When a tenant can't provide the usual guarantees a landlord requires (stable payslip, solvent personal guarantor), a bank guarantee appears as an alternative offered by some financial institutions to make it easier to access rental housing.
What a bank guarantee is
It's a document issued by a financial institution through which it commits to answering to the landlord, up to a set amount, if the tenant fails to meet their payment obligations under the lease (unpaid rent, damage to the property within the covered limits).
Difference from a personal guarantor
- Personal guarantor (usually a family member): answers with their own assets if the tenant defaults, with no direct financial cost for the guarantee itself, though it involves a significant personal commitment for whoever guarantees it.
- Bank guarantee: the financial institution is the one guaranteeing payment, not an individual, in exchange for a financial cost (fee) borne by the tenant, and it generally requires the tenant to deposit collateral or meet certain solvency requirements for the bank to agree to issue it.
The approximate cost of a bank guarantee
The usual cost of a bank guarantee for renting includes an arrangement or processing fee, plus a periodic maintenance fee while the guarantee is in force, normally calculated as a percentage of the guaranteed amount. This cost is an additional outlay on top of the mandatory legal deposit for the lease (usually one or two months' rent, depending on the urban leases law) and any additional guarantee the parties agree on.
Why some landlords prefer this guarantee
A bank guarantee offers the landlord a payment guarantee backed by a solvent financial institution, rather than depending on the future solvency of a personal guarantor (who could also run into financial trouble), which can be especially attractive to landlords who prioritize minimizing default risk.
Alternatives to the bank guarantee
Besides the bank guarantee and the traditional personal guarantor, recent years have seen the rise of rent default insurance and deposit guarantees through specific platforms, which serve a similar function with different cost structures and requirements, and which are worth comparing before deciding which best fits your situation.
How this affects your rental budget
When budgeting the real cost of renting a home, it's worth adding, besides the monthly rent, the one-off and recurring cost of the required guarantees (deposit, bank guarantee), especially if you need to resort to a bank guarantee for lack of a suitable personal guarantor.
Compare the cost of renting against other options
Our rent vs buy calculator lets you compare the total cost of renting against buying a home over time, factoring in these kinds of additional expenses into your budget.