Question

Some landlords ask for a special deposit before renting out an apartment. Which is the most likely purpose of a special deposit?

Answer 1

To reduce financial risk for following (potential) expences:

- Damages to property, furniture or installations
- Missing payments
- Legal costs in case a dispute has to be taken to court

It is often required (by low in some countries) that the landlord returns not only deposit but also an interest to ensure that no profit is made and only risk is considered.