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**Leasehold** is an interesting alternative to traditional property ownership. It is becoming increasingly popular in Luxembourg as it allows individuals to acquire long-term usage rights to a property or land without bearing the full cost of direct ownership. However, before committing to this option, it is crucial to understand its **advantages, disadvantages, and legal implications**.


## **What is Leasehold?**

A leasehold is a **long-term agreement** (typically between **27 and 99 years**) that allows a leaseholder (**the emphyteutic lessee**) to use a property or land owned by a freeholder (**the landlord**). Unlike a traditional rental agreement, this lease grants the tenant **extensive rights**, including the ability to modify, rent out, or even sell the property under certain conditions.


## **Advantages of Leasehold**

✅ **Lower acquisition costs**: The leaseholder does not pay the full purchase price of the land but instead pays an annual fee, significantly reducing the initial investment.

✅ **Freedom to modify**: The leaseholder can renovate, build, or use the property as they wish.

✅ **Easier access to real estate**: This solution is particularly attractive in high-cost areas such as Luxembourg.

✅ **Ability to sell the leasehold right**: The leaseholder can sell their usage rights, providing liquidity.


## **Disadvantages and Risks to Consider**

❌ **Not full ownership**: At the end of the lease, the land and any buildings on it revert to the original owner unless otherwise specified in the contract.

❌ **Potentially increasing fees and costs**: Depending on the terms, annual fees may be indexed or adjusted.

❌ **Difficulties in obtaining financing**: Some banks are reluctant to offer mortgages for leasehold properties, although financing is possible under certain conditions.

❌ **Loss of usage rights**: If contractual obligations are not met, the lease may be terminated early.


## **How to Successfully Invest in a Leasehold Property**

Before purchasing a leasehold property, consider these **important precautions**:

🔹 **Review the contract carefully**: Check for annual fees, maintenance obligations, and transfer rights.

🔹 **Check the remaining lease term**: The longer the remaining lease period, the more stable the property value.

🔹 **Investigate options for renewal or purchase**: Some agreements include an option to buy at the end of the lease.

🔹 **Consult a notary or real estate expert**: Legal advice is essential to minimize risks.

**Leasehold** is an attractive solution for those looking to enter the real estate market at a lower cost while enjoying extensive usage rights. However, it is essential to understand its obligations and risks before committing. With proper research and necessary precautions, it can be a **cost-effective alternative** to traditional property ownership—especially in Luxembourg, where land prices continue to rise.



Leasehold: What You Need to Know Before Buying

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# Buying a Property with a Low Energy Rating: An Opportunity or a Risk?

For several years, the European Union’s energy policy has encouraged the improvement of existing buildings' energy performance while imposing strict standards on new constructions. However, a crucial question remains: what should be done with older buildings that have a low energy rating, such as properties classified as H or I in Luxembourg? Buying such a property with a renovation plan in mind can be a great opportunity but also a significant challenge.

## A More Attractive Purchase Price

Properties classified as H or I are generally cheaper to buy than newer or already renovated ones. This can be an excellent opportunity for buyers with a limited budget or those looking to invest in a renovation project.

## 🔨 High Potential for Value Appreciation
A well-executed renovation can significantly increase the value of a property. By improving insulation, replacing heating systems, and optimizing energy consumption, it is possible to reach a higher energy class, making the property more attractive for resale.

## 🏡 A Home Tailored to Your Needs
Renovating an older property allows you to customize every space according to your tastes and needs. Unlike newly built homes, which are often standardized, older houses offer a unique architecture and distinctive charm.

## 💰 Financial Aids and Subsidies

In Luxembourg, several public aids support energy renovation work:

- Grants and subsidies for insulation, window replacement, and installation of more efficient heating systems.
- Reduced VAT (3%) on certain energy renovation works.
- Tax credits for specific ecological improvements.

# Risks and Challenges of Energy Renovation

## 💸 Potentially High Renovation Costs

While the purchase price is more attractive, renovation costs can quickly add up. Replacing windows, insulating walls and roofs, and installing a new heating system can cost tens of thousands of euros.

