your rights.

Quick Summary: German Rental Deposit Rules (§551 BGB)

Rule	Details
Maximum amount	3 months cold rent (Kaltmiete)
Payment	Can be paid in 3 monthly installments
Storage	Must be in separate, interest-bearing account
Return	With interest, typically 3-6 months after move-out
Legal basis	§551 Bürgerliches Gesetzbuch (BGB)

What is the Mietkaution?

The Mietkaution is a security deposit that tenants pay to landlords before or when moving into a rental property. It exists to protect the landlord financially. If you leave without paying your final rent, cause damage beyond normal wear and tear, or have outstanding utility bills, the landlord can use the deposit to cover those costs.

But here's the crucial part: this is not the landlord's money to spend. By law (§551 BGB), your deposit must be held in a separate account and returned to you, with interest, when you move out, assuming there are no legitimate claims against it.

How much is the deposit? (Maximum Three Months Cold Rent)

German law under §551 BGB caps the maximum rental security deposit at three months of cold rent (Kaltmiete), the base rent before utilities and additional costs. So if your Kaltmiete is €800 per month, the maximum deposit would be €2,400. The landlord cannot legally ask for more than this, regardless of how expensive or desirable the apartment is. If your contract demands a higher deposit, that clause is void.

One common point of confusion: the deposit is calculated on the Kaltmiete, not the Warmmiete (which includes heating and utilities). Always check which figure is being used when you calculate your expected deposit.

Can you pay in installments?

Yes, and this is one of the strongest tenant protections in German rental law. Under §551 of the German Civil Code (BGB), you have the legal right to pay your deposit in three equal monthly installments. The first is due when you move in, and the remaining two are paid alongside your rent over the following two months.

This right cannot be overridden by the rental contract. Even if your landlord insists on full payment upfront, or the contract explicitly states the deposit must be paid in full upon signing, you can still choose to pay in three parts. The law is on your side.

How must the landlord store your deposit?

German law requires landlords to keep your deposit completely separate from their personal finances. They must place it in a designated savings account (Sparkonto) where it earns interest at the standard rate for savings deposits. When you move out, you're entitled to get back both your original deposit and any interest it has accumulated.

This separation isn't just administrative. It protects you if the landlord faces financial trouble or bankruptcy. Because the deposit is held separately, it remains yours and cannot be seized by the landlord's creditors.

Many landlords use a a special deposit account (Mietkautionskonto) designed specifically for rental deposits. Some may also accept alternatives like a bank guarantee (Kautionsbürgschaft), where the money stays in your account but is blocked as collateral.

Alternatives to paying cash

Saving up three months' rent on top of moving costs, first month's rent, and agency fees can stretch anyone's budget. Fortunately, there are alternatives that let you preserve your savings.

Deposit insurance (Mietkautionsversicherung) allows you to pay a small annual fee, typically 3-5% of what the deposit would be, while an insurance company provides a guarantee to the landlord. This keeps your cash free for furniture, emergencies, or simply having a financial cushion. The downside is that these fees add up over time and you never get them back, unlike a traditional deposit that returns to you.

A bank guarantee (Kautionsbürgschaft) works differently: your bank issues a letter promising to pay the landlord if needed, while your money stays in your account but remains blocked. You might earn interest on it, and it looks professional to landlords. However, banks may charge fees for this service, and the money isn't truly accessible to you during the tenancy.

Finally, a deposit savings book (Mietkautionssparbuch) is a savings account opened in your name that the landlord holds as security. When you move out, you receive the book back along with any accumulated interest.

What happens when you move out?

The move-out process has three phases. First comes the apartment handover (Wohnungsübergabe), a walkthrough where you and the landlord inspect the apartment together. You'll compare its current condition against how it was documented when you moved in, and any damage is recorded in a handover protocol (Übergabeprotokoll). This is why documenting everything with date-stamped photos at move-in is so important. It becomes your evidence if there's ever a dispute.

