Leases and Rental Agreements

Understand the different elements of the tenancy agreement and the obligations of the landlord and tenant when renting property in Luxembourg...

The rental agreement or tenancy contract (contrat de bail à loyer) stipulates the terms and conditions of rental and rental rates and is signed between the landlord or estate agent (on behalf of the landlord) and the tenant.

The term for new rental agreements in Luxembourg is flexible, but is generally for one year. However, for historical reasons, some agreements are still signed for a three-year period.

The law does not state what the agreement must include, but in general the following will figure on the contract:

  • Owner's name and address and that of their agent (if applicable)
  • Start date of the contract
  • Duration of the contract and renewal terms
  • Rental amount and terms of revision/increase
  • Method of payment
  • Amount and form of the deposit
  • Type of accommodation (house, apartment, mixed dwelling)
  • Description of common areas in apartment buildings (copropriété)
  • A description of the property (number of rooms, garage, garden, cellar)
  • Mention of luxury property, when applicable

Rental agreements are usually drawn up by the estate agency. In the absence of an agency, a contract template can be found online.

The rental contract is generally accompanied by an inventory report (état des lieux), signed by the tenant and the landlord, or by the estate agent on behalf of the landlord. The inventory report describes fittings, fixtures and their condition and the overall state of the property on arrival.

When renting through an estate agent, an agency fee must be paid. This is generally paid by the tenant and amounts to one month's rent plus VAT, payable upon signature of the contract.

Documentation

On application for a lease the applicant will normally be requested to show the following:

  • Identity card or passport
  • Proof of income, either payslips or signed employment contract
  • Guarantor: in some instances, details of a guarantor may be requested

Deposit

A guarantee is usually required. It may take three possible forms:

  • A payment in cash with receipt
  • A bank guarantee covering the deposit, in which case the bank will also require payslips or a deposit of the same amount or a guarantee from the employer. This is the most common form of deposit
  • In exceptional circumstances, a guarantee from the State

The refundable deposit (caution or dépôt de garantie) is generally paid into an interest bearing account in the tenant's name, which is remunerated at the minimum legal interest rate, published on a regular basis in the Official Gazette. This account requires authorisation from the landlord and the tenant before the money can be released.

The deposit amount cannot exceed three month's rent and must be paid upfront when signing the lease agreement together with the first month's rent and the agency commission, if applicable. The deposit can also be in the form of a bank guarantee.

The deposit covers:

  • failure to pay the rent
  • any damage caused to the property (except fair wear and tear)
  • failure to pay service charges (in apartment buildings)

The deposit must be refunded, deducting any costs for repairs to the property, within six months of the end of the lease.

Household insurance and certificates

The tenant is contractually required to have a household and a fire insurance covering the building. Insurance for contents is only required if they belong to the landlord A copy of the certificate and any amendment may be required by the landlord at the signing of the rental agreement and may be requested at the rental renewal date.

Further Information