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Mietkaution interest is back in 2026: §551 BGB, ~0.7% p.a. in July 2026, and how landlords must hold deposits
German law again yields measurable interest on rental deposits. What §551 BGB requires, why July 2026 benchmarks are ~0.7% p.a., and the exact steps landlords must take to hold and account for Mietkaution safely.
The statute: what §551 BGB fixes in black and white
§551 of the German Civil Code (BGB) sets both the amount and the handling rules for residential rental deposits (Mietkaution). The cap is three months’ net cold rent (excluding operating-cost advances). If the security is cash, the tenant may pay in three equal monthly instalments; the first is due when the tenancy begins, the next two with the following rent payments. The money must be placed with a credit institution at the interest rate usually paid on savings deposits with three‑month notice, and it must always be held separately from the landlord’s assets. Interest belongs to the tenant and increases the security. Student and youth dormitories are exempt from the interest requirement. Any agreement disadvantaging the tenant is void. These points are all in §551(1)–(4) BGB and apply nationwide.
What counts as the “usual” savings rate in 2026?
There is no fixed government‑set “Spareckzins.” The Bundesbank discontinued its legacy savings‑rate series in 2003. In practice, courts and commentators look to the Bundesbank’s MFI interest‑rate statistics for “household deposits redeemable at notice up to three months” as the best proxy for the §551 benchmark. The Bundesbank itself maps the old savings categories to this MFI series (SUD105). In 2026, the stock rates for this category in Germany moved around two‑thirds of a percent: the Bundesbank’s statistical annex shows roughly 0.66–0.69% p.a. through the first half of 2026, and industry calculators that mirror the Bundesbank series report about 0.72% p.a. for July 2026. Note that euro‑area press releases often cite higher new‑business rates (around 1.17% for March 2026 across the euro area), which are not the Germany‑only stock rates typically used for Mietkaution. When documenting your deposit, state the exact Bundesbank series used and the month (for example: “MFI interest rate, households, notice up to 3 months, Germany, July 2026 ≈0.72% p.a.”).
How the money must be held: segregation, labelling and account forms
German case law is strict: the deposit must be segregated from the landlord’s own funds and externally recognisable as trust property, typically via a dedicated, properly labelled escrow/savings account. If several deposits are pooled on a single account, most practitioners accept a collective trust account provided each tenant’s balance and interest are tracked precisely. Using the landlord’s operating account is risky: if the landlord becomes insolvent, the tenant can only recover as an unsecured creditor unless the money was held on a properly designated trust account. Courts also allow the tenant to insist on paying into an insolvency‑proof account from the start, or to provide a pledged savings book in the tenant’s own name instead of handing over cash. If the landlord fails to open a compliant account, tenants may withhold rent up to the deposit amount until proper segregation is proven.
Paying interest and accounting to the tenant
Interest accrues to the tenant and increases the security. Banks usually withhold flat capital‑gains tax and solidarity surcharge at source on interest; landlords should pass on net interest and provide statements. At the end of the tenancy, the landlord must render an account and repay the deposit plus accrued interest, less any substantiated claims (repairs, unpaid rent, service‑charge arrears). There is no fixed statutory payout deadline. The Federal Court of Justice gives the landlord a “reasonable consideration and accounting period” after handover; three to six months is typical in straightforward cases, but longer can be justified if, for example, an annual service‑charge statement is pending and a top‑up is likely. Landlords should document any retention and settle the remainder promptly once figures are available.
What if the bank pays 0% or the landlord chose the wrong product?
§551 BGB does not guarantee a minimum yield; it requires the “usual” rate for savings deposits with three‑month notice. If the landlord fails to invest at the usual rate or mixes funds, courts recognise a damages claim for foregone interest: the tenant should be put in the position as if the deposit had been held correctly. In periods of negative rates, selecting a negative‑yield product for a cash deposit can also trigger liability. In practice, avoid current accounts and products that do not match the §551 yardstick. If parties agree another investment form (permitted by §551(3) sentence 2), document it clearly; if a bank guarantee replaces cash, there is no cash to earn interest, but the guarantee costs are typically not chargeable to the tenant unless agreed.
Action list for 2026 lettings
- Open a dedicated, labelled trust savings account (savings with three‑month notice) for each tenant or a properly managed collective trust account with precise sub‑ledgers. - Cite the Bundesbank MFI series (households, notice ≤3 months, Germany) as your benchmark. For illustration, Germany’s stock rates were roughly 0.66–0.69% p.a. in January–June 2026; many practitioners use ≈0.72% p.a. for July 2026. Keep a printout or PDF of the specific month’s table. - Credit interest annually (or at least upon move‑out) and retain bank statements. Make clear that interest belongs to the tenant and increases the security. - At move‑out, issue a written account within a reasonable period, itemising principal, interest credited (net of withholding tax), and any deductions (with invoices). If you retain funds pending the annual service‑charge statement, state the amount and the basis, and settle the balance promptly once the figures are available. - If you cannot ring‑fence funds promptly, expect the tenant to withhold rent up to the deposit amount until you prove compliant segregation. This is high‑risk for landlords.
Nothing on this page is investment, tax or legal advice. Price bands are indicative asking prices and disagree between sources by design. Verify every figure with a qualified German notary, tax adviser (Steuerberater) or lawyer before committing capital.
