Prepaid Rent vs. Deposit: What's the Difference?
Short answer: A deposit is security for your obligations at move-out, capped at 3 months' rent. Prepaid rent is rent paid in advance: at most 3 months, and never more than the rent for your notice period (section 59(3) of the Danish Rent Act). Once the tenancy is terminated, you may set it off against the last months' rent.
The two items almost always sit side by side in the lease, which is why they're so often mixed up. But each has its own purpose and its own cap – and they end up in very different places when you move out.
The Difference in One Table
| Deposit | Prepaid rent | |
|---|---|---|
| What is it? | Security for the landlord's claims at move-out | Rent paid in advance |
| Cap | 3 months' rent | 3 months' rent – and no more than the rent for your notice period |
| When you move out | Settled, with the rest paid back | Set off against the last months' rent |
Both caps are calculated on the base rent, without on-account payments for heating and water.
The Cap on Prepaid Rent
Prepaid rent may be no more than 3 months' rent – and, at the same time, no more than the rent you'd pay during your notice period. If your notice period is 1 month, for example for a room in the landlord's own home, prepaid rent can therefore be no more than 1 month's rent. Even if your notice period is longer than 3 months, 3 months is the upper limit.
How to Use the Prepaid Rent
Once the tenancy has been terminated, you have the right to set the prepaid rent off against the last months' rent – write to the landlord that you're doing so. It doesn't happen by itself. If you have 3 months' notice and have paid 3 months' prepaid rent, you can tell the landlord you're setting it off against the last 3 months' rent, and then you don't pay rent for that period. On-account payments for heating and water aren't rent and must typically still be paid.
You Can't "Live Off" the Deposit
The deposit works differently. According to the explanatory notes to the law, it can't be used as rent during the notice period. If you stop paying rent and point to the deposit, you risk the landlord sending a formal payment demand (påkrav). The deposit is only settled once you've moved out and the landlord has made any claims.
Why the Difference Matters
If a landlord demands more than the cap for either item, it isn't lawful – whatever the amount is called in the lease – and you can claim the excess back. Disputes are decided by huslejenævnet (the local rent tribunal) (section 63 of the Rent Act). On LejLet.nu, a listing can't have a deposit or prepaid rent above 3 times the monthly rent, but the system doesn't check the lower limit for shorter notice periods. That one you must watch yourself. If the rent rises, the landlord can require both amounts to be adjusted (section 60 of the Rent Act) – see how it works in Deposits Explained.