Authored by the expert who managed and guided the team behind the Luxembourg Property Pack
Everything you need to know before buying real estate is included in our Luxembourg Property Pack
Are you considering investing in Luxembourg’s real estate market? What are the legal steps, tax implications, and cultural nuances you need to understand before making a purchase? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
1) Understand Luxembourg’s market cycles, as its stable real estate can fluctuate with economic factors, affecting your returns based on purchase timing
Buying property in Luxembourg? Timing is everything.
In 2023, property prices in Luxembourg dropped for the first time in nearly a decade. This was largely due to high interest rates, which made borrowing more expensive and cooled the demand for homes. If you had known about these economic shifts, you might have waited for a better time to buy, potentially saving money or getting a better return on your investment.
Luxembourg's real estate market is influenced by supply and demand dynamics. The country has a growing population, but land is scarce, which limits housing supply. This imbalance can cause price fluctuations, so keeping an eye on these trends can help you make smarter investment decisions.
Government policies are another key factor. Planned reforms in property taxes and increased public investment in housing could lead to more available properties and potentially lower prices. Being aware of these changes can help you time your purchase to take advantage of these shifts.
Understanding local market cycles is crucial. Luxembourg's real estate market is generally stable but can fluctuate based on economic factors. Timing your purchase can significantly impact your returns.
By staying informed about these elements, you can make better decisions about when to buy or sell property in Luxembourg. Knowing when the market is likely to rise or fall can give you a competitive edge.
Sources: Luxembourg Residential Real Estate Market Analysis 2024, In-Depth Review 2023 Luxembourg - Economy and Finance, Key factors to watch in the Luxembourg real estate market in 2025
In this video, 'Luxembourg Real Estate Market Update Q4 2023 + 2024 predictions' demonstrates that understanding market cycles is crucial. The presenter discusses how the market has cooled considerably but hasn't frozen, with inflation rates and interest rates showing comforting numbers that could bring positive changes for buyers and sellers in 2024.
2) Familiarize yourself with Luxembourg’s strict tenant protection laws if renting out property to avoid legal issues
In Luxembourg, renting out property comes with strict rules to protect tenants.
Since August 2024, all rental agreements must be in writing. This means you need a written lease with details like rent and security deposit. It's a move to ensure clarity and fairness between landlords and tenants.
Real estate agency fees are now split equally between landlords and tenants. If a lease says otherwise, that part is invalid. This change stops landlords from making tenants pay the whole fee, which was common before.
Rent increases are capped at 10% every two years. This prevents sudden hikes that could strain tenants. Plus, the security deposit is now capped at two months' rent, with clear rules for its return.
Ignoring these rules can lead to legal trouble. For instance, not having a written lease or unfairly splitting agency fees could result in legal challenges. The Justice of the Peace handles disputes, ensuring both parties are protected.
Sources: Engel & Völkers Luxembourg, Guichet Public, Michel Real Estate
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Luxembourg. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Learn French or Luxembourgish to avoid misunderstandings in real estate deals, as many documents and negotiations are in these languages
In Luxembourg, knowing the local language is key when buying property.
Many real estate documents, like the **compromis** and **acte de vente**, are only in French or Luxembourgish. Real estate agents and legal professionals often use these languages, so not being fluent can lead to misunderstandings. Even though English usage has increased by 27%, French and Luxembourgish still dominate in business and legal settings.
Expatriates often face challenges due to language barriers, which can complicate property transactions. Misunderstandings can arise if you're not familiar with the local languages, making it crucial to understand them well.
Translation services are an option, but they can be expensive. Buyers might need to hire a translator unless they speak French, German, or Luxembourgish. This adds another layer of cost and complexity to the process.
Understanding the local language isn't just about convenience; it's about avoiding potential pitfalls. Many expatriates have reported difficulties in navigating the real estate market due to language issues.
So, while translation services exist, being fluent in the local languages can save you time and money in the long run.
