Cabinet approved the amendments to the draft bill 7642 measures during a meeting on 5 October. The bill on leases aims to make rental properties more affordable. Luxembourg has seen rents grow by 17% over a , and 18,000 low-income households pay over 40% of their income towards rent.  

Deposit and maximum rent reduced

The amendments could see the maximum rent that landlords can charge decrease. For more energy-efficient housing (categories A+ to E) they can ask at most 3.5% of the capital invested, a threshold that falls to 3% for poorly adapted structures (categories F to I). Previously, the rent was limited at 5% of the revalued and discounted capital invested. The capital is determined or fixed during its construction or purchase.

The changes also foresee for instance that all leases have to be in written format and agency fees should be split evenly between the owner and tenant of a property. The deposit should be limited to two months of rent, as opposed to three months currently applicable.

Landlords will also have to indicate the capital invested--revalued and discounted--in the property (or room), the rent price without additional charges and a detailed account of down payments and cost of furniture and supplements in the written agreement.

These rules also apply for furnished rooms available on the rental market.

 “With the reform of the rent ceiling and more transparency for residential leases, the private rental market will be better regulated in order to fight against excessive rents. The objective of this strategy is the right to housing for all", said housing minister  upon presenting the dossier.

Easier procedures for flat shares and recovery of deposit

Luxembourg does not have a specific legal framework for flat shares (known as “Wunngemeinschaften” or “WG” in the grand duchy). This should change with the adopted amendments. Though it has not been presented in detail, the addition to the draft bill foresees clearer rules when a member of the flat share leaves before the end of their lease, as well as allows tenants to set up a flat share with the landlord living on the premises.

Charges not mentioned in the agreement between flatmates will be split equally between all members.

Lastly, deposit recovery should also be sped up: within the first month following the departure, landlords will have to refund half of the total amount if the property is in the same state as upon entry (except for normal wear-and-tear).

Should the landlord deem the state of the property not acceptable, they will have to provide proof and justification within one month. If they do not return the deposit, they will have to pay the tenant a late fee equivalent to 10% of the monthly rent in addition to the deposit.  

The draft bill still has to be submitted to and debated in parliament before being voted into law. A potential date for its debate has not been announced--Delano contacted the housing ministry but had not received an answer at the time of publishing.