How to Increase Rent Legally in Luxembourg: A Guide for Property Owners

Welcome to La Minute Immo, your podcast that unveils the secrets of real estate in the Grand Duchy of Luxembourg. Today, we’ll explore how property owners can increase rent in compliance with Luxembourg law.

Adapting Rent Responsibly

As a property owner with a stable and respectful tenant, you may be considering a rent adjustment due to inflation. However, Luxembourg’s rental laws set specific limitations:

• Maximum Rental Yield: Rent should not exceed 5% of the capital invested, doubling only for furnished properties. This includes the acquisition cost, improvement expenses, or any other work done on the property. First Step: Verify that your current rent complies with this rule before any increase.

When Can You Increase the Rent?

In Luxembourg, landlords are not permitted to increase rent arbitrarily or on an annual basis. The law allows a rent revision only every two years within a current rental contract.

Some scenarios justify an increase, such as:

• Property Improvements: If you install a new kitchen, renovate a bathroom, or make upgrades to improve energy efficiency, a portion of these costs can be reflected in the rent.

Real Estate Market Conditions

Since 2022, rents have risen as property sales slowed. However, an increase in market prices does not automatically justify a rent increase. Legal Limit: If you’ve already reached the 5% legal threshold, you may only increase rent if improvement work has been done.

How Much Can Rent Be Increased?

Luxembourg’s rental law limits each rent adaptation to a maximum of 10%. Now that you know the basics, here’s what to do next.

Steps to Notify Tenants of a Rent Increase

1. Written Notification: Inform your tenant of the rent increase through a written letter, specifying the reasons for this adjustment and referencing the legal criteria.

2. Tenant Acceptance: The increase must be accepted by the tenant. If the tenant refuses or disputes the adjustment, either party can appeal to the Rent Commission, which will assess the legality and justification of the increase.

Tenant’s Rights

If a new higher rent is set, tenants have the right to terminate their lease. Importantly, no increase can be imposed if the tenant chooses to vacate in response to the adjustment.

Conclusion

These are the essential steps for legally increasing rent in Luxembourg. Follow these guidelines to ensure compliance with rental laws while maintaining a positive relationship with your tenant.