What is the maximum amount that can be charged as a rental deposit?

The legal upper limit: Analysis and facts

The 3-month rule for living spaces

For residential properties, Article 257e of the Swiss Code of Obligations clearly defines the maximum security deposit . It may not exceed three months' rent . This limit is absolute. A landlord may not demand more under any circumstances. Even if you are renting a luxury villa or your credit rating isn't perfect, the maximum security deposit remains capped at three months' rent.

The gross rent is crucial for calculating the maximum security deposit . This means the maximum security deposit is calculated as the net rent plus any contractually agreed advance payments for utilities. For example: If your net rent is CHF 2,000 and the utilities are CHF 200, the gross rent is CHF 2,200. Therefore, the maximum security deposit may not exceed CHF 6,600.

What happens if the contract demands more?

Sometimes, rental agreements stipulate a higher security deposit, such as four or six months' rent. Here, the law protects you. An agreement that exceeds the legally permissible maximum security deposit is partially invalid in this respect. This means you only have to pay the legally allowed maximum security deposit (three months' rent). You can reclaim the excess amount or simply not pay it in the first place. If you have already paid more than the maximum security deposit , you have a right to a refund from the landlord. It's worth being persistent here, because the maximum security deposit is not negotiable, but a legal limit.

Difference in business premises

Caution is advised when renting a studio, office, or shop. There is no legally mandated maximum security deposit for commercial premises ; this is a matter of contractual freedom. Since the risk for landlords is often higher with commercial properties (e.g., in the event of tenant bankruptcy), deposits of six to twelve months' rent are not uncommon. The maximum security deposit is determined purely by negotiation and market forces. As a tenant, you should still try to keep the maximum security deposit from becoming excessively high, as this can severely restrict your liquidity.

The blocked account: Your money, not his.

Another critical point besides the amount of the maximum rental deposit is the method of safekeeping. The law mandates that the maximum rental deposit must be paid into an escrow account (rental deposit account) at a bank, which must be in the tenant's name .

The landlord is never allowed to put the maximum security deposit into their private account. Doing so is illegal. The account serves as security, but the money (including interest) remains yours. If a landlord demands the maximum security deposit in cash, this should raise a red flag. Insist on having the maximum security deposit paid directly into the bank account.

Alternatives to a cash deposit: Rental deposit insurance

Not everyone has three months' rent saved up. This is where rental deposit insurance (like SwissCaution or Firstcaution) comes in. Instead of paying the maximum rental deposit in cash, you pay an annual premium. The insurance company then guarantees the landlord up to the amount of the maximum rental deposit .

Here too, the insurance coverage must not exceed the legally mandated maximum security deposit of three months' rent. However, the landlord is not obligated to accept such insurance. Many landlords prefer the traditional bank deposit option for the maximum security deposit , as access to the funds in the event of damage is often simpler. If you intend to cover the maximum security deposit with insurance, be sure to clarify this before signing the contract.

When is the maximum rental deposit due?

The landlord is entitled to demand the full security deposit before handing over the keys. The principle of "step by step" applies. If the full security deposit hasn't been received in the escrow account on the day of move-in, the landlord can refuse to hand over the keys. Therefore, allow sufficient time for opening the account and transferring the full security deposit . Nothing is more frustrating than arriving at your door only because the bank transfer of the full security deposit took a day too long.

Refund of the deposit

The issue of maximum security deposits doesn't end with move-in. After move-out, the landlord must release the money. If there is no damage and all rent has been paid, this should happen within 30 days. In case of disputes, the landlord is entitled to withhold the maximum security deposit (or a portion thereof). The absolute maximum for holding the maximum security deposit is one year. After that, the bank must release the money unless the landlord has filed a lawsuit.

Luxury apartments and inventory

A gray area regarding the maximum security deposit concerns very luxurious, furnished apartments. Landlords sometimes argue that a higher security deposit is necessary because of the valuable furnishings. However, courts have confirmed that even for luxury properties, the maximum security deposit remains three months' rent. If the landlord wants more security, they must find other ways (e.g., advance payment of rent), but the security deposit instrument is exhausted at the maximum of three months' rent .

Conclusion

The question of the amount is clearly answered: For residential properties, the maximum security deposit is three months' gross rent. This is a mandatory legal safeguard. Do not agree to demands that exceed the maximum security deposit , and insist that the money is held in an account in your name.

The maximum rental deposit is often a large sum of money. Treat it with the necessary care. Check the contract before you sign and do the math. If the landlord demands more than the legal maximum rental deposit , politely but firmly point them to Article 257e of the Swiss Code of Obligations. Knowing the maximum rental deposit is your best protection against being taken advantage of.

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Glossary

• Maximum rental deposit: The legally defined upper limit for the security deposit for residential rents, which may not exceed three months' rent.
• Gross rent: The rent including advance payments for utilities. It serves as a basis for Calculation of the maximum Rental deposit .
• Blocked account (rental deposit account): A bank account held in the tenant's name but blocked. The maximum rental deposit must be deposited here; withdrawals require the consent of both parties.
• **Swiss Code of Obligations (OR): The Swiss Code of Obligations, which sets out the rules for the maximum rental deposit** in Art. 257e .
• Rental deposit insurance: An alternative to paying the maximum rental deposit in cash , where an insurance company guarantees the deposit in exchange for an annual premium.