During the press conference on the 6th of October 2022, the Luxembourg Minister for Housing, Henri Kox, announced that he hoped to bring about a complete overhaul of contracts issued between property owners and tenants when renting accommodation.

New rules for landlords

The owners of real estate who wish to rent out a flat or a house are subject to different legal obligations to that can be found in the tenancy agreement. Henri Kox, the Luxembourg Minister for Housing has suggested that the 2006 law obliging landlords to ask for rent of no more than 5% of their capital invested is changing. Soon, landlords will have to show the amount of capital invested in the property in their rental properties’ tenancy agreements. However, the rent must be fixed at a maximum of 3.5% of capital invested (revalued and discounted) and no more than 5% for properties in energy classes A to E. For properties in energy classes F to I, which require a higher energy cost, the rent must be equal to 3% of capital invested.

This amendment also makes provision for changes in housing already rented out. In effect, rent increases will be more regulated and will determine the maximum increase the landlord can make. If the increase exceeds 10%, the landlord will be penalized with an obligation to rent the property out at eight euros per square meter.

Finally, this new reform indicates that security deposits will be reduced to two months’ rent.

Better transparency for tenants

Thanks to this new amendment on rental leases, tenants will be able to benefit from total transparency on the expenses related to their accommodation. The fact of allowing the tenant to have all the information together concerning their accommodation provides them with better protection.

If the rental increase amounts to more than 10%, the tenant will easily benefit from spread payments. More precisely, tenants will automatically benefit from the application of the “annual thirds” rule, which lets them benefit from a two year period to pay the total amount of the rent increase. Currently, the tenant must take the initiative to make the request themselves.

The Minister for Housing specifies that these new amendments are not intended to penalize landlords, but to maintain reasonable rents for previous landlords and at the same time offer current and future tenants better transparency.

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