Executive Summary
The Cost: Landlords require 3 months' rent as security (often CHF 6k - 12k).
The Dilemma: Lock away cash (0% cost) vs. pay an insurer (~5% annual premium).
The Strategy: Use Insurance for short stays (<2 years). Use Cash for long-term stays.
Moving to Switzerland is expensive. Between the first month's rent, furniture, and health insurance, your bank account takes a beating. Then comes the landlord, asking for another CHF 10,000 as a deposit. Do you really have to pay this in cash?
The Rules of the Game
- Legal Limit: A residential rental deposit (Mietkaution) cannot exceed 3 months' rent.
- The Account: It must be held in a special "Mietkautionskonto" in YOUR name, but blocked by the landlord.
Option A: The Blocked Bank Account
This is the traditional way. You transfer the full amount (e.g., CHF 9,000) to a blocked savings account at a Swiss bank.
Pros
Cheapest Option: One-time fee (~CHF 50).
Interest: Technically earns money.
Cons
Liquidity Drain: CHF 10,000 is "dead capital." Cannot be used for cars or emergencies.
Option B: Deposit Insurance
Services like SwissCaution or FirstCaution offer an alternative. You pay an annual premium instead of locking up cash.
Pros
Cash Flow: Keep your CHF 10,000 for furniture or investing (S&P 500).
Cons
Expensive: Pay ~5% annually. In 5 years, you lose 25% of the value.
The 5-Year Cost Analysis
Let's assume a deposit of CHF 10,000. The insurance premium is 5% (CHF 500/year).
| Timeframe | Cash Cost (Bank) | Insurance Cost | Difference |
|---|---|---|---|
| Year 1 | CHF 50 | CHF 500 | - CHF 450 |
| Year 3 | CHF 50 | CHF 1,500 | - CHF 1,450 |
| Year 5 | CHF 50 | CHF 2,500 | - CHF 2,450 |
*Note: This does not factor in potential investment returns if you invested the CHF 10,000 elsewhere (Opportunity Cost).
The Verdict
Short Stay (< 2 Years)
Cash flow is king. The ~CHF 1,000 fee is worth the liquidity for furniture.
Long Stay (> 3 Years)
Insurance is bad value long-term. Don't waste 25% of your deposit.
Pro Tip (The Hybrid Strategy): Start with insurance to move in cheaply. Once you receive your year-end bonus or save up cash, cancel the insurance and switch to a bank deposit. Most insurers allow this switch at any time.
Essential Add-On: Liability Insurance
Whether you choose cash or insurance for the deposit, your landlord will almost certainly require you to have Personal Liability Insurance (Privathaftpflicht). This covers damage to the apartment (scratching the parquet, breaking a window).
Frequently Asked Questions
Does the landlord have to accept insurance?
No. The landlord has the final say. Some institutional landlords require insurance, while private landlords often prefer cash because it is "safer" and less paperwork for them.
How do I get the money back?
The money is blocked. It can only be released if both the landlord and tenant sign the release form after the apartment handover (Abgabeprotokoll).