## 📜 Legal Requirements to Consider

With new European energy regulations, homeowners may be required to carry out mandatory renovations in the future. Starting in 2030, some EU rules may restrict the use of low-efficiency buildings.

## 🛠️ Long and Complex Renovation Work

Renovating an old house requires time and good planning. You need to coordinate multiple contractors, obtain necessary permits, and handle unexpected structural issues (poor insulation, asbestos, etc.).

## 🏦 Difficulty in Obtaining Financing

Some banks are becoming more demanding when granting loans for properties with a very low energy rating. They may require a detailed renovation plan before approving financing.

## 🔎 Buying an Old Property: A Decision That Requires Preparation

To avoid unpleasant surprises, it is essential to:

✔ Conduct an energy audit to estimate the renovation costs accurately.
✔ Research available grants and subsidies to reduce the investment.
✔ Compare multiple quotes before hiring contractors.
✔ Plan ahead: some renovations can take several months to complete.

## 💡 Conclusion: An Opportunity If Well Prepared

Buying a property with a low energy rating can be an excellent investment, but it’s important to be aware of the challenges involved. A well-planned renovation, a thorough cost assessment, and professional guidance can turn an energy-consuming property into a comfortable, eco-friendly, and highly valued home.

👉 Thinking about buying an old property in Luxembourg? Contact us for personalized support and expert advice on energy renovation!



Advantages of Buying an Older Property with Low Energy Performance

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The European Central Bank (ECB) announced on Thursday, January 30, a new interest rate cut. The deposit rate, the main reference indicator, has been lowered by 0.25 percentage points, now standing at 2.75%. This decision marks the fifth cut since June 2024 and the fourth consecutive one, confirming the institution's intention to stimulate the eurozone economy in an uncertain context.

## Necessary Support for a Fragile Growth

Faced with a persistent economic slowdown, the ECB continues its accommodative policy to reduce credit costs and encourage investment and consumption. By easing monetary conditions, it aims to revive sluggish growth in the eurozone, weakened by international tensions and a gloomy economic climate.

However, the ECB must navigate a complex environment. Uncertainty regarding Donald Trump’s economic policies, particularly in international trade and financial regulation, weighs on growth prospects and complicates the anticipation of the effects of monetary measures taken by Frankfurt.

## Inflation on the Path to Stabilization

Despite a rise in prices to 2.4% in December 2024, ECB officials remain confident about inflation trends. According to their statement, "the disinflation process is well underway", and the objective of bringing inflation back to 2% by the end of the year remains unchanged.

This declaration aims to reassure markets and investors regarding price stability. However, some analysts believe that the price increase observed at the end of 2024 could limit the ECB’s room for maneuver in the coming months.

## A Divergence with Fed Policy

While the ECB lowers its rates, the U.S. Federal Reserve (Fed) has chosen to keep its rates unchanged, within a range of 4.25% to 4.50%.

This divergence between the two major central banks is mainly due to differences in economic dynamics between the two regions. In the United States, inflation remains higher, and the labor market remains strong, prompting the Fed to be cautious before considering monetary easing.

In contrast, in the eurozone, weaker growth justifies a more accommodative monetary policy, despite the uncertainties.

## What Are the Impacts on the European Economy?

The ECB’s interest rate cut could have several effects:

- Encouraging business investment by reducing financing costs.

- Supporting household consumption through more accessible credit.

- Easing the debt burden for eurozone states, particularly the most indebted ones.

However, this strategy is not without risks. A monetary policy that is too lax could fuel speculative bubbles or limit the ECB’s future room for action in the event of a major economic shock.

## A Strategy Under Scrutiny

By implementing this new rate cut, the ECB confirms its commitment to supporting the European economy in the face of fragile growth. However, it will need to remain vigilant regarding inflationary pressures and geopolitical uncertainties that could complicate its mission.

The evolution of markets and the reaction of businesses and households to these monetary easing measures will be crucial in assessing the effectiveness of this policy in the coming months.