Sources: RTL Today, Expatica, Statec, RTL Today
4) Consider energy-efficient properties in Luxembourg for higher profits, as tax incentives and subsidies boost demand for eco-friendly homes
Investing in energy-efficient properties in Luxembourg is a savvy way to boost your profits.
The Luxembourg government is rolling out the red carpet for eco-friendly investments with tax incentives and subsidies. For instance, they've bumped up the tax credit for registration and transcription fees from €30,000 to €40,000, which can really cut down your initial costs.
Eco-friendly homes are all the rage these days, and the demand is only growing. Thanks to the Klimabonus scheme, which offers subsidies for sustainable energy renovations, more people are jumping on the green home bandwagon. This means energy-efficient homes are becoming hot properties in the market.
Owning an energy-efficient property isn't just good for the planet; it's good for your wallet too. The Klimabonus scheme provides financial aid ranging from €1,500 to €2,600 for energy renovation projects, helping to offset those renovation costs. This makes these homes more attractive to buyers and more profitable for investors over time.
Imagine the appeal of a home that not only saves on energy bills but also comes with financial perks. With the right investments, you can tap into a market that's both lucrative and sustainable. Luxembourg's real estate market is ripe for those who think green.
So, if you're considering a property investment, think about going green. The combination of government support and market demand makes energy-efficient homes a smart choice. It's a win-win for your portfolio and the environment.
Sources: Goodwin Law, Guichet Public
5) Prepare your finances for a mortgage in Luxembourg, as foreigners face complex processes, needing a large down payment and stable income proof
In Luxembourg, property prices are soaring, with the average price per square meter hitting €8,488 in late 2024.
Buying a home here isn't cheap, especially compared to other European countries. Nearly half of Luxembourg's population is foreign, so there's a big market for non-resident buyers. But if you're not from Luxembourg, getting a mortgage can be tricky. For example, non-first-time buyers need a 10% deposit, and if you're looking to invest in a rental property, you'll need to put down 20%.
When it comes to income, lenders are pretty strict. They want to see a steady income, whether it's from a job or a business, and they usually look at your earnings over the past three years. If you're from outside the EU or EFTA, you might need a bigger deposit and possibly some extra collateral.
So, if you're thinking about buying property in Luxembourg, it's crucial to have your finances in order. The process can be complex, especially for foreigners, and you'll need to prove stable income and have a significant down payment ready.
Despite the challenges, Luxembourg's property market remains attractive, thanks to its strong economy and high quality of life. But remember, preparing your finances is key to navigating the buying process smoothly.
Sources: Expatica, Delano, Statista
We believe this video, 'Tax Calculation || All you need to know,' provides detailed insights into the financial aspects of property purchase in Luxembourg, including the complexities of obtaining mortgages and the importance of proper financial preparation.
6) Consider properties near new tram lines in Luxembourg, as improved transport links are likely to boost property values
Investing in properties near Luxembourg's new tram lines is a smart move.
The tram network is expanding from one to four lines by 2035, which is expected to boost property values in connected areas. Improved public transport makes these places more accessible and desirable. For instance, the tram extension to Findel, set for completion in March 2025, is likely to increase property values in nearby areas like Belair, Gasperich, and Cessange.
This isn't just a Luxembourg phenomenon. Cities like Vienna and Berlin have seen significant property value rises after introducing new tram systems. Real estate agencies in Luxembourg City have noted that the average rent per square meter was €30.53 at the end of 2023, indicating a rise in real estate prices.
Experts predict that property prices will continue to rise, especially near the new tram lines. Forecasts suggest an increase of 3% to 7% in 2025. This trend is driven by the enhanced connectivity and convenience that trams bring, making these areas more attractive to potential buyers and renters.
Local insights suggest that areas like Belair and Gasperich, already popular for their amenities, will become even more sought after. The tram lines will not only improve daily commutes but also enhance the overall quality of life in these neighborhoods.
