Credit: Chronicle.lu

On Wednesday 10 July 2024, the Chamber of Deputies (Luxembourg's parliament) voted on Bill no. 7642 amending the amended law of 21 September 2006 on residential leases and article 1714 of the Civil Code.

As reported by Luxembourg's Ministry of Housing and Spatial Planning, the law is expected to come into force on 1 August 2024. From this date, charges for tenants at the start of the lease will be reduced and real estate agency fees shared between the tenant and the owner. In addition, shared accommodation will be regulated.

The main aspects of the reform, approved by the Government Council (Luxembourg's cabinet) earlier this year, are as follows:

  • real estate agency commission fees will be shared equally (50/50) between the lessor and the tenant;
  • the maximum amount of the rental guarantee (deposit) will be reduced from three to two months' rent. When the tenant leaves the accommodation, a procedure for returning the deposit is introduced, with precise terms, including a sanction in the event of non-compliance with the deadlines provided for by law;
  • for co-tenancy (flatsharing), a single lease contract will be drawn up between the lessor and all the co-tenants. Co-tenancy is therefore distinct from subletting or rental with multiple leases (e.g. rental of furnished rooms) where a lease contract is concluded individually between the owner-lessor and each tenant. In addition, the flatmates will establish a written co-tenancy pact in order to formalise the aspects of community living and the practical arrangements of this form of rental.
    When a co-tenant wishes to release themselves from their obligations before the end of the lease, they must notifie the lessor (by registered letter) and co-tenants simultaneously with three months' notice. The co-tenant must look for a replacement flatmate before the end of the notice period; other flatmates or the landlord can also propose a replacement. Failing to find a replacement candidate, the departing flatmate must be able to demonstrate having carried out an active and sufficient search with a view to finding a new co-tenant;
  • due to "numerous abuses", the concept of luxury housing (making it possible to avoid the application of the rent ceiling) is being abolished;
  • the main rules on the rent ceiling have not changed. To balance the needs of tenants and landlords, the government said it is committed to conducting "a thorough analysis", before submitting a new proposal to reform the rent ceiling.
    Some additional clarifications are nevertheless provided for in the new text, for example: the amount of the sum of the rents paid by the tenants within the framework of a rental, a shared rental or a rental with multiple leases cannot be greater than the legal limit of the annual rent (=5% of the capital invested in housing); a rent supplement for furniture may be requested by the lessor in the case of furnished accommodation; the rule of annual thirds is replaced by a biennial rent limit of 10%;
  • any residential lease contract must in future be made in writing, and contain certain mandatory information.