Rental Lease Reform Contested

Bill no. 7642, which amends the law on tenancy agreements, has been the subject of much criticism. The Luxembourg landlords' association is not happy either.

The president of the Luxembourg Landlords' Association, Georges Krieger, believes that the bill has been poorly prepared and that landlords and property professionals have not been consulted. In particular, he is against limiting rents to 3.5% of the capital invested (instead of the current 5%), as this would discourage investors.

The reform also penalizes owners of old properties. The method of calculating the invested capital is problematic, especially for old properties, which represent more than 60% of real estate assets in Luxembourg. The reform provides for a discount of 1% per year, except for the first year, which can lead to absurd situations for very old properties.

The bill also requires more transparency from landlords, who will have to prove their investments and, if necessary, call in an expert. Krieger finds this procedure cumbersome and difficult to comply with, and fears more conflicts before the Rent Board and between tenants and landlords.

The president of the Luxembourg Landlords' Association believes that the bill should be revised.