Investing in these areas now could mean getting ahead of the curve, as property values are expected to rise with the completion of the tram network. This is a chance to be part of a growing trend that combines urban development with increased property value.
Sources: RTL Luxembourg, Delano News, Justarrived.lu
7) Budget for higher notary fees in Luxembourg, as they can be 7-10% of the property's value, unlike in many other countries
In Luxembourg, notary fees can be surprisingly high compared to other countries.
While the notary fees themselves might seem modest at 1% to 1.5% of the property's value, the real kicker is the additional costs. For instance, registration fees, which were temporarily reduced to 3.5% from late 2024 to mid-2025, can really add up. When you put it all together, the total transaction costs can be quite hefty.
In fact, these combined fees often reach around 7-10% of the property's value. This is a big deal, especially when you consider that in other European countries, the costs might be lower. According to the Global Property Guide, the total round-trip transaction costs in Luxembourg can range from 12.50% to 16.00% of the property's value.
Real estate experts always stress the importance of budgeting for these costs when buying property in Luxembourg. They point out that while the notary fees might not seem too high at first, the combined costs can catch many buyers off guard, especially those who aren't familiar with the local fee structure.
For expatriates and locals alike, it's crucial to be aware of these fees to avoid any unpleasant surprises. The notary fees are just one part of the equation, and it's the additional costs that can really make a difference in your budget.
Sources: Global Property Guide, NextImmo, atHome Blog
8) Luxembourg’s low property tax rate is advantageous for long-term investments compared to other European countries
You might be surprised to learn that Luxembourg has a relatively low property tax rate compared to other European countries, which can be advantageous for long-term property investment.
In Luxembourg, the municipal land tax is quite modest, ranging from 0.7% to 1% of the property's assessed value. This is a stark contrast to the United Kingdom, where property tax rates can soar to 1.94%. Such a difference makes Luxembourg an appealing option for those considering property investments.
Real estate experts often point out that Luxembourg's low property tax rates are a key factor in its competitive real estate market. This favorable tax environment attracts investors who are keen on securing long-term gains without the burden of hefty taxes.
Interestingly, when you look at property tax revenue as a percentage of GDP, Luxembourg stands out. In 2023, the country's tax revenue was 29.4% of GDP, which is lower than many of its European counterparts. This indicates a lighter tax load on property owners, enhancing its appeal.
For those eyeing property in Europe, Luxembourg's tax structure offers a unique advantage. The combination of low property tax rates and a competitive market makes it a prime destination for real estate investment.
With such benefits, it's no wonder that Luxembourg is gaining attention from savvy investors. The country's tax policies not only make it attractive but also encourage sustainable investment growth in the real estate sector.
Sources: The Luxury Playbook, Immigrant Invest, CEIC Data
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Luxembourg versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
9) Consider properties easily convertible to co-living spaces, as they are popular with young professionals and expatriates
Luxembourg is experiencing a notable population boom, especially in 2023 and 2024.
With a projected growth of 48% by 2050, this surge is fueled by both locals and foreigners, creating a high demand for affordable housing. At the start of 2024, 47.3% of Luxembourg's residents were foreigners, and immigration accounted for 80% of the population increase. This influx of expatriates often leads to a search for flexible and affordable living options, making co-living spaces an attractive choice.
Property prices in Luxembourg have climbed, making traditional home ownership less accessible for young professionals and newcomers. This trend underscores the need for alternative housing solutions like co-living spaces, which are gaining traction.
Surveys indicate that millennials and Gen Z are drawn to flexible living arrangements, which align with the offerings of co-living spaces. These spaces provide a mix of private and shared facilities, catering to the modern needs of young professionals.
Co-living spaces are becoming popular among young professionals and expatriates, offering a chance to invest in properties that can be easily converted into shared living arrangements. This trend is particularly notable in Luxembourg, where the demand for such spaces is on the rise.
