For the landlord, the deposit is security in case the tenant doesn't pay or damages the flat. For the tenant, it's their own money, which they want back at the end of the tenancy. Most move-out disputes come from this tension, yet most of them can be avoided.
How much is usual?
In Budapest, the most common amount is two to three months' rent. For furnished, freshly renovated flats the higher end is typical; for unfurnished or older flats, two months is often enough.
For private flats, the law sets no upper limit, so you're free to agree on the amount. The market does set one, though: if you ask for much more than usual, some good tenants will simply move on. Think about the total move-in cost, not just the deposit. The tenant has to pay the first month's rent, the deposit and often the move all at once.
Before you set the amount, consider:
- How much value are you leaving in the flat? A new kitchen, expensive appliances or quality furniture justify a higher deposit.
- How high are the utilities? If the meters are in your name, an unpaid utility bill may also come out of the deposit.
- How long would it take to find a new tenant? If the tenant stops paying, the deposit covers the loss until things are sorted out.
What can it be used for?
- Unpaid rent or utilities. If the debt is bigger, we've written about what to do here.
- Repairing damage caused by the tenant. Bigger damage is what insurance is for.
- Tasks the tenant agreed to in the lease but didn't do, for example if they agreed to repaint at move-out and didn't.
Normal wear and tear isn't damage. Slightly faded walls, marks where furniture stood or a worn door handle can't be deducted from the deposit. After a few years of living there, the flat won't be as good as new, and the rent has already paid for that.
The line isn't always sharp. A nail hole from a picture is wear; a burn mark on the parquet is damage. In disputed cases, it helps if you have photos of the condition at move-in and an invoice or quote behind each deduction.
When is it due back?
At the end of the tenancy, after the flat has been handed back. The law doesn't name a specific day, so it's worth setting the deadline in the lease. A common choice is 8–30 days after move-out: by then you know whether any more utility bills are coming and whether anything needs repairing.
Justify every deduction item by item, ideally with photos and invoices. Unexplained deductions almost always lead to a dispute, and if the tenant takes it to court, you'll have to prove that the damage is real and not normal wear. If you're a tenant, here's how to get your deposit back.
If the final utility settlement is still pending, you don't need to hold back the whole amount. Keep an estimated sum and return the rest on time. It's fair, and it prevents a lot of disputes.
Where should you keep the deposit?
The deposit isn't your income; it's the tenant's money that you hold as security. It's worth keeping it separate so it's definitely there at the end of the tenancy. The simplest is to receive it by bank transfer, so the amount and date are clearly provable. If it's paid in cash, always give a written receipt.
On tax: a deposit that's returned isn't income. But if you keep part of it for debt or damage, it's worth discussing the tax treatment with your accountant. We wrote more about this in our article on taxing rental income.
How to avoid disputes
- Put the amount, what it can be used for and the repayment deadline in the lease.
- Photograph the flat at move-in and move-out from the same angles. Our article on the handover report lists what's worth recording.
- Give a written receipt for the deposit.
- At move-out, walk through the flat together, and note any disputed items in the report.
- Send a written statement of deductions, item by item, with amounts.
FAQ
Can the tenant "live off" the deposit for the last month?
Only if you both agree. The deposit isn't prepaid rent. If the tenant unilaterally skips the last month's rent, the landlord is left with no cover for any damage.
Does the deposit earn interest?
For private rentals there's no such rule, unless the lease says otherwise.
What if the flat is sold during the tenancy?
The deposit belongs to the lease. When the flat is sold, it's worth settling in writing who is responsible for repaying it. As a tenant, ask for written confirmation of this.
Rentkey
Rentkey keeps track of the deposit and any deductions, and the handover report keeps the photos. So at the end of the tenancy, everything you need for the settlement is in one place.