New ECB rate cut: support for growth under pressure

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With the energy transition and new environmental regulations, the **energy efficiency rating** of real estate in Luxembourg plays an increasingly significant role in property transactions. Buyers, sellers, and investors are now highly aware of energy performance, not only for ecological reasons but also for long-term financial considerations. This article explores the impact of energy efficiency ratings on Luxembourg's real estate market and its implications for stakeholders.

## **🔧 What is an Energy Efficiency Rating?**

An energy efficiency rating indicates a building's energy performance. It is determined by an **Energy Performance Certificate (EPC)**, which classifies properties on a scale from A (very efficient) to I (very inefficient). This classification considers several factors, including:

- Thermal insulation.
- Heating and hot water systems.
- Primary energy consumption.
- Greenhouse gas emissions.

A property rated A or B is considered energy-efficient, while a property rated F or G is deemed energy-intensive and may require renovation.


## **📊 Impact on Property Value**

1. **High-Efficiency Properties (Class A or B):**
   - These properties are highly sought after as they guarantee **lower energy bills**.
   - Buyers are willing to pay a premium for such properties due to their compliance with modern standards.
   - Investors see these properties as sustainable and eco-friendly investments.

2. **Low-Efficiency Properties (Class E to I):**
   - These properties often suffer from a **significant devaluation**, as they involve higher energy costs and renovation needs to meet current standards.
   - Potential buyers are cautious or even reluctant, as these properties may become **less attractive in the long term**.


## **🛠️ Impact of New Regulations**

1. **Carbon Neutrality Goals:**
   - Luxembourg aims to significantly reduce CO2 emissions by 2050, which translates into stricter energy standards.
   - Properties failing to meet these standards may become unsellable in the future without upgrades.

2. **Obligations for Sellers:**
   - Since 2021, any property for sale or rent must be accompanied by a valid Energy Performance Certificate (EPC).
   - This certificate is a **key selling point**, especially for buyers concerned about energy efficiency.

---

## **🔹 Tips for Buyers and Sellers**

### **For Buyers:**

- **Always check the energy performance certificate** before purchasing a property.
- Prioritize properties rated A to C to reduce energy expenses.
- If buying a low-efficiency property, budget for energy renovations.

### **For Sellers:**

- **Improve the energy rating** of your property before putting it on the market. Investments in insulation, heating systems, or windows can significantly increase your property’s value.
- Highlight the energy-efficient features in your listing to attract buyers.


## **🎡 Conclusion**

Energy efficiency ratings have become a critical factor in Luxembourg’s real estate market. They directly influence property value, market attractiveness, and compliance with current and future regulations. Whether you are a buyer, seller, or investor, understanding and optimizing this aspect is essential for successful real estate transactions in a context where ecology and energy efficiency are becoming central.



🌍 The Impact of Energy Efficiency Ratings on Properties for Sale

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**Purchasing a property under buying off-plan, is an excellent solution to own a modern home tailored to your needs. This process, well-regulated under Luxembourg law, offers many advantages but also requires careful attention. Here’s a complete guide to assist you in this journey.**

## 1. Understanding the VEFA Concept

In a VEFA transaction, you purchase a property that is not yet built or is still under construction. You sign a contract with a real estate developer, who commits to completing the project according to detailed plans and within a specified timeframe. Payments are made in installments as the construction progresses.

## 2. Steps to Buy a Property Off-Plan

📅 **Define Your Needs and Budget**

Identify the type of property you want: apartment, house, size, location, etc.

Calculate your budget, factoring in the purchase price, additional costs (notary, loan), and potential fiscal benefits available in Luxembourg (such as the reduced VAT rate of 3%).

🏢 **Find the Right Project**

Browse listings and new projects offered by reputable developers.

Research the developer’s track record: adherence to deadlines, quality of completed projects, and customer reviews.

🔒 **Sign a Reservation Agreement**

This document formalizes your interest in the property. It includes:

- A detailed description of the property (plans, materials, finishes).