Sources: Co-living in Luxembourg, Population of Luxembourg, The Rise of Co-Living Spaces
10) Network with local agents and developers for off-market deals and insider info to enhance investment opportunities
Networking with local real estate agents and developers in Luxembourg can give you a significant advantage in the property market.
Many transactions here are conducted off-market, meaning these deals are not publicly advertised. This trend is growing, with agents often reaching out directly to potential buyers from their client lists, leaving only less desirable properties to be advertised online or in print.
Investors who have successfully navigated this market often share that working closely with local agents allows them to stay competitive, even on a budget. These agents can provide early access to properties, which is crucial in a market where many sales happen before properties are publicly listed.
This insider access can lead to more profitable investments, as off-market properties often have a higher price difference compared to those listed publicly. Surveys of real estate agents in Luxembourg further highlight the prevalence of off-market deals.
Many agencies have exclusive search mandates with clients, enabling them to directly contact potential buyers when suitable properties become available. This direct line of communication is a key reason why networking is so valuable in this market.
Gaining an edge by networking with local real estate agents and developers can lead to better investment opportunities, as they often have access to off-market deals and insider information.
Sources: Just Arrived, Zillow
11) Consider surrounding areas for better value, as high demand in Luxembourg City drives up prices and competition
Luxembourg City is a real estate hotspot, with property prices on the rise.
In the heart of the city, housing construction permits are scarce, leading to fewer new homes, especially in sought-after areas. Even though there was a surge in dwelling permits in early 2023, it hasn't necessarily increased the number of available properties. This scarcity is a key factor in the competitive market.
The city's appeal is growing among expatriates and international professionals, largely due to its thriving financial sector. This influx is boosting demand for housing, particularly in premium neighborhoods, which naturally drives up property prices. If you're considering buying, it might be wise to explore areas just outside the city for better deals.
In 2025, property prices are expected to rise by 3% to 7%, reflecting the high demand and limited supply. This trend makes it a challenging market for buyers, especially those looking for a bargain in the city center.
For those interested in investing, understanding the local dynamics is crucial. The high demand and limited supply mean that competition is fierce, and finding a good deal requires strategic planning and perhaps looking beyond the city limits.
Sources: Luxembourg City Price Forecasts, Global Property Guide
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12) Be fully committed before signing a "compromis de vente" in Luxembourg, as it is a legally binding preliminary sales agreement
In Luxembourg, buying property often starts with a "compromis de vente," a legally binding preliminary sales agreement.
Once you sign this agreement, you're locked into buying the property at the agreed price, and backing out can lead to serious legal consequences. This is why it's crucial to be absolutely sure before putting pen to paper.
Interestingly, the number of property transactions in Luxembourg dropped significantly in 2023 and 2024. Some say this might be due to the strict nature of the "compromis de vente," which requires buyers to be fully committed.
Real estate agents often suggest that buyers carefully review the "compromis de vente" and consider adding clauses. These clauses can allow for termination if certain conditions, like mortgage approval, aren't met. This is important because failing to meet these conditions can lead to penalties.
For instance, if the contract lapses due to unmet conditions, you might have to pay 10% of the sale price as a penalty. So, it's wise to ensure all conditions are clearly outlined and understood.
Legal experts emphasize that retracting from this agreement is tough without facing severe penalties. So, make sure you're fully informed and prepared before signing.
Sources: European Commission, Delano, Delano
13) Consider existing properties in Luxembourg, as buying land for new builds is tough due to limited availability and strict zoning laws
Buying land to build a new property in Luxembourg is quite challenging.
Luxembourg is a small country with a high population density, so there's not much land available for new construction. This scarcity is worsened by the country's small size and the high demand for housing. The limited space means that finding a plot to build on can be like searching for a needle in a haystack.
