Luxembourg – Property Letting

How does the property letting process work in Luxembourg?

Renting out a residential property in Luxembourg follows a defined sequence of steps, from marketing the accommodation to executing a lease. Most owners advertise through well-established local property portals and real estate agencies, both of which enjoy broad usage throughout the country. Once a prospective tenant has been selected, it is standard practice to complete an entry inspection report (état des lieux) before handing over the keys — this document records the state of the property in detail and is legally indispensable should any dispute about the deposit arise when the tenancy ends.

The legislative overhaul of August 2024 introduced a binding requirement that all residential rental agreements be drawn up in writing, doing away with any remaining acceptance of informal oral arrangements. This marks a notable departure from civil law traditions in which unwritten contracts sometimes carried at least partial legal force. Landlords in particular must ensure that lease agreements concluded after 1 August 2024 contain all the newly mandated information, as failure to do so can render the lease void.

Rental contracts in Luxembourg typically run for two or three years, though a shorter term may be negotiated. Whatever duration is agreed, it must be clearly recorded in the contract. If neither party serves notice when the fixed term expires, the lease renews automatically and converts to a rolling month-to-month arrangement, unless the contract provides otherwise.

The tenancy agreement must set out all essential terms: the rent, any service charges, the deposit, the duration, and — following the 2024 reforms — an explicit statement confirming that the rent complies with the statutory ceiling. Landlords should note that, unlike some common-law jurisdictions where a landlord may serve notice without specific justification, Luxembourg law confines the grounds on which a landlord may bring a tenancy to an end (see the section on termination below).

The 2024 reforms also introduced dedicated rules for shared housing. A single tenancy agreement must be concluded between the landlord and all co-tenants, who thereby become jointly liable for all obligations. In addition, a written co-tenancy arrangement among the occupants themselves is required to formalise their mutual commitments.

What types of rental arrangements are available in Luxembourg?

Luxembourg draws a broad distinction between long-term residential letting, medium-term furnished letting, and short-term or holiday rental. Each category carries its own regulatory requirements, and landlords should be certain which applies to their intended activity before proceeding.

Long-term residential letting is by far the most prevalent arrangement and is governed by the Residential Tenancies Act of 21 September 2006, as substantially amended by the Law of 23 July 2024. Standard leases extend for two to three years, with the full application of the rent ceiling, deposit restrictions, and notice period rules.

Short-term and holiday letting operates under a distinct regulatory regime. Airbnb is permitted in Luxembourg, but wide-ranging rules introduced in September 2023 and further updated in line with EU-wide requirements in 2024–2025 apply to short-term rentals. Owners must satisfy specific licensing conditions, zoning constraints, tax obligations, and safety standards that differ materially depending on whether their property is let for fewer than 90 days per year or whether it functions as a commercial hospitality operation.

Property owners in Luxembourg may let their accommodation for up to three months per year without requiring a special licence. Where letting exceeds that threshold, an authorisation becomes necessary. Commercial hospitality rules come into play for properties let for 90 or more days per year, requiring both a business establishment permit (autorisation d’établissement) and relevant hospitality training.

Zoning regulations cap short-term rentals in residential zone 1 areas at 89 nights per year, whereas mixed-use and commercial zones may accommodate longer rental periods subject to appropriate licensing. Anyone renting furnished accommodation on a short-term basis must notify the relevant municipality and meet applicable public health standards. Landlords are advised to verify the current local requirements with their commune directly, as municipal rules can differ.

What rental income can landlords expect, and how are rates set?

Luxembourg has operated a rent cap system since 1955. The maximum annual rent a landlord may charge, excluding service charges and utilities, is capped at 5% of the total capital the owner has invested in the property. This figure encompasses the purchase price, construction costs, and the cost of significant improvements. Despite this restriction, housing in Luxembourg remains expensive by European standards.

Landlords and tenants have meaningful freedom to agree the initial rent level, but any subsequent increases are subject to legal limits designed to protect tenants from sharp hikes. The law restricts any single rent increase to a maximum of 10%, preventing sudden and disproportionate rises. In practice, rent can normally be adjusted only once per year, and any increase must be grounded in legal criteria such as inflation or indices specified in the contract.

