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On Monday 15 April 2024, Luxembourg's Government Council (cabinet) approved the government amendments to Bill No. 7642 related to the amended law of 21 September 2006 on residential leases.
As reported by Luxembourg's Ministry of Housing and Spatial Planning, in order to finalise this bill as quickly as possible, and considering "strong opposition", the cabinet opted to scrap the provision concerning a rent cap. The other main aspects of the bill were maintained.
The government amendments have now been put into the legislative procedure, so that bill no. 7642 can be notified by the Council of State before being voted on by the Chamber of Deputies (parliament) "very soon".
The lease law reform includes: specific legal provisions for shared accommodation; the obligation of a written lease and compliance with the legal rent ceiling; clarification of certain terms relating to the rent ceiling; the abolition of the concept of "luxury housing"; sharing of real estate agency fees (split 50/50 between landlords and tenants); the framework of the rental guarantee.
1) Flat shares: A single co-tenancy contract is to be established between landlords and tenants. In addition, the roommates establish a written co-tenancy pact in order to formalise their living situation. When a co-tenant wishes to leave before the end of the lease, they have to notify the landlord and their co-tenants simultaneously with three months' notice. During this period, the departing roommate has to look for a replacement roommate; the other roommates or the landlord can also propose a replacement candidate.
Unlike shared accommodation, the rental of furnished rooms (or "cohabitation") is a rental with multiple leases established between the owner individually with each tenant. The same rules provided for any lease for residential use apply for each individual lease.
2) Written lease obligation: All future residential lease contracts must be made in writing and contain certain mandatory information. For example, any mention that the rent requested by the landlord for the rented accommodation respects the legal ceiling of the annual rent must be stipulated in future lease contracts.
3) Clarification concerning the rent ceiling: In order to find a balanced relationship between the needs of tenants and landlords, the government is "giving itself the necessary time to carry out a detailed analysis". A new proposal for reform of the rent ceiling will be reformulated.
However, the following provisions are maintained in the text of the current bill:
- the amount of the sum of rents paid by tenants within the framework of a rental, a shared rental or a rental with multiple leases cannot be greater than the limit of the maximum annual rent, defined by the rule of 5% of the capital invested in housing;
- a rent supplement for furniture may be requested by the landlord in the case of furnished accommodation;
- the rule of annual thirds is replaced by a biennial limit on rents of 10% (during each adjustment, the rent cannot be increased by more than 10% upwards).
4) Abolition of luxury housing: The notion of "luxury housing", which makes it possible to avoid the application of the rent ceiling, will be abolished.
5) Shared real estate agency fees: In the future, commission costs from real estate agencies will be shared equally between landlords and tenants.
6) Rental guarantee framework: The maximum legal amount of the rental guarantee is reduced from three to two months' rent. The bill introduces a procedure for restitution of the rental guarantee, with precise modalities, including a sanction in the event of non-compliance with the deadlines provided for by law when the tenant leaves the accommodation.
