How to Hold and Invest a Mietkaution (2026)
How to Hold and Invest a Mietkaution
Separately from your own assets, insolvency-proof and bearing interest, and the interest belongs to the tenant.
The deposit may not exceed three Nettokaltmieten (§ 551 Abs. 1 BGB) and is customarily held at the rate for savings deposits with three months' notice (§ 551 Abs. 3 BGB).
§ 551 Abs. 3 BGBIn 60 seconds
The deposit may not exceed three times the Nettokaltmiete, excluding any operating costs shown as a flat rate or advance payment. Anything agreed beyond that is void (§ 551 Abs. 1 BGB).
The tenant may pay in three equal monthly instalments, the first due at the start of the tenancy. A clause excluding this is void (§ 551 Abs. 2 BGB).
A cash deposit must be held separately from the landlord's assets, not in their private account, but recognisably as trust money.
That separation is what keeps the deposit out of creditors' reach if the landlord becomes insolvent.
It must earn at least the customary rate for savings deposits with three months' notice; the interest increases the security and belongs to the tenant (§ 551 Abs. 3 BGB). Student and youth hostels are the exception.
What the law says
The landlord must hold a sum of money given as security at a credit institution, at the customary rate for savings deposits with three months' notice. The parties may agree another form of investment. In either case the holding must be separate from the landlord's own assets, and the returns belong to the tenant.
What forms of security are there?
A deposit need not be cash in an account. Three forms are common:
| Form | How it works | Who pays / holds |
|---|---|---|
| Kautionskonto / deposit savings book | The landlord holds the cash deposit separately and at interest (§ 551 Abs. 3 BGB) | Tenant pays in; landlord holds it insolvency-proof |
| Pledged savings account | The tenant opens their own account and pledges it to the landlord | Tenant is the account holder; interest accrues to them |
| Mietkautionsbürgschaft / deposit insurance | A bank or insurer guarantees the sum | Tenant pays an annual premium; no capital tied up |
Only the cash deposit puts the full holding duty on you. With a pledged savings account the tenant is the account holder, so the interest is theirs in any case; a guarantee ties up no capital and earns no interest.
Deductions at move-out are covered in Withholding or returning the Kaution.
What it means for each side
- Ask for evidence that the deposit is held separately.
- Insist on your right to pay in three instalments.
- Check the amount against the Nettokaltmiete, not the Warmmiete.
- Count the interest in at the end. It is yours.
- Open a recognisable trust or deposit account, separate from your private assets.
- Hold it at no less than the customary savings rate.
- Do not exclude instalment payment in the contract.
- Record the amount, where it is held and the interest, so the final statement is quick.
Common mistakes
Mixing it with your own assets breaches § 551 Abs. 3 BGB. The tenant may then withhold rent up to the amount of the deposit until you evidence proper holding (BGH, VIII ZR 234/13).
The excess portion is void.
The right under § 551 Abs. 2 BGB cannot be contracted away.
The interest belongs to the tenant and accrues whether or not you held the deposit correctly.
What to do next
Check the amount: at most three Nettokaltmieten (§ 551 Abs. 1 BGB).
Agree the form: cash deposit, pledged savings account or a guarantee.
For a cash deposit, open a separate, recognisable deposit account and hold it at interest.
Allow instalments, and record the amount, the account and the interest.
Frequently asked questions
How high can the Mietkaution be?
At most three times the Nettokaltmiete (net cold rent), meaning the rent without any operating costs shown as a flat rate or prepayment (§ 551 Abs. 1 BGB). Any agreement above that is void to the excess, and the tenant can reclaim the surplus.
Where must the landlord hold the deposit?
Separately from their own assets, insolvency-proof and interest-bearing. Typically on a Mietkautionskonto (dedicated deposit account) or Kautionssparbuch (deposit passbook) at a bank, at the rate usual for savings with three months' notice (§ 551 Abs. 3 BGB). Any bank within the EU is permitted.
Who owns the interest on the Mietkaution?
The tenant. The interest increases the security and is paid out with the deposit at the end of the tenancy (§ 551 Abs. 3 Satz 3 BGB). The landlord may not keep it. Exception: student and youth hostels (§ 551 Abs. 3 Satz 5 BGB).
Can the tenant pay the deposit in instalments?
Yes. The tenant may pay a cash deposit in three equal monthly instalments (§ 551 Abs. 2 BGB). The first is due at the start of the tenancy, the others with the next two rent payments. The contract cannot remove this right.
What happens if the landlord does not hold the deposit separately?
If the landlord fails to hold the deposit separately and insolvency-proof, the tenant may withhold rent up to the amount of the deposit until correct, separate investment is proven (BGH, VIII ZR 234/13). Mixing it with personal assets also gives the tenant a claim to proper, separate investment.
This page gives general information as at the date shown. It does not replace legal advice on an individual case.