The “luxury housing” classification, which previously offered an exemption from the statutory rent cap, was abolished under the 2024 reforms in order to prevent abuse and ensure uniform application of the ceiling across all properties. This means that every residential letting — irrespective of quality or specification — is now subject to the same 5% cap on invested capital.

Where either a landlord considers a tenant to be paying below the lawful ceiling, or a tenant believes they are being overcharged, either party may refer the matter to the Rent Committee (Commission des loyers). A tenant who disputes the rent level or associated charges may apply to the Committee to seek a reduction. Landlords should consult the official Luxembourg Housing Portal (logement.public.lu) for up-to-date guidance on calculating the invested capital and applying the rent ceiling correctly.

Do landlords need to provide a furnished or unfurnished property in Luxembourg?

No general legal requirement exists in Luxembourg obliging a landlord to let a property furnished. Both furnished and unfurnished arrangements are common, and the decision is primarily driven by market positioning and the profile of likely tenants. Luxembourg City and localities with a high density of international workers and expatriates tend to generate stronger demand for furnished accommodation, particularly on shorter contracts.

Where a property is let furnished, the landlord may request a supplement on top of the base rent to reflect the furniture provided. This additional charge is separate from the base rent calculated under the 5% invested capital rule. However, the supplement must be proportionate and justifiable — no separate regulated scale exists for furniture supplements, so landlords should maintain documentation of the value of items supplied.

Furnished lettings also carry specific short-term rental obligations: anyone letting furnished accommodation on a short-term basis must inform the municipality and comply with relevant public health standards. For long-term furnished tenancies, all standard residential tenancy rules apply in full, including the rent ceiling, deposit restrictions, and the written agreement requirement. Landlords should be aware that furnished properties invite closer scrutiny of the exit inventory, since the condition of the furnishings themselves must be assessed when the lease comes to an end.

From a tax perspective, an owner who lets a furnished property is required to file a tax return declaring that income, regardless of whether they are resident in Luxembourg, and will be liable to tax accordingly.

Do you need a licence or registration to let a property in Luxembourg?

For conventional long-term residential letting, no general landlord licence is required in Luxembourg. Any owner of a residential property — whether resident or non-resident, national or foreign — may let it without first obtaining a licence, provided they comply fully with tenancy law requirements, including the obligation to use a written lease, observe the rent ceiling, and respect the deposit rules.

That said, specific registration or licensing obligations do arise in certain circumstances. All short-term rental properties, regardless of how often they are let, must be registered with local authorities and assigned a unique identification number before being listed on any rental platform. This EU-mandated requirement has been in force since 2024–2025 and applies universally.

Commercial hospitality regulations govern properties let for 90 or more days per year on a short-term basis, requiring both a business establishment permit (autorisation d’établissement) and specialist accommodation training. This is broadly analogous to requirements in countries such as France or Germany, where operating holiday accommodation commercially necessitates formal business registration. For occasional private short-term lets below the 90-day threshold, registration requirements are lighter but still apply.

Landlords of shared housing must also comply with the 2024 co-tenancy rules, including formally documenting the arrangement and being notified whenever the identity of any co-tenant changes. Any change to the occupants requires the landlord’s consent. Landlords should confirm current registration requirements either with their local commune or via the Guichet.lu official portal.

How do you obtain a landlord licence or register as a landlord in Luxembourg?

For long-term residential letting, no formal landlord licence application is needed. The essential legal step is ensuring that the tenancy agreement satisfies the 2024 reforms and is properly documented. For short-term rental registration and commercial hospitality permits, the following sequence applies:

1. Determine your rental category. Establish whether your letting falls under occasional short-term rental (fewer than 90 days per year) or commercial hospitality (90 or more days per year). The applicable rules, registration authorities, and permit requirements differ significantly between the two.
2. Check municipal zoning. The licensing process requires submitting property documentation, evidence of safety compliance, and zoning confirmation to municipal authorities. Contact your local commune to establish the zoning category of your property and whether short-term letting is permitted within it.
3. Register with local authorities to obtain a unique identification number. All short-term rental properties, whatever their letting frequency, must be registered with local authorities and issued a unique identification number before being advertised on any rental platform. This is an EU-mandated obligation in effect since 2024–2025.
4. Apply for a commercial establishment permit if required. Where you intend to let for 90 or more days annually, apply for an autorisation d’établissement (business establishment permit) through the relevant ministry. Applications for commercial licences require additional business registration documentation and proof of training certification.
5. Meet health and safety requirements. All lawful short-term rental activity must conform to municipal rules, health and safety standards, and tax obligations regardless of letting frequency. Compile documentation demonstrating compliance with fire safety, hygiene, and habitability requirements.
6. Register for tax purposes. Both resident and non-resident landlords earning more than €600 per year in rental income must register with the Luxembourg Inland Revenue (Administration des contributions directes) and submit an annual tax return. Non-resident landlords file using Form 100. Consult the official Guichet.lu guidance on declaring rental income for current procedures.

