Housing and rent

What you need to know about the rental agreement in Luxembourg

In this article, we will explain the rules for drawing up a lease in Luxembourg, which documents one must collect and how to avoid common mistakes.

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When renting an apartment in Luxembourg, the contract creation and the inspection of the apartment should be taken very seriously. The rental agreement and the act of acceptance transfer are the most important documents that protect both parties. If there is an agent, he will do all the work like drawing up the contract and inspecting the apartment.

Written form only

The contract must be drawn up in two copies in written form since any oral agreements are unprovable.

It is obligatory to specify:

The duration of the lease of the apartment in Luxembourg

Changes that the tenant may and may not make while living in the apartment

The amount of the rent deposit and the way of securing it

The amount of payment for the rent

Frequency of payments

Termination conditions

Property inventory with pictures of deficiencies (inventory report)

Additional expenses for rent and what is included in them

Any other points to be negotiated by the owner

Clearly stated rent amount

If you are planning to rent an apartment in Luxembourg, be careful here. The rental fee is established once the lease is signed. It can be adjusted only once every 2 years. This means that the amount cannot be reviewed for two years, unless the contract says otherwise.

By law, the maximum amount the owner may receive as a rental fee may not exceed 5% of the property's investment. This investment amount is made up of 1) the value of the land on which the property is located, 2) the cost of construction of the building, and 3) the amount invested in any repairs and alterations.

But there are exceptions. Social and luxury housing are not eligible for the 5% regulation.

Fixed-term lease and terms of termination

Normally the rental contract in Luxembourg is concluded for at least one year. It can be terminated whenever one of the parties requests it. But in this case, the other party must be notified. This is usually done in advance with a 1-2 month deadline to send the notice if other is not specified in the contract.

The Luxembourg lease will automatically be renewed at the end of the term specified in the agreement unless explicit notice of termination is written.

In case this is an open-ended lease, this should also be specified in the contract.

Recorded additional costs

When it comes to renting an apartment in Luxembourg, the additional costs are defined as the amounts that the owner can charge the tenant. These are utilities such as water, heating/gas, electricity, drainage, garbage disposal, and chimney cleaning. Minor repairs can be charged as well, in this case, we recommend that you define what counts as minor repairs and the amounts involved.

Ask the landlord about what counts as extra costs and write it down in the contract. Don't forget to state the procedure for paying utility bills (les charges) -— when to pay, who pays it, how, whether they are included in the rent, etc.

Simple bank guarantee as bail

A rent deposit, or security deposit, is a guarantee that money will be paid if the property is damaged.

You can make a security deposit with

first-demand guarantee,
bank guarantee,
wire transfer to the landlord's account,
cash,
home insurance to prevent rental risks (risqué locatifs).

Bail is the money you should get back if you haven't damaged anything. It should be mentioned in the contract as well. However, if you make a deposit in cash, a bank transfer, or a first-demand guarantee, there is little chance of getting the deposit back.

Bank guarantee

A bank guarantee as a deposit when renting an apartment in Luxembourg means that a sum is fixed on the tenant's bank account. The money is only paid to the landlord if he or she can prove the legitimacy of the tenant's debt.

First-demand guarantee

In the case of a first-demand guarantee, the landlord can get the entire deposit or part of it without the tenant's consent and without giving a reason.

Home insurance to prevent rental risks

As for insurance, it can only be applied for if the landlord consents to such a deposit. Sometimes owners ask for both the insurance and the rent deposit.

A detailed inventory of property

When renting an apartment in Luxembourg, the tenant and the owner prepare a written report on the condition of the property. All damages, breaks, and defects are described in it. The utility measurements are to be included. It is best to take pictures and attach them to the description. The document is signed by both parties on each page. The date should be given at the time of making the document.

A property report is prepared the tenant enters the apartment as a host.

Certain rules for terminating a lease

The contract should spell out how the on-site inventory is conducted, how the keys are handed over, at what point the tenant has the right to stop paying rent, etc.