Renting an apartment or house without a deposit

Chapters of the article

• What is a rental deposit for
• How the security deposit and its amount are regulated by law
• Refunding the security deposit
• Normal wear and tear – what’s covered and what’s not
• Advantages and disadvantages of a security deposit
• Where to look to rent apartments and houses without a security deposit

What is a rental deposit for

A refundable security deposit or security deposit is a sum of money that the tenant pays to the landlord along with signing the rental agreement. Its primary purpose is to protect the landlord from financial loss if the tenant breaches the terms of the rental agreement. The security deposit can thus cover the costs in the event of:

• Damage to the property: If the tenant causes damage to the rental property beyond normal wear and tear during the lease, the landlord can use the security deposit to cover the cost of repairing or replacing the damaged equipment. This may include buying new appliances, painting dirty walls or replacing damaged flooring.
• Unpaid rent: If the tenant fails to pay the rent owed to the landlord, the security deposit can be used to cover any unpaid rent so that the landlord does not suffer a financial loss.
• Cleaning costs: if the tenant leaves the rented property excessively dirty, the landlord may use the security deposit to cover the costs of cleaning and restoring the property to its original condition.
• Breach of the terms of the lease: If the tenant violates the terms of the lease, such as subletting without permission or unauthorized boarding of pets, the security deposit may be used to compensate the landlord for any expenses or losses incurred.
• Abandonment of the property: If the tenant abandons the rental property and leaves personal belongings behind, the security deposit can be used to pay for the cost of removing and storing those belongings.

How bail and its amount are regulated by law

The payment of a refundable security deposit is not legally obligatory and it is up to the landlord whether to require a security deposit. Therefore, in order to enforce the security deposit, it must be stipulated in the lease agreement. The method of payment depends on the landlord. The security deposit can be paid in cash or on account, immediately or in several instalments.

On the other hand, what the law regulates is the amount of the refundable security deposit. The Civil Code stipulates that the maximum possible amount of the security deposit is three times the monthly rent. This means that if you pay a monthly rent of CZK 15,000, the security deposit cannot exceed CZK 45,000. In addition, the amount of the security deposit must not include the amount that the tenant (or landlord) pays for utilities, so the security deposit is calculated purely on the rent.

Return of the deposit

The refundable security deposit must be returned to the tenant as soon as possible after the end of the rental agreement, without undue delay. If the rental property is returned in its original condition with only signs of normal wear and tear, the deposit will be returned to you in full. However, if something needs to be repaired or replaced in the property, or if you have not paid something you should have paid (e.g. outstanding utility bills), you will not get part or all of the deposit back.

The tenant also has to pay interest for the time the landlord held the deposit. If interest on the deposit is not agreed in the tenancy agreement, then the normal interest rates (e.g. those provided by banks in the place where you live) will apply.

Normal wear and tear – what’s covered and what’s not

As mentioned above, the refundable deposit cannot be deducted in the case of normal wear and tear. Ordinary wear and tear is not defined by law, but we can think of it as wear and tear that arises from the normal use of the home. This includes, for example, trampled carpets, lightly scratched or stained walls or, for example, blocked drains. The tenant should pay the cost of these, unless otherwise agreed in advance in the tenancy agreement.

Advantages and disadvantages of bail

Although it may not seem so at first glance, a security deposit has advantages not only for the landlord but also for the tenant. And it has disadvantages for both parties as well.

For the landlord

Advantages:

• Financial protection: the primary advantage of security deposits is that they provide financial protection for landlords. If the tenant damages the property, fails to pay rent, or violates the lease in any way, the landlord can use the security deposit to pay for the costs associated with the damage.
• Tenant Responsibility: The security deposit encourages tenants to take good care of the rental property and to abide by the terms of the rental agreement. Knowing that their refundable security deposit is at risk makes it more likely that they will behave responsibly.
• Covering rent arrears: Landlords can use security deposits to cover unpaid rent, reducing the financial impact of rent arrears.

Disadvantages:

• Obligation to return: landlords are legally obliged to return the unused portion of the security deposit to the tenant, including interest. Failure to do so can have legal consequences.
• Administration and Compliance with Laws: Proper administration of refundable security deposits from one or more tenants requires careful record keeping and compliance with local laws. Failure to follow proper procedures can lead to lawsuits and fines.
• Tenant Disputes: Tenants may dispute deductions made from security deposits, leading to conflicts and potentially court action. This can be time consuming and costly for landlords.
• Limited use: In some cases, landlords may find that the security deposit is insufficient to cover extensive damage or unpaid rent, causing them further financial loss.
• Tenant turnover: Frequent tenant turnover can result in a continuous cycle of dealing with security deposits, which can be administratively challenging.

For tenants

Benefits:

• Financial security: when tenants pay a security deposit, it also acts as a form of financial security for them. It ensures that if they meet the terms of the lease, maintain the property well and pay the rent on time, they are entitled to a refund of the security deposit when they move out.
• Maintenance of the property: the refundable security deposit encourages tenants to take good care of the rental property because they have a vested interest in getting the full deposit back.
• Recovering the deposit: In most cases, tenants are entitled to the return of their deposit plus interest. This money can be a useful source of funds to move to a new place or to cover other expenses.

Disadvantages:

• Initial financial burden: paying the security deposit can be a significant financial burden for tenants. In addition, it also means a large sum of money that they cannot draw on for the duration of the tenancy.
• Deductions and disputes: there is always a risk that the landlord may make unauthorised deductions from the damage deposit. Disputing these deductions can then be time consuming and stressful.
• Delayed return: Some landlords may take time to return the security deposit after the tenant moves out. This delay can be frustrating for tenants, especially if they need funds for their new lease or other expenses.
• Interest rates: landlords are required to pay interest on security deposits. However, the interest rates offered are minimal and tenants may feel they could earn more elsewhere.
• Limited use: Although the security deposit is intended to cover damages and unpaid rent, it cannot be used to cover normal wear and tear or to pay last month’s rent (unless specified in the lease).

Where to look for apartments and houses for rent without a deposit

Nowadays, you can get an apartment or house rental without a security deposit. This is most often possible if you rent directly from the owner, with whom you can negotiate the existence of a refundable deposit or the amount of the deposit. It is more difficult to rent through real estate agencies (where you will pay a commission to the real estate agency in addition to the deposit) or with people who rent apartments in bulk.

You can find properties for rent that are not rented by real estate agencies but directly by the owners, for example, on bezrealitky.cz. However, you can also search for apartments and houses without a deposit on classic portals such as Bazoš.cz or Marketplace on Facebook or various Facebook pages focused on renting apartments without a deposit in different locations.

In summary, every rental is unique and whether or not the landlord requires a security deposit depends on the landlord and the specific circumstances. However, a tenant can avoid a security deposit these days by finding a rental where one is not required. Ultimately, however, security deposits play an important role in the rental process – they provide both parties with a degree of financial security while requiring careful consideration and legal compliance.