What is deposit and prepaid rent?

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Deposit and prepaid rent are both aspects that you, as a property seeker and tenant, will encounter and need to pay. They are in place to protect the interests of both you and your landlord during the rental period.

In this article, you will find explanations about what deposit and prepaid rent are, and why they contribute to providing security while you live in your rental property.

You can always find the specific agreements, conditions, and amounts related to your deposit and prepaid rent payment in your rental contract.

What is a deposit?

A deposit is an amount that you, as a tenant, pay to your landlord as security for any potential damages or deficiencies in the property when the lease agreement concludes. The deposit can be used to cover the costs of repairing damages beyond normal wear and tear.

Some landlords also use a portion of the deposit for tasks such as painting, floor sanding, and similar maintenance. This will always be outlined in your lease contract.

According to the Tenancy Act (Lejeloven), your deposit must not exceed 3 times the rent excluding utilities.

Remember to document faults and defects:
To differentiate between pre-existing damages present at move-in and damages you might have caused during your tenancy, which would consequently be deducted from your deposit, it's crucial to report faults and defects to your landlord upon moving in.

Upon moving out:
When the tenancy concludes – that is when you move out of your rental - the landlord assesses the property's condition and any damages during a move-out inspection.

If there are no damages requiring repairs, the deposit is usually returned to you, minus any expenses – for example, if there is an agreed-upon refurbishment in your lease contract.

Therefore, you can't be certain whether you will receive your entire deposit back or part of it. This depends on what is stipulated in the lease contract regarding maintenance and refurbishment upon move-out, and whether you have caused any damages during the rental period.

What is prepaid rent?

Prepaid rent refers to an amount that you, as a tenant, typically pay to the landlord as part of the overall move-in cost. This amount constitutes a portion of the total rent and generally covers the last 3 months of rent.

Prepaid rent provides your landlord with security that they will receive payment, even if you fail to pay rent during the lease period, or if you suddenly vacate the property without giving the landlord time to find a new tenant.

Upon moving out:
For instance, if you have prepaid 3 months' rent, you don't need to pay rent for the last 3 months you stay in the property.

If you're not required to pay prepaid rent, it means you need to pay rent as usual until the day you move out.


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