New rules for real estate leasing in Luxembourg: soon to take effect?

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

These amendments are now in the legislative process, so that the bill can be reviewed 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 - that is, 50/50 - between the landlord and the tenant, assures the Ministry of Housing.

Abolition of the notion of luxury housing

The notion of "luxury housing," which allowed avoiding the application of rent caps (defined by the 5% rule of the capital invested in the housing), will be abolished, notes the government.

Reduction of the deposit from 3 to a maximum of 2 months

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

"The bill introduces a procedure for the return of the security deposit, with precise modalities, including a penalty in case of non-compliance with the deadlines provided by the law when the tenant leaves the housing," specifies the Ministry of Housing.

Limitation of rent increases to 10% every two years

The rule of annual thirds is replaced by a biennial limit on rents of 10%, notes the ministry. Therefore, during each rent adjustment, the rent cannot be increased by more than 10%.

It should be noted that a furniture surcharge may be requested by the landlord for furnished housing.

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

All residential lease contracts must be in writing in the future and contain certain mandatory mentions, explains the government.

"For example, the mention that the rent requested by the landlord for the leased housing complies with the legal annual rent cap (5% of the capital invested in the housing) must be stipulated in any future lease contract," it illustrates.

Roommate

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

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

The other roommates or the landlord "may also propose a replacement candidate." Failing to present a replacement candidate, the outgoing roommate "must be able to demonstrate having actively and sufficiently searched" for a new roommate.