Renting or buying in Luxembourg in 2018? Engel & Volkers advises you
Trust in the real estate market in Luxembourg has been an established reality for several years. Indeed, the Grand-Duchy benefits from a favorable conjuncture and a growing attractiveness for foreign workers. Nevertheless, it is also a particularly complex market to be analyzed before settling in Luxemburg. Experts of the real estate agency Engel & Völkers invite you to discover residential real estate in this multicultural and multilingual country located at the very heart of Europe.
Renting a property
In Luxembourg, the rental market is relatively restrained/limited. The previous year rents increased by 4 to 5%. This average is mainly influenced by the strong growth of the rental prices in Luxembourg-city and Esch-sur-Alzette. Indeed, these two cities alone represent half of the rental properties within the Grand-Duchy of Luxembourg.
However, this price increase hides some disparities. The trend of the last few years is the following: the smaller the surface, the faster the rental price augmentation. This observation obviously goes together with the demand growth. Luxembourg welcomes more and more students, trainees and young workers who seek a studio or a small apartment to rent before considering a purchase. The past years, prices for big houses or apartments have been stable yet remain really high. Therefore, families settle down outside the capital, in calm and green communes such as Niederanven or Mamer for instance.
In Luxembourg, the agency fees are borne by the tenant and usually amount to a month’s rent.
Buying a property
If you are considering buying, the trend is the same as for rentals. Indeed, the price per sqm is constantly increasing and the price of small surfaces is the fastest . Currently, new projects are highly demanded at a price per sqm reaching over 6.300€ on average for an apartment.
Though promising, the real estate market in Luxembourg is highly complex. Considering a real estate investment in Luxembourg requires a deep knowledge of local specificities. Indeed, the legal system offers many advantages: a tax credit on notarial acts, a very low property tax, the real estate gain on the main residence is low taxed and some expenses linked to the mortgage are tax deductible.
Moreover, the State of Luxembourgoffers a reduced VAT rate of 3% instead of 17% for the construction or renovation works or for a first occupancy. However, this fiscal advantage cannot exceed 50.000€.
In the case of a sale in Luxembourg, the agency fees are covered by the owner.
For these reasons, we strongly recommend using the services of a real estate agency. In Luxembourg,private transactions are nearly non-existent given the requisite knowledge before buying, selling or renting a property in the best conditions. With more than 40 years of experience within the real estate industry, our partners from the Engel & Völkers agency in Luxembourg can support you all along your real estate project.