Fees for establishment permits and registration vary by commune and permit type. Check the official Guichet.lu portal or the Luxembourg Housing Portal for current fees and procedures, as these are subject to change.

What are the rules around deposits in Luxembourg?

Luxembourg’s deposit regime was significantly tightened under the August 2024 reforms. For leases signed on or after 1 August 2024, the maximum permissible deposit is two months’ rent, excluding utilities. This represents a reduction from the previous three-month cap. Unlike the United Kingdom or Ireland, Luxembourg does not operate a centralised tenancy deposit protection scheme — the deposit is ordinarily paid directly to the landlord or held in a blocked bank account, and the parties manage its return between themselves within the legally prescribed timeframe.

Landlords are required to return 50% of the security deposit within one month of the exit inspection, provided no damage has been identified and rent payments are fully up to date. The remaining 50% must be refunded within one month of receiving the annual service charge statements. Failure to meet these deadlines attracts penalties of 10% of the monthly rent for each month of delay.

Where a deposit is required under the tenancy agreement, it is strongly advisable to conduct a thorough inspection of the property with the landlord or agent before the tenant moves in. All pre-existing damage should be recorded in the inventory at the outset. In principle, tenants are obliged to return the property in the same condition it was in at the start of the tenancy; however, deterioration resulting from ordinary use, fair wear and tear, or the passage of time does not constitute tenancy damage.

Landlords may make deductions from the deposit for genuine damage that goes beyond normal wear and tear, or for unpaid rent and outstanding service charges. Any deductions that are disputed may be referred to the Rent Committee or litigated through the courts. Both parties should retain signed copies of the entry and exit inventories, as these documents serve as the primary evidence in any deposit dispute.

Who is responsible for maintenance and repairs in Luxembourg?

Luxembourg follows a civil law tradition in assigning responsibility for repairs, broadly mirroring the frameworks used in France and Belgium. The landlord is responsible for structural maintenance and for ensuring the property remains fit for habitation throughout the tenancy. This covers the roof, external walls, heating systems, and major installations. The property must satisfy minimum habitability standards both at the outset and for the duration of the lease.

Landlords may charge tenants for certain supplementary rental expenses, including energy costs, routine upkeep of the dwelling and shared areas, and minor repairs. Day-to-day maintenance tasks — replacing light bulbs, keeping appliances in reasonable working order through normal use, and maintaining general cleanliness — typically fall to the tenant. The boundary between a “minor repair” chargeable to the tenant and a structural repair that is the landlord’s liability can be a source of contention, and it is prudent to define this clearly within the tenancy agreement.

If a tenant experiences difficulties with a landlord who is failing to maintain the property to a habitable standard, they should raise the matter formally by registered post as soon as possible. Crucially, the tenant should not withhold rent as a self-help remedy. Only a court may authorise a rent reduction where a landlord is found to have breached their obligations. Landlords who neglect their maintenance duties risk rent reduction orders from the judiciary or referral to the Rent Committee, and are well advised to respond to repair requests promptly and in writing.

How are letting agents used in Luxembourg, and what do they charge?

Letting agents and property management companies occupy a prominent place in the Luxembourg rental market. The majority of property owners let their accommodation through real estate agencies. Agents typically offer a range of services: marketing the property, screening prospective tenants, preparing tenancy agreements, managing entry and exit inspections, and collecting rent. For landlords based abroad, comprehensive property management services — encompassing rent collection, maintenance coordination, and regulatory compliance — are widely available.

One of the most significant changes introduced by the 2024 reform relates to how agency costs are allocated. Under the new rules, the expense of engaging an agency to secure a tenancy is split equally — 50% borne by the tenant and 50% by the landlord. This represents a substantial shift from the previous practice, under which tenants frequently bore the full cost. The model is broadly comparable to Germany’s Bestellerprinzip, though the Luxembourg approach creates a shared-cost structure rather than placing the fee exclusively on whoever commissions the agent.

