Do you want to increase the rent of your property? As you may already know, this practice is strictly regulated by law in Luxembourg. To avoid disputes with your tenant and the need to backtrack later, discover all the information you need to manage your rent amount and adjust it legally.
What regulates rent increases in Luxembourg?
The amended law of 21 September 2006 on residential leases governs rent management in Luxembourg. The rule is as follows: rents must not exceed 5% of the capital invested by the owner.
However, this law has led to many disagreements. Indeed, when the owner decides to increase the rent, the tenant may contest the hike. If the owner cannot prove that the rent remains below 5% of the capital invested, such disputes could end up in court. For this reason, before applying a rent increase, it is in your best interest to gather all the documents that can attest to the invested amount.
The invested capital: the basic rule for increasing rent
The tenant has the right to contact the Rent Commission of their municipality to assess the invested capital if they doubt your honesty. This is why property owners are advised to anticipate rent increases carefully.
Once this procedure begins, the tenant may take the case to court to contest the new rent and request a reduction.
Unsure about the amount of your rent?
Seek advice from a real estate professional.
To avoid such disputes, owners are also advised to communicate clearly with tenants about the rent increase. An amicable procedure to reach an agreement can help avoid escalating the conflict.
When and how to increase your rent?
Based on these 5% of the initially invested capital, you can increase the rent if it has not changed for at least two years. In addition to respecting the 5% rule, you must also ensure that the increase does not exceed 10%.
A specific exception applies to luxury apartments, those with rents reaching or exceeding €2,500 per month. Here, indexation clauses may apply (even though they are prohibited by the law for standard leases). As the notion of invested capital is challenging to define for luxury properties, rent increases in these cases tend to be more complex and harder to regulate.
The Rent Commission: an important contact in case of disputes
If your tenant does not accept the rent increase you propose and you believe it complies with the rules, you can contact the Rent Commission. This commission can also be contacted by the tenant to request a rent reduction.
Entrust the management of your property to a real estate professional to adjust rents smoothly.
As a mediator, this conciliation body helps resolve disputes amicably. Don’t hesitate to rely on it, as it can save you from a more costly and burdensome legal procedure.
Since managing a rental property and having rent increases accepted can be challenging, remember that you can also seek the support of real estate professionals. They can handle rent calculations, apply increases according to legal standards, and even manage potential disputes with your tenant.
