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If you want to rent an apartment, you often need to provide a rental deposit. Find out how to decide between a rental deposit savings account and a rental surety guarantee.
When you rent an apartment or a commercial property, landlords usually require some form of security, known as a rental deposit. This deposit provides security in case the rent and ancillary costs are not paid or any damage is caused to the rental property. In the case of apartments, landlords can ask for a maximum of three times the monthly rent (gross) as a deposit. For commercial properties, the amount is negotiable.
The deposit is due when you move in or with the first rent payment. It is refunded after you move out – if no damage has occurred – together with the final bill.
There are various ways to provide the deposit. In addition to a private guarantee, for example for parents wishing to help their children find an apartment, the common options are a rental deposit account or a rental surety guarantee held with a bank or insurance company.
The rental deposit is usually held in a special rental deposit account. This is a blocked account set up in the name of the tenant. It is known as a blocked account, because the blocked funds can only be withdrawn with the joint consent of the landlord and the tenant (excluding the interest).
Many banks offer a rental deposit account. With UBS you can open a rental deposit account quickly and easily online. A private account held by the landlord is not permitted as a rental deposit account.
Interest is usually paid on rental deposit accounts, although at a lower rate than for normal savings accounts. The interest incurred on rental deposit accounts belongs to the tenant. You will be informed about the account balance regularly, usually at the start of the year.
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The rental surety guarantee has become established as an alternative to the rental surety savings account. It is also advertised as “rental guarantee insurance” or a “rental deposit without a bank deposit”. A solution of this kind requires the landlord’s consent. With a rental surety guarantee, a provider, such as an insurance company, guarantees on your behalf that it will pay the deposit amount to the landlord if necessary. In return for this guarantee, which you can prove with a guarantee certificate, you pay the provider a monthly or annual premium. Some insurance companies also charge administrative fees.
If a payment to the landlord becomes due after the end of the tenancy, it will initially be paid by the provider. However, this is merely an advance payment. The provider will subsequently reclaim the rental deposit payment from you or your personal liability insurance provider.
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How much a rental surety guarantee costs depends on the size of the rental deposit and the terms an insurance company offers. Using a company’s premium calculator, you can easily find out online how much the flexible insurance solution would cost you.
For example, if your deposit is CHF 4,000, the insurance premium is 5% of the deposit and the administration fee is CHF 20, you pay CHF 220 each year for the guarantee. Additional costs may arise in the event of a claim or if the insurance is terminated.
Whether you need an account or a guarantee for your deposit – as a UBS client, you have both options. The UBS rental deposit account is completely free of charge, so there are no fees for opening or managing an account. Taking out a rental surety guarantee is straightforward with our partner Zurich Insurance.
Arrange an appointment for a non-binding consultation or if you have any questions, just give us a call.
Disclaimer
This publication is for personal information purposes only within Switzerland and is not to be understood as a recommendation, offer or solicitation of an offer for investment or other specific products and services. It is not intended to form investment, legal or tax advice and should not be used as the basis for financial decisions. Before making a decision, you should obtain professional advice.
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