The standard agency fee for sourcing and placing a tenant has historically been approximately one month’s rent plus VAT at 17%, though under the 2024 rules this amount is now divided equally between the two parties. Ongoing property management fees vary by agent and by the scope of services required; landlords should ask for an itemised fee schedule from any agency they consider engaging. For current regulated fee structures and market norms, consult the Luxembourg Order of Architects and Consulting Engineers or local real estate bodies such as CIGDL, as these can evolve over time.

What taxes apply to rental income in Luxembourg?

Rental income received by resident taxpayers from property situated in Luxembourg is taxed at the standard progressive rates. Depending on the taxpayer’s total annual taxable income and family circumstances, the maximum marginal rate — inclusive of the solidarity surcharge — is either 42.80% or 43.60%. Rental income is also generally subject to long-term care insurance contributions at a rate of 1.4%. These figures apply as of 2024.

Non-resident taxpayers are subject to a minimum tax rate that varies according to their income level, unless they have elected to be treated as resident taxpayers for Luxembourg tax purposes. Non-resident landlords whose rental income from Luxembourg property exceeds €600 are required to file a Luxembourg tax return. Non-residents file using Form 100, with Form 190 as the annex for rental income. Those who meet the relevant income thresholds may opt for resident taxpayer treatment, which can unlock additional deductions — a local tax adviser should be consulted to determine whether this election is advantageous in any given situation.

Property owners may offset a range of allowable expenses against gross rental income, thereby reducing the amount subject to tax. Deductible items typically include costs of maintenance, repairs, and property management fees. Mortgage interest payments attributable to the rental property are also deductible. The depreciation rate applicable to buildings generally falls between 2% and 6% per year, depending on the age and nature of the property (as of 2024).

Net rental income arising from social housing management — where landlords have entered into arrangements with organisations contracted by the Ministry of Housing — benefits from a 90% partial tax exemption with effect from the 2024 tax year. This represents a material incentive for landlords prepared to make their property available through social housing channels.

Luxembourg maintains an extensive network of double taxation agreements (DTAs) with other countries, designed to prevent the same rental income from being taxed twice and to allocate primary taxing rights between states. All landlords — resident and non-resident alike — should engage a qualified tax adviser and refer to the Luxembourg Inland Revenue (Administration des contributions directes) for current guidance, given the complexity and ongoing evolution of the tax rules.

What are the rules around ending a tenancy or evicting a tenant in Luxembourg?

Luxembourg’s residential tenancy legislation is widely regarded as favouring tenants. Its protections — particularly concerning eviction, deposits, and rent disputes — place it among the more tenant-oriented frameworks in Europe. Landlords contemplating a Luxembourg investment should incorporate this reality into their planning: regaining possession of a property outside the legally recognised grounds is not a simple matter.

A landlord may only bring a tenancy to an end on specific grounds: a genuine personal need for the property, a material breach of obligations by the tenant, or other serious and legitimate reasons. This is considerably more restrictive than the “no-fault” notice mechanisms available to landlords in certain other jurisdictions. Seeking to recover possession for rent arrears or any other breach requires the landlord to pursue a formal court process rather than simply issuing a notice.

Where a tenant wishes to vacate at the end of the rental period, they must give the landlord at least three months’ written notice by registered letter with acknowledgement of receipt, and ensure all rent is paid up to date. Landlords seeking to end a tenancy are bound by the same formal notice requirements — written notice by registered letter with acknowledgement of receipt — and must be able to demonstrate that their grounds fall within the categories recognised by law.

In shared housing arrangements, a co-tenant who wishes to be released from their obligations before the lease expires must give three months’ notice to both the landlord and the remaining co-tenants. Notice to the landlord must be sent by registered letter with acknowledgement of receipt. Landlords facing persistent difficulties with a tenant should take legal advice without delay. The Justice de Paix (magistrates’ court) has jurisdiction over most residential tenancy disputes in Luxembourg.

What should expat landlords know about managing property remotely?

There are no restrictions on foreign nationals purchasing real estate in Luxembourg, and the property acquisition process broadly resembles that of many other EU member states. Non-resident landlords may let Luxembourg property without needing to be physically present in the country, but there are several practical and legal matters that warrant careful attention.

