Rental Deposit
Let's get straight to the point: We recommend a rental deposit guarantee ONLY if you have NO other option to deposit the security deposit!
Okay, now that's out of the way. But what is this rental deposit all about? And what is a rental deposit guarantee service?
What is a Rental Deposit?
In Switzerland, it is common for landlords to require a deposit (rental deposit or rental security deposit) of 1-3 months' rent. This deposit is held by a bank in a special account that neither party has access to. The purpose of the rental deposit is to provide the landlord with a guarantee for any potential damages to the property. When you move out of the rental property, the landlord deducts the necessary repairs from this deposit, and you receive the remaining amount back.
Rental Deposit Guarantees / Rental Security Insurance
Rental security insurance offers the service of replacing a cash deposit with an insurance policy. The advantage of this service is clear: you don't have to deposit any money with the bank. However, you should be aware of the disadvantages: you pay an annual premium for this service, usually ranging from 100 to 300 Swiss francs. You do not get this premium back, whereas you do receive the rental deposit back after the end of the tenancy. For this reason, we recommend opting for a rental deposit guarantee ONLY if you have no other means of raising the money for the deposit. If you have any possibility to borrow the money for the rental deposit from a family member or friend as a private loan, it will be much cheaper for you.
It is important to be aware that rental deposit guarantees do not cover damages to the property, and all costs must be paid by the tenant! In addition to the damages, the tenant also has to pay the processing fee charged by the rental deposit guarantee, which can be up to 500 Swiss francs!
All in all, rental deposit guarantees resemble more of a poor small loan for which you pay an annual interest rate, rather than an insurance.
Rental Deposit Guarantee Providers
Overview of various rental deposit guarantee providers: www.comparis.ch