- The price and payment schedule.

- The expected delivery date.

A deposit (usually 5%) is paid into a secure notary account.

🌎 **Secure Financing**

Contact your bank to arrange a mortgage. Provide the reservation agreement to finalize the loan application.

Consider taking out borrower’s insurance.

📝 **Sign the Sales Contract with a Notary**

Once financing is approved, the authentic deed is signed before a notary. This document transfers ownership to the buyer upon completion of construction.

🔧 **Monitor Construction Progress and Make Payments**

Payments are made in stages according to the construction milestones (foundations, structural work, finishing, etc.). Each stage must be validated before making the payment.

🏠 **Inspect and Receive the Property**

A handover inspection is organized with the developer to check the property’s compliance with the contract.

Any defects or issues must be documented in a handover report.

## 3. Key Points to Watch For

⚠️ **Choose a Reliable Developer**

Prioritize developers with a solid reputation and proven track record.

Ask for references or visit their completed projects.

⚠️ **Review the Provided Guarantees**

Completion Guarantee: Ensures that the property will be delivered even in case of the developer’s bankruptcy.

Perfect Completion Guarantee: Covers defects noted within one year of delivery.

Decennial Warranty: Covers major structural defects for 10 years.

⚠️ **Scrutinize Contract Clauses**

Read the reservation agreement and sales contract carefully. Ensure that all property details and penalties for delays are clearly outlined.

⚠️ **Verify Finishes and Materials**

Check that the materials used match those specified in the contract. Request a detailed description.

⚠️ **Manage Customizations**

If you want modifications or upgrades, budget for additional costs and ensure these changes are included in the contract.

[Buying off-plan in Luxembourg is an excellent opportunity](https://nextimmo.lu/en/blog/acheter-un-bien-neuf-luxembourg-2025) to own a modern, personalized property. However, thorough preparation and attention to detail are crucial to ensure a smooth experience. By following these steps and keeping these tips in mind, you can successfully complete your real estate project with confidence.



Buying Real Estate Off-Plan (VEFA): Key Steps and Practical Advice

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## 1. 🤝 Negotiation Opportunities in a Challenging Market

The current real estate crisis opens up new negotiation opportunities with developers.

Take advantage of price reductions or secure free extras, such as:

**A fully equipped kitchen.**

**Parking spaces** or an included **garage.**

**Upgraded finishes** (e.g., premium flooring or paint).

Developers are more flexible, making it an ideal time to buy under favorable conditions.

## 2. 💰 Financial Benefits and State Housing Aids

Reduced VAT at 3% for primary residences, saving up to €50,000 on the total price.

Additional state aids:

**Acquisition grants**: Financial assistance for primary residences, subject to income conditions.

**Energy renovation grants:** Available for highly energy-efficient equipment in new buildings.

**Low-interest loans (PRIMe House):** Support for eco-friendly installations like solar panels or heat pumps.

**Grants for young households:** Additional support for young families or first-time buyers.

Staggered payments based on the progress of construction reduce the immediate need for capital.

New properties retain their value better, increasing resale potential in the future.

## 3. 🎨 Personalization of Your Property

Customize your future home to match your preferences:

Choose materials (flooring, tiling, paint).

Adapt the layout of the interior spaces to suit your needs.

Opt for eco-friendly solutions like solar panels or heat pumps.

The result: a home that perfectly fits your needs without additional renovation work after delivery.

## 4. 🌿 Compliance with Modern Standards

High energy performance (Class AA) ensures reduced energy costs.

Built with state-of-the-art materials and technology, offering comfort and durability.

Fully compliant with the latest regulations on insulation and eco-friendly building.

## 5. 🔒 Legal Protection and Guarantees

**Completion guarantee:** Your investment is protected, even if the developer encounters financial issues.

Post-delivery guarantees include:

- 1 year for finishing defects.
- 2 years for detachable equipment.
- 10 years for structural defects.

These protections ensure you can buy with total peace of mind.

