Moving into a flat involves costs. If you rent, you have to pay a rental guarantee or deposit. What exactly is this?

A non-compulsory but frequent deposit

Have you found accommodation to rent that meets your expectations? If the rental guarantee is not legally required, there is a very good chance that the landlord will ask you to pay a deposit. For him, it is an insurance policy that can cover both a default in the payment of rent and damage to the property.

Luxembourg law imposes a limit in this respect: the landlord cannot ask you for a deposit equivalent to more than three months' rent. Nevertheless, this is a large sum to pay, in addition to the first month's rent and any agency fees.

Aid to pay for a rental guarantee

Especially if you are at the beginning of your professional life and are about to rent your first home, paying a deposit is often a headache. Fortunately, there are various forms of assistance available to help you with this expense.

Thus, if the flat is not conventionalised, you can claim state aid for financing a rental guarantee. The maximum amount is €573, but it only applies to accommodation where the rent does not exceed €1,368 (approximately) and one third of the tenant's income. It is subject to other conditions, such as the signing of a deposit agreement with a bank.

In Luxembourg, the bank itself can help you, either by blocking the sum corresponding to the guarantee on an account (this is known as a first demand bank guarantee), or by offering a simple bank guarantee: the institution undertakes to pay the lessor the sum due by a defaulting tenant on presentation of the claim. 

Rental guarantee insurance

Another option for tenants is to take out rental guarantee insurance with a specialist company. Instead of paying several months' rent in advance, the tenant pays an annual premium. In the event of a default specified in the contract, the insurer will pay compensation to the landlord. Please note that this option is subject to the agreement of the landlord.