Legal maximum rent in Luxembourg: how to calculate it

The 5% rule

The annual rent excluding charges is capped at 5% of the invested capital, revalued and then reduced by a depreciation for age. The maximum monthly rent is therefore: capital × 5% ÷ 12. The rule is set out in the amended law of 21 September 2006 on residential leases, revised on 1 August 2024.

Step 1: the invested capital

• Purchase price plus deed costs (notary, registration), or the total construction cost including the land.
• If the land value is not known, it is set at a flat 20% of the capital.
• Improvement works (renovation, extension, insulation) are added. Routine maintenance does not count.

Step 2: revaluation

The capital is multiplied by the revaluation coefficient of the year of purchase (works use the coefficient of their own year). Examples: 1990 = 1.94; 2000 = 1.56; 2010 = 1.26; 2020 = 1.09; since 2022 = 1.00. The full table is below.

Step 3: depreciation

From 15 years after construction, the revalued capital excluding land is reduced by 2% per 2-year period. Revalued maintenance and repair costs can offset this depreciation.

Worked example

• House built in 1985, bought for €180,000 in 1990, €60,000 of works in 2012.
• Purchase revalued: €180,000 × 1.94 = €349,200. Works revalued: €60,000 × 1.18 = €70,800. Total: €420,000.
• Land (20% of the revalued purchase): €69,840, excluded from depreciation.
• Depreciation: 41 years old, i.e. 13 two-year periods beyond 15 years → 26% of €350,160 = €91,042.
• Capital used: €328,958. Maximum rent: 328,958 × 5% ÷ 12 ≈ €1,370 per month.

What changed on 1 August 2024

• Rental deposit: 2 months' rent maximum (instead of 3).
• Agency fee split 50/50 between landlord and tenant.
• Rent adjustment: +10% maximum, at most every 2 years.
• The written lease must state that the rent complies with the legal cap. The 'luxury dwelling' exemption has been abolished.
• Furnished lets: a furniture supplement may be added.

In case of dispute

The tenant can refer the matter to the Rent Commission (Commission des loyers) of their commune, which checks the cap. A reform of the calculation is under study (Observatoire de l'Habitat report of 17.04.2026) but has not been adopted.