Luxembourg’s Ministry of Housing and Spatial Planning has published Note 46 by the Housing Observatory (Observatoire de l’Habitat), an analytical report examining the regulatory instruments and challenges, particularly the “grey areas”, associated with the growth of co-living and short-term rental models in Luxembourg’s private rental market.

The publication, released on Tuesday 21 October 2025, highlights how these fast-growing market segments are reshaping the use of housing and testing existing legal and urban-planning frameworks.

Building on the Ministry’s previous Note 41 (December 2024), the new report identifies the emergence of three expanding segments within Luxembourg’s private rental sector:

  • Co-living, offering furnished rooms managed by specialised operators with shared services and spaces;

  • Short-term rentals, consisting of furnished, self-contained units rented for several nights, primarily to a mobile professional clientele;

  • Shared housing residences, new complexes designed exclusively for studios, rooms and shared communal areas.

According to the Housing Observatory, these new concepts sit at the interface between housing and hospitality and raise regulatory, fiscal and urban-planning issues.

The report identifies several grey areas complicating the work of public authorities. These include the absence of specific criteria distinguishing between furnished rooms and flat-sharing, the blurred line between housing and hotel-type projects, and the underestimation of actual housing density in co-living developments, where clusters of rooms are often recorded as a single dwelling. Such gaps, the Ministry noted, create dependency on international private operators whose standardised projects may not fit Luxembourg’s context.

An analysis of building regulations and general development plans across eleven municipalities revealed highly diverse local practices. Differences were found in minimum net surface requirements and parking standards for certain types of rental projects - variations that may influence the decisions of developers and investors.

In conclusion, Note 46 calls for greater national clarity and coordination regarding the definition of “housing” and the distinction between various forms of accommodation. It also recommends a more comprehensive understanding of the rental stock, supported by the forthcoming national building register.