Rental Deposit and Rental Deposit Guarantee

Important: We recommend a rental deposit guarantee ONLY if you have NO other way to provide the deposit!

Okay, now that's out in the open. But what is this rental deposit topic all about anyway? And what kind of service is a rental deposit guarantee?

What is a Rental Deposit?

In Switzerland, it is common for the landlord to require a deposit (called a rental deposit or rental deposit account) of 1-3 months' rent. This deposit is held at a bank in a special account that neither party has access to. The purpose of the rental deposit is to give the landlord a guarantee for any potential damage to their property. When you move out of the rental property, the landlord pays for the necessary repairs from this deposit and you receive the remainder back.

Rental Deposit Guarantees / Rent Guarantee Insurance

Rent guarantee insurance offers the service of taking out an insurance policy instead of providing a deposit. The advantage of this service is obvious: you don't have to lodge a deposit with the bank.

However, you should be fully aware of the disadvantages: every year you pay a premium for this service, usually 100 to 300 francs. You do not get this premium back, whereas you do receive the rental deposit back once the tenancy ends. For this reason, we recommend taking out rent guarantee insurance ONLY if you have no other way to come up with the money for the deposit.

If you have any way at all to borrow the money for the rental deposit from a family member or a friend as a private loan, it will work out much cheaper for you.

What you absolutely need to be aware of:

Rental deposit guarantees are not liable for damage to the property
All costs must be paid by the tenant themselves
In addition to the damage, the processing fee charged by the rental deposit guarantee must also be paid, which can be up to 500 fr.

All in all, a rental deposit guarantee resembles a poor small loan, for which you pay annual interest, more than it does an insurance.