The reform tabled on 20 September 2020 by the minister for housing, Henri Kox (déi Greng), and adopted by the Frieden-Bettel government, was adopted by parliament on 10 July 2024.
The text was identical, with the exception of the reform of the rent ceiling, which did not affect the ceiling of 5% of the capital invested--a rule in force since 1955--but which looked at the rules for determining the capital invested and provided for a reduction of between 3.5% and 3% depending on the energy category of the property.
This provision was “strongly criticised by many of the players involved,” according to the summary of the parliamentary dossier. Although this part of the bill “has been set aside for reworking,” explained the rapporteur, (DP), the ceiling of 5% of the capital invested remains in place until further notice. The text of the law provides a few clarifications: each time the rent is adjusted, the increase may not exceed 10%. In the case of furnished accommodation, the landlord may request a rent supplement for the furnishings. In addition, the concept of luxury accommodation, used to avoid the application of the rent ceiling, has been abolished. The government points to “numerous abuses” as the cause.
Key points of the reform
In its final form, the text aims to “protect tenants against abusive rents” and encourage “the return of investors to the property market, which is essential if we are to meet the growing demand for housing,” as the rapporteur pointed out. The bill reforms the law of 21 September 2006 on residential leases, as well as certain provisions of the civil code on the following five points:
- estate agency commission fees will now be paid in equal shares by the lessor and the tenant if the lessor is behind the hiring of an estate agent to find a tenant for a given property;
- the legal maximum amount of the rental guarantee has been reduced from three to two months’ rent;
- the procedures for returning the rental deposit at the end of the lease are specified. From now on, at the end of the lease, if all the rent and charges due have been paid by the tenant and if no damage has been noted by the landlord when the keys are handed over, the landlord will return 50% of the rental deposit within one month. The other 50% must be returned within one month of receipt of the service charge statements;
- recognition of shared tenancy. Shared tenancy, which refers to the rental of the same property by several tenants known as co-tenants, is now permitted subject to the express agreement of the landlord. When the shared tenancy agreement is signed, the tenants must also sign a shared tenancy agreement. This pact must set out the specific rules of the shared tenancy and clarify the responsibilities and joint liability of the tenants. The landlord will need to be informed of the identity of the flatmates, and any changes will require his or her agreement.
If a co-tenant wishes to be released from his obligations before the end of the lease term, he or she must give three months' notice to both the landlord and his co-tenants. The landlord must be notified by registered letter with acknowledgement of receipt. Before the notice period expires, the joint tenant must look for a replacement. The other housemates or the landlord may also propose a replacement. If the outgoing tenant fails to propose a replacement, he or she must be able to demonstrate that they have made an active and sufficient search for a new tenant.
- 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 proposed law comes into force.
Rent caps, the big absentee
Unsurprisingly, the text was voted through by the CSV-DP majority. The CSV voted in favour of “a text that goes in the right direction to relaunch the property market,” in the words of (CSV) who regretted, with the exception of the rent cap, “that it took several years for this text to be adopted.”
for LSAP was more circumspect. While referring to “a necessary reform,” she regretted that the government had not made any progress on the issue of rent caps.
(déi Gréng)--who was participating in his last session as a member of parliament (Bausch )--also stressed the need for the law to be quickly supplemented by a framework for rent caps. “The current framework is unworkable,” he insisted, referring to the latest court rulings on this point. “Rent caps are necessary to protect tenants from arbitrary landlords.”
(Piraten) also regretted that the bill made no mention of rent setting. The Pirates would like this to be based on a rent index rather than on the capital invested. Landlords who set rents higher than this index would face tax penalties. He also deplored the fact that agency commission fees were neither regulated nor capped.
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(déi Lénk) called for a mechanism to cap rents, but had no illusions. “This government has clearly chosen sides. It’s not the side of hard-working tenants, but the side of big profiteering landlords.” At the very least, he called for landlords to be obliged to state the capital invested in the rental contract “so that there is at least a minimum of transparency.” His proposal to freeze rents pending a new law on rent caps--a proposal supported by the Greens--was rejected.
pointed out that the ADR, “a party that also seeks to put housing on the market without constraints,” regretted the fact that agency fees would not be the sole responsibility of the landlord and that the rental guarantee would be reduced, fearing that this would discourage landlords from letting their properties. Alexandra Schoos (ADR) welcomed the recognition of shared accommodation, but felt that the framework was too strict.
The law is due to come into force on 1 August. But in the absence of a rent ceiling mechanism, the debate is far from over.
This article was originally published in .