## 6. 📈 Long-Term Value and Practical Benefits

New properties retain their value better on the market, making them ideal for long-term investment.

Simplified planning thanks to a clear construction timeline and scheduled delivery date.

No additional expenses for renovations or repairs, as everything is new and guaranteed.

[Buying off-plan (VEFA) in Luxembourg](https://nextimmo.lu/en/buy?type=100) is a unique opportunity to own a modern, eco-friendly, and fully customizable property. 💡 Take advantage of the current crisis to negotiate favorable terms and benefit from significant financial, legal, and state aid advantages.

🏡 Why Buying Off-Plan (VEFA) is advantageous in 2025 in Luxembourg

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_The storm that hit the Luxembourg real estate market seems to be coming to an end. Existing properties are regaining momentum, and buyers’ interest is picking up. The rebalancing phase has allowed the resale market to stabilize, leading to a resurgence in transactions. However, the new-build market is showing modest signs of recovery after more than two years of stagnation._

📉 Between 2022 and 2024, property prices followed a downward trend, decreasing by an average of 1% per month. This adjustment has created opportunities for buyers who had postponed their projects. As for new-build properties, prices will also need to adapt to current market conditions, especially since interest rates are unlikely to drop below 2.5% this year.

In this shifting context, evaluating a property’s price has become a significant challenge. In the past, experienced real estate agents could estimate a property’s value in their neighborhood almost instinctively. Today, this task requires advanced expertise and the use of tailored methods.

📊 **The importance of advanced expertise for reliable valuation**

Estimating a property’s value now requires a combination of skills and precise data. Whether it's choosing the right methods or applying specific coefficients, the process must be based on rigorous analysis. Combining various approaches provides a global and realistic view of a property’s value, close to its market value.

In Luxembourg, the lack of comprehensive data is often a challenge, particularly in municipalities with limited recent sales. To address this, Nextimmo has developed a moderation method that supplements missing data and ensures reliable valuations, even in areas with fewer transactions.

💡 With 20 years of experience in real estate, technology, and marketing, we are equipped to deliver precise valuations, even in a constantly evolving market.

✅ **Why choose a professional valuation with Nextimmo?**

Relying on Nextimmo for your property valuation ensures a reliable and market-aligned evaluation. 

**Our valuations are:**

📍 Accurate: Based on thorough analysis and reliable data.

📝 Commitment-free: You receive a clear valuation with no obligations.

👉 Request a professional valuation now by clicking [this link.](https://nextimmo.lu/en/contact)

👉 Pre-assess your property online using our tool [available here.](https://nextimmo.lu/en/estimation)



🏡 Conduct a coherent evaluation in a rebalancing real estate market

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_Luxembourg, although small, has a real estate market that, while more modest in size than those of its neighboring countries, has always generated significant interest. A few years ago, the supply of properties for sale was extremely limited, and properties sold quickly, despite often overestimated prices. This phenomenon is typical of seller's markets, where demand is exceptionally high and access to credit remains relatively easy. However, in 2023, the dynamic changed. Due to the rise in interest rates, the market shifted towards a buyer's market: demand dropped dramatically, while supply, on the other hand, increased. For sale signs remained visible on facades for much longer, and transactions became rarer. So, can we expect a paradigm shift in 2025?_

Indeed, several factors seem to be aligning to allow the market to recover, provided it follows its natural development cycle. If we consider that the market experienced a phase of decline between 2023 and 2024, it should now enter its phase of rebalancing before moving into a recovery phase. Our on-the-ground experience and theoretical analysis confirm that we may be on the cusp of the last price adjustments, with the rebalancing phase already having begun in mid-2024. This phase could continue its cycle in 2025, eventually transforming into a recovery phase by the end of the year. But what drives this optimism?

First, interest rates are expected to continue decreasing throughout the year. This drop in rates could allow households to have a better purchasing power for acquiring real estate. Additionally, the prices of existing properties have fallen sufficiently, increasing the chances of finding properties at more accessible prices.

