What solutions are available to you?
Have you found an apartment to rent in Luxembourg or the European Union?
In most cases, your lease will include a provision for a rental deposit, also known as a security deposit. The main reason for this is to reassure the owner. It is intended to cover certain obligations under the lease, such as:
- rental payments
- rental expenses
- or damage to the property.
This deposit is held by the owner until the end of the lease.
It can take a range of forms:
- a rental guarantee issued by the bank
- a transfer into the owner’s bank account
- or by making a cash payment to the owner.
Good to know
In Luxembourg, the law states that this rental guarantee cannot total more than three months’ rent. However, given rental market prices, it isn’t always easy to cover this expense. Especially since you’ll also need to pay the first rental instalment and any agency fees (which generally correspond to one month’s rent).
First solution: rental guarantee
This solution is the most common and most secure for you and the landlord. It’s granted directly by the bank, meaning there’s no risk of being scammed. Specifically, you pay the rental deposit without ever being able to access it.
This rental guarantee(1) can be made:
• With a personal deposit: you deposit cash, and the bank blocks the amount in one of your bank accounts, which generates interest.
• Without a personal deposit: if you’re under 30, you might not have to deposit any money. The bank can provide a guarantee to the owner and block the requested amount in a bank account(2).
The rental guarantee is a first-demand guarantee. This means that the lessor can ask the bank to enforce the guarantee without requesting any supporting documents. More precisely, the bank can therefore return the deposit to your landlord without them having to provide any justification.
To set this up, the easiest thing to do is to contact your BGL BNP Paribas branch advisor.
Second solution: Deposit by bank transfer
You can also make a security deposit by bank transfer into the owner’s bank account.
Third solution: Cash payment
Finally, as a renter, you can also transfer the security deposit amount in cash directly to the owner. However, under no circumstances may the landlord impose this payment method. If you decide to pay in cash, consider asking for proof of payment from the owner.
Landlords appreciate this type of deposit, in cash or by transfer. This way, they have the guarantee amount from the beginning of the contractual relationship.
Government aid for financing a rental guarantee
People who are looking to rent a property but don’t have the means to finance the required security deposit can make a request for aid to finance this guarantee. To be eligible, you’ll need to meet certain criteria. All relevant information can be found on Guichet.lu.
Frequently asked questions
The rental guarantee is blocked in the renter’s account for a fixed or indefinite term. Generally, this period corresponds to the initial term of the lease agreement, plus a few months. It can also be renewed.
When the lease expires or is duly terminated, the tenant recovers the security deposit amount blocked in their bank account. To do this, the first step is to arrange a meeting with the landlord, in order to complete an end-of-lease inspection. If the property is returned in good condition, the rental guarantee must be cancelled. To do this, you must ask the landlord to send the original rental guarantee to the bank. If it has been lost, they must return a release, i.e. a signed letter stating that they waive the guarantee in question.
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