Yeah, they do that here too, especially for smaller apartments. I think my rent is still reasonable though, and I’d be willing to pay a bit more to not have to move out anyway.
You don’t get the deposit back either way, just think of it as a keeping out the poor fee rather than as a deposit you don’t earn interest on. “Oh, the floor is scratched in this corner, no deposit for you”. Just knock down walls and make the apartment your own. I raised the value of mine quite a bit, if they have a problem with that, it’s for them to stew on. Next year they’ll probably offer to renovate my kitchen, and I don’t expect any sass about the missing wall, if they even notice it. When they renovated the bathrooms they just asked that I suggest which weeks would work best for me, and then I can talk to the contractor and the building manager about what I’d prefer. When they renovated the bedrooms and hallways the contractors just set up a meeting with me so I could tell them what I wanted done, building manager didn’t even show up that time. Nobody’s complained that I’ve changed out the light fixtures or screwed a large TV and a bunch of cabinets to the walls, I expect the same for the kitchen.