Everything you need to know about becoming a homeowner in Luxembourg

Buying a property in Luxembourg

With almost 12,000 new residents every year, the real estate market in Luxembourg is booming. With tax incentives on the increase, home ownership in Luxembourg is a profitable investment.

Eric Thill of AXA's Hobscheid branch takes stock to guide you in your property purchase. 

Luxembourg real estate market on the rise

Real estate growth in Luxembourg has been rising steadily in recent years. Apartment and house prices continue to rise, despite a real estate price readjustment in recent months. On the other hand, expected rents are rising even more, and rental investment is clearly very attractive.

This inflation of the square meter is favorable to buyers. They see Luxembourg real estate as a highly profitable investment. Even if today's rising interest rates make it increasingly difficult to obtain loans, buying real estate for rental purposes remains an attractive investment.

In fact, while the property acquisition market is tightening, rents are soaring, so the return on investment remains attractive.

Why invest in Luxembourg? Attractive tax advantages

Real estate growth is driven by tax incentives offered by the Luxembourg government, which wants to make owning a main residence accessible to as many of its residents as possible.

Home ownership and Bellegen Akt

Firstly, the purchaser of a principal residence can benefit from a tax allowance on the purchase of his or her home, as well as a tax credit on notarized deeds - see Bellegen Akt. Transaction costs are limited, property taxes are low and the interest on the loan is deductible from your tax bill.

Tax deductibility of mortgage fees

Interest on mortgages is tax-deductible from the taxpayer's income tax return.

What's more, property buyers also benefit from a tax credit on their mortgage insurance (outstanding balance insurance). Mandatory when taking out a bank loan, this insurance protects you and your family in the event of an unexpected event.

Your AXA agency can help you set up death and disability insurance for your mortgage with a financial institution.

Variable prices in Luxembourg real estate

Property prices in Luxembourg vary widely.

Housing price disparities by geography

There is a marked disparity in the price per square meter of housing between Luxembourg City and the rest of the country, particularly the north.

When looking to buy a property in the capital, the square meter for an existing apartment is over 10,000 euros. If you move away from the capital, towards Hobscheid in the west, northwards to Wiltz or eastwards to Echternach, for example, the average square meter of housing drops to €6,000.

Price disparity between new and existing properties

There is also a variation, depending on whether you are buying a new or old property, although this variation is tending to narrow. For a new apartment in Paris, the square meter rises to €15,000. The best way to keep track of market trends is to consult the Observatoire de l'Habitat website.

Price disparities by number of rooms and surface area

Property prices also depend on surface area and number of rooms.

The price of a studio apartment is generally more expensive per m2 than an apartment with 4 or more bedrooms. The investment market is in fact driving prices upwards, with prospects of higher returns.

Find out more about the real estate market in Luxembourg.

How to buy in Luxembourg

To become a homeowner, and to obtain a mortgage, a buyer needs to be able to justify a down payment of 20% or even 30% of the purchase price. This is all the more true now that interest rates are rising. Luxembourg banks are becoming more and more demanding in this respect.

This explains why many people are no longer able to buy their own home without a sufficient down payment. See the cost of living in Luxembourg.

Once you've been granted a mortgage, you'll need to take out an insurance policy on your loan. This measure, systematically imposed by the banks, will protect your family in the event of an accident. Don't neglect to carefully study the guarantees offered by this death insurance contract. An insurer is well qualified to assist you in this process.

Once you've found your apartment or house and signed the compromis, the deed of sale must be drawn up by a notary of your choice. For information on this subject, we recommend you visit the Luxembourg notary's website, or refer to thereal estate agency in charge of the sale. They often work with the same notary to facilitate the transaction.

Want to take the plunge and become a homeowner in the Grand Duchy? Let AXA Eric Thill in Hobscheid help you with all your insurance needs. AXA Eric Thill agency in Hobscheid26d, Grand-Rue L - 8372 Hobscheid, tel: 27 39 27 1, eric.thill.agent@axa.lu.

Being well insured is an important factor in the success of your expatriation project in Luxembourg. More information here.

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