Let’s take the example of an apartment in the city, valued at 1 million euros at the peak. By borrowing 1 million euros at an interest rate of 1.2%, with no down payment, the buyer would have to repay 3,340 euros per month over 30 years. If this same property has lost 20% of its value and the buyer now needs to borrow 800,000 euros instead of 1 million, with the repayment period remaining the same at a rate of 3%, the monthly payments would now be 3,380 euros. Thus, even though the property’s value has decreased, the monthly payment remains nearly identical, meaning that the market has reached an equilibrium point. On average, the decline in real estate prices in Luxembourg is about 20%.

For this reason, we believe that 2025 will be the year when equilibrium is restored, followed by a rapid recovery. Of course, this scenario relies on one crucial condition: that interest rates continue to fall and stabilize by the end of the year around 2.5%. As for negative scenarios, two possibilities remain. The first involves a further sharp drop in rates, down to 1.5%, which would cause prices to rise quickly and prevent the market from following its normal development cycle. Conversely, if rates are increased again after a decrease, a new price drop would be needed to find a new equilibrium. This scenario could have disastrous consequences for the real estate market, potentially leading to a sharp decline in its value. Nevertheless, we remain optimistic and estimate that the market recovery will occur between 2025 and 2026. 

P.S. In this article, we focus solely on existing real estate, with the new real estate market being a topic we will address in a separate article.

Will real estate prices finally stabilise in 2025 in Luxembourg?

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_At the beginning of 2025, the variable effective interest rate in Luxembourg is averaging 4.22%, while the fixed rates are 3.29%, 3.37%, and 3.74% for durations of one to five years, five to ten years, and over ten years, respectively. The European Central Bank (ECB) plans to continue lowering its rates starting in the first quarter of 2025, with a 50 basis point reduction expected, or 0.5%. Although the ECB's main interest rate remains lower than the market rates, it is reasonable to expect a similar reduction in market rates._

If this cut materializes, it would represent a significant turning point, as rates would drop below 3% for the first time since 2023. This shift could have a major impact on the real estate market. Many potential buyers have postponed their acquisition projects due to high interest rates. If these candidates reactivate their plans, it could revive the real estate market dynamics.

**The impact of rate cuts on the real estate market**

The price correction observed in the Luxembourg real estate market over the past few months opens up new and attractive prospects for future homeowners. This period could indeed be an ideal opportunity to invest in one's dream home, especially if interest rates continue their downward trend. The stabilization of interest rates at lower levels would make homeownership more accessible to a greater number of buyers, even though inflation has already impacted purchasing power.

Although inflation has had a negative effect on residents' purchasing power, a slowdown seems to be on the horizon. This positive shift has allowed the ECB to confirm the continuation of its rate-cutting policy, which could further stimulate economic activity.

**Economic outlook for 2025**

The economic outlook for 2025 appears optimistic. The ECB is expected to continue its cycle of reducing the main interest rates. The market even anticipates that the fixed rate, currently at 3.29%, could fall to 2.29% by the end of 2025. This forecast is already factored into the projections influencing the 10-year rate at the beginning of 2025. However, for this trend to continue, negative economic factors may prompt the ECB to adopt an even more accommodative policy.

A key factor in determining the long-term rate equilibrium will be the ECB's stance on the neutral rate, an essential data point for the market. According to recent statements from the ECB, the neutral rate range could vary between 1.75% and 2.5% according to C. Lagarde, and between 2% and 3% according to I. Schnabel. In summary, it is likely that the influence of the ECB’s rates on long-term rates will be less pronounced in 2025 compared to previous years.

**Opportunities ahead in 2025**

In a context where inflation seems to be slowing down and where the ECB continues its rate-cutting cycle, 2025 could offer attractive opportunities for both investors and property buyers. If interest rates continue to fall, this could lead to a significant rebound in the real estate market. Potential buyers would then have the opportunity to pursue their real estate projects under more favorable conditions. As a result, the economic outlook for 2025 remains positive, with a return to significantly lower rates expected to stimulate both consumption and investment.



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