Strict zoning laws add another layer of complexity. The government oversees land use planning, and each municipality has its own rules that must align with national regulations. This creates a complex and lengthy process for obtaining building permits, which can be a real hurdle for developers. Navigating these regulations requires patience and often a bit of local know-how.
Real estate market trends show a preference for existing properties over new builds. For instance, the price of an old property in Luxembourg is 15 to 20% lower than a new one, making existing homes more attractive to buyers. This is not just a passing trend; historical data supports that the number of new builds has been significantly lower than the sales of existing properties.
Investing in existing properties is often more feasible due to these challenges. The market leans towards older homes, which are not only cheaper but also come with the advantage of being in established neighborhoods. This makes them a safer bet for many buyers who want to avoid the hassle of new construction.
So, if you're considering buying property in Luxembourg, it might be wise to look at what's already on the market. The process is generally smoother, and you might find a gem in an area with a rich history and community. Existing properties offer a more straightforward path to owning a home in this beautiful country.
Sources: CMS Law, RTL Today, RE/MAX Sweet Home
One of our partners sent us this video where 'Housing Market Update Q3 2024' shows the challenges of buying land and zoning laws in Luxembourg, emphasizing why investing in existing properties is often more feasible.
14) Check if Luxembourg’s “right of first refusal” law applies, as the government can buy properties deemed of public interest before you do
In Luxembourg, there's a unique law called the "right of first refusal" that can affect your property purchase.
This law means the government can buy a property before you if it's deemed necessary for public interest. Imagine finding your dream home, only to have the government step in and purchase it instead. This law is based on the Luxembourg Law of 15 March 1979, which outlines what qualifies as public interest, such as infrastructure projects or public buildings.
Understanding this law is crucial because it can impact your plans. If your potential property is in a strategic location, it could be at risk. While there aren't specific statistics or case studies from 2023 or 2024, the law has been used for various public projects, introducing uncertainty and potential delays in the real estate market.
To navigate this, it's essential to check if this law applies to your potential purchase. Consulting with legal experts or real estate agencies in Luxembourg can provide guidance. They can help you understand if your property might be affected and how to proceed.
One insider tip is to look for properties that are less likely to be in strategic locations for public projects. This might reduce the risk of the government exercising its right of first refusal. However, always verify with a professional to ensure you're making an informed decision.
Remember, the real estate market in Luxembourg can be competitive, and this law adds another layer of complexity. Being aware of it and seeking expert advice can help you navigate the process more smoothly.
Sources: Global Corporate Real Estate Guide
We have made this infographic to give you a quick and clear snapshot of the property market in Luxembourg. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
15) Avoid underestimating renovation costs in Luxembourg, as strict building codes and high labor costs can inflate your budget
When you're thinking about renovating an older property in Luxembourg, be prepared for potentially high costs.
Renovation expenses can vary widely, typically ranging from €800 to €2,500 per square meter. This means even a small project can quickly become costly. Luxembourg's labor costs are among the highest in Europe, driven by the demand for skilled workers and strict building codes.
These building codes are particularly stringent in conservation areas, requiring special permissions and adherence to specific standards. This can lead to additional expenses and delays if not properly planned for. It's essential to factor in these potential costs when budgeting for your renovation project.
Unexpected issues can arise during renovations, causing budgets to escalate rapidly. The high demand for skilled labor in Luxembourg means that labor costs can quickly add up, impacting your overall renovation budget. Planning ahead and being aware of these factors can help you manage costs more effectively.
Luxembourg's building regulations are designed to maintain the country's architectural integrity, but they can also add complexity to your renovation plans. It's important to understand these regulations and factor them into your project timeline and budget. Proper planning can help you navigate these challenges and avoid unnecessary expenses.
Sources: Renov.lu, VDL.lu, Global Property Guide
In this video, 'Buying Real Estate in Luxembourg,' comprehensively explains the property buying process, including the importance of the 'compromis de vente' and legal requirements.
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.