Our analysis of the rental lease reform

1. House-sharing

A housemate will be able to freely replace a housemate before the end of the lease with a 3-month notice and subject to finding a replacement themselves, leaving the option open for other housemates and the landlord to find a replacement as well.

INOWAI’s opinion: “House-sharing is a preferred housing solution for various profiles such as newcomers looking for a more affordable option when they arrive in Luxembourg or people whose situation is in transition. This reform will allow them greater flexibility to adapt to their often rapidly changing situation, which is difficult to anticipate. Keep in mind that current lease conditions still apply, and these impose solidarity between each tenant.”

2. Requirement for a written lease and respect for the legal rent ceiling

All residential lease agreements must be made in writing in the future and include certain mandatory clauses. The contract must state that the rent complies with the annual legal cap. The total rent amount cannot exceed 5% of the invested capital. An additional charge can be requested for furnished housing. Upon each adjustment, the rent cannot increase by more than 10% every two years.

INOWAI’s opinion: “As professionals in the field, we obviously operate with written leases.”

3. Abolition of the concept of luxury housing

The concept of “luxury housing,” which allowed avoiding the application of the rent ceiling, will be abolished. During each rent adjustment, the rent cannot be increased by more than 10% every two years.

INOWAI’s opinion: “We see this positively. The luxury housing clause raised many questions and apprehensions/misunderstandings from our potential tenants. It was, however, the only way to introduce an indexation in the residential lease. Without this clause, indexation was indeed only allowed for commercial leases. Including a specific percentage in the indexation clause allows for better transparency and understanding of the terms for tenants and simplifies the process. No more complicated calculations with Statec scales!”

4. Sharing of real estate agency fees

In the future, real estate agency commission fees will be shared equally – 50/50 – between the landlord and the tenant.

INOWAI’s opinion: “This change would be quite unprecedented for the Luxembourg market, which has so far greatly favoured the interests of the landlord. This reform would be fairer and more coherent as the service and work provided by real estate agencies are carried out for both parties. We assist both the tenant in their search and moving process and the landlord in marketing and renting out their property at large.”