Buying real estate: new or old?
Are you thinking about buying a property in Luxembourg? Are you unsure whether to buy a new or existing home? Together with our real estate specialists, we’ll take a look at the pros and cons of each option.
Pros and Cons of New Construction
Buying a new home in Luxembourg offers significant advantages on several levels: benefit from buildings featuring the latest technological innovations, move into a new home that meets all your design requirements,... But that’s not all... We’ll tell you more here.
Latest building standards and energy efficiency
Buying a new property means, above all, benefiting from the latest building standards. These standards aim to optimize energy consumption and thus provide tangible energy savings in the long run.
AAA Passive Houses in Luxembourg
Since January 1, 2017, all new construction in Luxembourg has met the building standards for a passive house. They must comply with AAA energy efficiency classes corresponding to :
- energy efficiency
- thermal insulation
- optimal environmental impact.
Energy consumption must be nearly zero (NZEB = Nearly Zero Energy Building).
Energy savings in new homes
In accordance with passive house standards, AAA buildings ensure lower energy consumption. Additionally , they distribute the generated heat more efficiently.
Homes or apartments equipped with the latest energy-saving innovations ensure very low energy consumption. Ultimately, this means lower energy bills for occupants , which is highly beneficial in a context of soaring energy prices.
By comparison, an older property will likely require additional investment to improve its energy efficiency. This is particularly true for homes built before the oil crises of the 1970s.
The energy performance certificate is mandatory for any home purchase. It will help you estimate the expected costs. Be sure to request it during your first visit to a property you’re interested in!
Buying off-plan in Luxembourg: creating your custom home
Buying new construction usually means buying off-plan. This means that from the very beginning, you can envision your future home and be involved in its creation.
The orientation of the different rooms to maximize natural light and sunlight, the layout of the rooms, the choice of materials, the selection of fixtures, the kitchen design, and more.
With the exception of multi-unit buildings, buying a new home allows you to create a custom-built home. If you choose to build your own house, you can tailor it to your family’s needs.
Benefit from a ten-year warranty on new real estate
In Luxembourg, whether you purchase a new or recently built property, you are entitled to a ten-year warranty. This 10-year warranty, provided by the builder, offers the property owner protection in the event of construction defects.
The ten-year warranty covers any major repairs to the property within 10 years of purchase.
Therefore, when purchasing a recent property, be sure to ask whether the ten-year warranty is still valid, including for single-family homes.
Reduced VAT rate for new construction or renovation work
When purchasing a new primary residence, the buyer is eligible for a 3% VAT rate on the construction cost, provided they occupy the property themselves as their primary residence.
This benefit amounts to up to 50,000 euros per newly constructed dwelling.
The VAT rate will be 17% for investors wishing to purchase a new property for rental purposes.
Reduced registration fees for new purchases
Registration fees are the costs paid to the notary when purchasing a property. These fees are calculated based on the cost of the land and the existing building.
Registration fees or notary fees are therefore particularly low if the building has not yet been constructed, since they then apply only to the land portion.
They will be higher for a home that has already been built.
Be mindful of timelines and prices in new construction
Since the COVID-19 health crisis and other international crises, the time it takes for properties to become available has tended to increase. Whether in apartment buildings or single-family homes, the supply of raw materials is suffering.
As a result, the wait to receive the keys to your new home may be longer. At the same time, raw material prices are skyrocketing. The final cost of new construction is also affected. After new construction, investors are now increasingly turning to older properties.
If you’re looking to buy a home, don’t miss the Home Expo in October.
Existing Homes: Pros and Cons
Existing homes offer other advantages over new construction.
Immediate availability of older homes in Luxembourg
In Luxembourg, the purchase process for older properties can be very quick.
Once the preliminary agreement has been signed, the sale can typically be completed within 1 to 2 months at most.
Any additional delays are often related to obtaining a loan, and thus depend on the buyer.
To avoid this, make sure from the very start of your search that you have the bank’s approval for the budget of your real estate purchase. Plus, you’ll avoid a significant source of stress when it comes time to sign a purchase offer.
Are you looking to sell your house or apartment? Make sure the buyer already has a loan approval.
Lower prices per square meter for older properties in Luxembourg
In Luxembourg, prices for existing properties are historically 20% lower than those for equivalent new properties.
See the latest real estate price trends in Luxembourg.
Appreciation of older properties over time
Investing in older properties allows you to increase the value of your real estate over time. With a lower cost per square meter and rising real estate prices, the value of older properties is indeed likely to increase more rapidly.
This is especially true if the property is located in a sought-after area and/or if you have undertaken renovation work. Moreover, the market is becoming increasingly demanding regarding property quality.
People who purchased their property more than 15 years ago in Luxembourg have seen their investment double since then.
Larger lots for older homes
Older homes often come with plots of several acres and large gardens. Built at a time when land prices were still low, older homes offer an undeniable advantage in terms of lot size.
Today, we often see houses from the 1950s to the 1980s being demolished to make way for new developments.
Furthermore, with the surge in demand, municipalities are increasingly granting building permits for duplexes or even apartment buildings where previously there was only a single-family home.
This trend tends to reduce the average lot size for new homes.
Prime locations with nearby amenities
With few exceptions, older properties are located in highly sought-after areas near amenities. Closer to city centers, older properties often offer better access to shops, schools, and public transportation networks.
New construction is more outlying, though it’s worth noting that new neighborhoods are emerging alongside these developments, complete with all amenities nearby. Check the real estate market to learn about these new neighborhoods.
In Luxembourg, sought-after older neighborhoods include the City Center, the Grund, Belair, Merl, and Limpertsberg.
Gasperich, Kirchberg, and Cessange are seeing the emergence of new neighborhoods in particular.
See neighborhoods to live in Luxembourg.
Renovation work and reduced VAT rate
If you carry out renovation work on your primary residence—including as a tenant—you can benefit from a reduced VAT rate of 3% instead of 17% on the cost of the work. This reduction is applied directly to the invoice upon request to the municipal administration. See housing assistance in Luxembourg.
However, the total amount of this benefit cannot exceed 50,000 euros per residence. You must submit a request to your municipality to benefit from this reduced housing VAT rate. If you are a tenant, remember to ask your landlord for permission before starting any work.
Looking to buy a home? Contact real estate agents to help you find a property.
Why buy real estate in Luxembourg? We’ll tell you everything.
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