To protect tenants and ensure maximum transparency, renting out a property remains strictly regulated. As legislation continues to evolve, it is not always easy to keep track of the applicable rules. Below is a clear and comprehensive summary of the key obligations you must comply with in order to rent legally — while securing your investment at the same time.
A written lease agreement is mandatory
Since the revision of the residential lease law on 1 August 2024, the law requires that all lease agreements be drawn up in written form. The contract must include several mandatory elements:
- The full identity of the parties;
- A detailed description of the property (including annexes such as cellar or parking space);
- The duration of the lease;
- The amount of rent excluding charges, as well as details of advance payments or flat-rate charges.
Rent capping: the 5% rule
As a landlord, you may not charge an annual rent exceeding 5% of the capital invested in the property.
This capital includes the purchase price of the land and building, as well as renovation and conversion costs, all revalued according to official coefficients.
From 2026 onwards, following the abolition of the “luxury housing” category, this rule applies to almost the entire private rental market.
In addition, rent increases are permitted only every two years, with a maximum increase capped at 10%.
“You may not charge an annual rent exceeding 5% of the capital invested in the property.”
Security deposit and sharing of costs
The 2024 revision of the lease law also introduced changes to the financial aspects of renting:
- Security deposit: now limited to a maximum of two months’ rent (previously three). This amount must be clearly stated in the lease agreement.
- Agency fees: real estate agency fees must be shared equally (50/50) between landlord and tenant. Any clause placing the full cost on the tenant is null and void.
Energy Performance Certificate (EPC)
A property cannot be offered for rent without a valid Energy Performance Certificate. This certificate is valid for 10 years and rates the property from A (most energy-efficient) to I. It also plays a major role in the property’s attractiveness on the rental market and should not be overlooked.
“It is impossible to place a property on the rental market without a valid Energy Performance Certificate.”
Inventory of fixtures: essential protection for both parties
Although Luxembourg law requires an exit inventory only if an entry inventory has been carried out, it is strongly recommended to make this step systematic.
A joint inventory of fixtures, signed by both parties, should be conducted when the keys are handed over. Be extremely thorough: test equipment, take photographs of any defects, and record meter readings. In the event of a dispute over the return of the security deposit, this document will be your only tangible evidence.
Insurance and maintenance: clearly define responsibilities
To avoid disputes during the lease term, responsibilities for insurance and maintenance must be clearly defined from the outset:
- Tenant insurance: the tenant is required to take out insurance covering civil liability and damage to the property. An annual certificate should be requested.
- Boiler and chimney maintenance: chimney sweeping and annual servicing of heating systems are the tenant’s responsibility.
- Major repairs: structural work, roof waterproofing, or replacement of worn-out equipment remain entirely the landlord’s responsibility.
Finally, remember that you must register the lease agreement within the legal deadline with the Registration, Estates and VAT Authority (AED). This formality gives the contract a legally certain date and protects both parties’ rights, particularly in the event of a sale of the occupied property.