After the walkthrough, the landlord has the right to hold the deposit for a reasonable period, typically three to six months, to wait for the final utility bill and assess any repair needs. Courts generally accept this timeline, though for utility bills specifically, landlords can hold a portion for up to twelve months.

Finally, you should receive your deposit back, minus any justified deductions, along with the interest earned. The landlord must provide an itemized breakdown of any amounts withheld.

What can the landlord deduct?

Landlords can only make deductions for genuine costs: damage beyond normal wear and tear, unpaid rent or utilities (with documentation), cleaning if you truly left the place dirty, and unreturned items like keys or parking remotes.

The key phrase here is "beyond normal wear and tear." Faded paint from sunlight, minor scuff marks on walls, worn carpet in high-traffic areas, small nail holes from hanging pictures, and slightly discolored bathroom grout are all considered normal. You shouldn't be charged for these. However, large holes in walls, broken windows or doors, significant stains or burns, pet damage, and missing fixtures that should have stayed are all fair game for deductions.

The distinction matters because many landlords try to deduct for normal wear, counting on tenants not knowing their rights. If a deduction seems excessive, challenge it.

Your rights if there's a dispute

When a landlord makes unreasonable deductions or refuses to return your deposit, you have options. Start by requesting an itemized statement. They must explain exactly what each deduction covers. Counter with your evidence: the move-in photos, the signed protocol, any receipts for repairs you made.

If that doesn't work, send a formal written letter giving them a deadline (usually 14 days) to return the money. Many disputes resolve at this stage when landlords realize the tenant knows their rights.

For stubborn cases, the tenant association (Mieterschutzbund) offers legal advice and support. Small claims court (Amtsgericht) handles disputes up to €5,000 and is designed to be accessible without a lawyer, though having one helps.

Making the process smooth

The secret to a hassle-free deposit experience is documentation. When you move in, photograph and video everything: every scratch, every stain, every quirk of the apartment. Get the handover protocol signed by both parties. Keep receipts for your deposit payments.

During your tenancy, report problems early before they become bigger (and more expensive) issues. Keep the place well-maintained and save receipts for any repairs or improvements you make.

When moving out, clean thoroughly. Professional cleaning is worth considering if you want to avoid disputes. Fill small nail holes with filler. Never just hand over the keys; always insist on a formal walkthrough with the landlord present. And get everything in writing, including any confirmation that there are no claims against you.

Typical refund timelines

How long you'll wait depends on the situation. For straightforward cases with no claims, expect your deposit back within two to four weeks. If the landlord is waiting for the final utility bill, it can take three to six months. Minor repairs might add one to three months. Serious disputes over damages can drag on for six to twelve months and may require legal action.

If your landlord is taking too long without explanation, send a formal written request with a clear deadline. Often, that's enough to get things moving.

Common mistakes to avoid

The biggest mistake is paying more than three months' Kaltmiete. It's illegal, and any excess should be returned. Many tenants also fail to document the apartment's condition at move-in, leaving them without evidence in disputes. Others leave without doing a formal walkthrough, accept verbal promises instead of written agreements, or don't realize they have the right to pay in installments.

Know your rights before you sign, and you'll avoid most problems.

Related resources

Understanding the deposit is just one part of renting in Germany. For the complete picture, check out our guides on how to find a flat in Germany as a foreigner, what documents you need to rent, and the best websites to find apartments across Europe.

Final thoughts

The rental deposit in Germany is a significant upfront cost, but the law firmly protects tenants. You have the right to pay in installments, your money must be kept separate and earn interest, and landlords can only make legitimate deductions.

The key to a smooth experience is documentation. Photograph everything, get protocols signed, and keep all receipts. When it's time to move out, you'll be glad you did.

And if you want a renting experience that's fair and transparent from the start, join Domily. We're building a platform that puts tenants and landlords on equal footing.