Engaging a property manager or letting agent is strongly recommended for landlords based overseas. A local professional can attend to day-to-day management, respond to tenant queries, organise repairs, and safeguard the landlord’s interests in their absence. Where a landlord wishes to grant a trusted individual formal legal authority to act on their behalf — for instance, to execute lease agreements or liaise with the tax authority — a notarised power of attorney (procuration) can be arranged through a Luxembourg notary.

Non-resident landlords receiving rental income from a Luxembourg property in excess of €600 must file a Luxembourg tax return. Such taxpayers are subject to a minimum tax rate that varies according to their income level, unless they have elected to be treated as residents for tax purposes. Non-residents should retain the services of a local tax adviser or fiduciary firm with expertise in Luxembourg’s rules to ensure that annual returns (Form 100 and Form 190) are submitted accurately and on time.

No restrictions apply to repatriating rental income from Luxembourg — as a full EU member state and a leading international financial centre, Luxembourg imposes no capital controls. Nevertheless, the double taxation treaty between Luxembourg and the landlord’s country of residence will govern how cross-border rental income is treated, and non-resident landlords should verify the relevant DTA provisions. Luxembourg operates an extensive network of such agreements. Consulting a cross-border tax specialist is strongly advisable for any landlord managing property in Luxembourg from abroad.

Frequently asked questions

Can a non-resident own and let property in Luxembourg?

There are no restrictions on foreigners buying real estate in Luxembourg. Non-resident property owners may let their Luxembourg property under exactly the same legal framework as resident landlords. They must comply with all tenancy law requirements, and if rental income from the Luxembourg property exceeds €600, they are obliged to file a Luxembourg tax return.

Is a verbal tenancy agreement valid in Luxembourg?

All lease contracts must now be in writing. An oral contract will no longer have any legal value if it is entered into after the law came into force on 1 August 2024. Landlords entering into any new residential tenancy must ensure the agreement is documented in writing and contains all mandatory clauses required under the 2024 reforms.

How much security deposit can a landlord charge in Luxembourg?

For leases signed from August 1, 2024 onward, the maximum deposit is now 2 months’ rent, excluding utilities. Landlords who request more than this amount risk the excess being unlawful. Always check the official Guichet.lu portal for the current rules.

Do I need a local agent to let my property in Luxembourg?

There is no legal requirement to use a letting agent for long-term residential letting in Luxembourg. However, most homeowners rent their property via real estate agencies. For non-resident landlords especially, a local agent or property manager provides essential support for compliance, tenant management, and tax filing obligations.

What is the rent cap in Luxembourg and how is it calculated?

The maximum rent charged to tenants may not exceed 5% of the amount that the landlord has invested in the property per year, excluding service charges (as of 2024). “Capital invested” includes the purchase price and eligible improvement costs. The law also limits any rent increase to a maximum of 10% at a time. Consult the Luxembourg Housing Portal for detailed guidance on calculating the capital invested.

Can I let my property on Airbnb in Luxembourg?

Airbnb is legal in Luxembourg, but comprehensive regulations govern short-term rentals. Property owners must comply with specific licensing requirements, zoning restrictions, tax obligations, and safety standards that depend on how frequently they rent. Property owners can rent out their accommodation for three months at most without a special licence; for longer periods, an authorisation is required.

How is rental income taxed for non-resident landlords in Luxembourg?

The income of non-resident taxpayers is taxed at a minimum rate which varies depending on their level of income, unless those taxpayers have opted to be treated as resident taxpayers. Non-residents are subject to Luxembourg’s progressive tax rates, but are taxed only on Luxembourg-sourced income. As of 2024, rates range from 0% to 42% plus surcharges. A double taxation agreement between Luxembourg and your country of residence may reduce your liability. Always consult a qualified local tax adviser.

What happens if a tenant does not pay rent in Luxembourg?

Non-payment of rent is a recognised ground for terminating a tenancy, but the landlord must follow a formal legal process. It is not possible to simply lock out a tenant or discontinue services. The landlord must apply to the Justice de Paix (magistrates’ court) for an eviction order. Only a judge may authorise a rent reduction or take enforcement action where a landlord or tenant is found to have broken the law. Luxembourg’s system is strongly tenant-protective, so landlords should act promptly and seek legal advice if a tenant falls into arrears.