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New property rental rules in Luxembourg soon to take effect?

New property rental rules in Luxembourg soon to take effect?

The rent cap reform will not see the light of day, but the Ministry of Housing is highlighting "the other important aspects" of the bill. The Government Council approved on Monday, April 15, 2024, the government amendments to the bill modifying the rules on residential leases.

These amendments are now in the legislative process, so that the bill can be examined by the Council of State and voted on by the Chamber of Deputies "very soon".

Sharing of real estate agency fees

In the future, real estate agency commission fees will be shared equally - thus 50/50 - between the landlord and the tenant, assures the Ministry of Housing.

Abolition of the concept of luxury housing

The concept of "luxury housing," which made it possible to avoid the application of the rent cap (defined by the rule of 5% of the capital invested in the accommodation), will be abolished, notes the government.

Reduction of the security deposit from 3 to 2 months maximum

The maximum legal amount of the rental guarantee is reduced from three to two months' rent.

"The bill introduces a procedure for the return of the rental guarantee, with specific terms, including a penalty in the event of non-compliance with the deadlines set by law when the tenant leaves the accommodation," specifies the Ministry of Housing.

Limitation of rent increases to 10% every two years

The annual thirds rule is replaced by a biennial rent limit of 10%, notes the ministry. During each rent adjustment, the rent can therefore not be increased by more than 10%.

It should be noted that a rent supplement for furniture may be requested by the landlord in the case of furnished accommodation.

Obligation of a written lease and compliance with the legal rent cap

Every residential lease agreement will obligatorily have to be drawn up in writing in the future, and contain certain mandatory clauses, explains the government.

"Thus, for example, the statement that the rent requested by the landlord for the rented accommodation respects the legal annual rent cap (5% of the capital invested in the accommodation) will have to be stipulated in every future lease agreement," it illustrates.

Shared tenancy

The bill provides specific legal provisions for shared tenancy, "which are still lacking in the current legislation," explains the government. Between the tenants and the landlord, a "single shared tenancy agreement" is established. In addition, the co-tenants "establish in writing" a co-tenancy pact, in order to formalize the aspects of communal living and the practical modalities of this form of rental.

When a co-tenant wishes to be released from their obligations before the end of the lease, "they notify the landlord and their co-tenants simultaneously with three months' notice". The notification to the landlord is made "by registered letter" with acknowledgment of receipt. This co-tenant "is required", before the expiration of their notice period, to look for a replacement co-tenant.

The other co-tenants or the landlord "can also propose a replacement candidate". Failing to have presented a replacement candidate, the outgoing co-tenant "must be able to demonstrate having conducted an active and sufficient search" in order to find a new co-tenant.