Looking forward to invest in a real estate property in Luxembourg? Find some useful information on procedures to follow in this article.
You will probably want to buy a real estate property if you are moving to Luxembourg for a long-term stay. This is possible provided you have some information on related procedures. You can then choose between a property that has already been built and a property that is in construction. But in either case, it is wise to inquire on the real estate market beforehand.
Real estate market
For two decades, the country's increasing development has led to a rise in real estate prices. The arrival of expatriates, along with a strong demand for housing in urban regions has quite modernized local trends. Thus, sales prices have highly increased. However, this trend continues to encourage foreigners to invest in real estate properties in the country.
According to the Observatory of the Habitat, indicators have been showing an increase of 3% to 5% in the sale of apartments during one year. Prices for houses and apartments rose by an average of 7.4% to 8.7% respectively. During the third quarter of 2014, the average price for a three-bedroom house amounted to € 610,877, while a studio cost some € 250,000.
Like in most major European cities, real estate prices vary according to urban and rural regions. Therefore, prices are higher in the capital city and in its surrounding cities, especially due to high demand and their proximity to many facilities such as schools, companies, etc. Further in the North and East, prices tend to be lower.
Buy a built property
There are a series of procedures to be filled so that you can own a built property in Luxembourg. First of all, a sales agreement has to be established under a private seal between you and the owner. This agreement will serve as a pre contract before the sale is subject to a notarial deed. It also stipulates that both parties have agreed on the quoted price.
The sales agreement
The sales agreement is similar to a lease document. It generally consists of some basic information on both parties so as to ensure their safety until the deal is concluded. Hence, it contains both parties' names and addresses, a brief description of the building, the existence of any easement, the sale price and terms of payment, notary's name and the deed's signature date, the expected sale date, a suspension clause allowing the sale agreement's cancellation in case the potential buyer is denied a loan by a credit institution and, finally, a penalty clause providing for compensation in case of unjustified cancellation of the sales agreement either by the seller or by the buyer.
The sale agreement then has to be registered with the Administration de l’enregistrement et des domaines (AED). Formalities are to be filled in by a non-professional within three months following the signing of related documents. Thus, the sale is compromised against third parties as from the registration date. The buyer's investment is then secured in case of breach of agreement by the seller.
Note that fees of € 12 apply whereby the suspension clause applies. Otherwise, these will amount to 7% of the stated sale price. These fees have to be settled by the person who registered the agreement at the EDA.
The notarial deed
A notarial deed is then drawn up or received by a competent public official. In case of change of ownership, this document is mandatory although it is just a formality since the sales agreement has been signed.
However, the deed is important as the deadlines for legal safeguards come into force when both parties have signed the document. Thus, the sale of a built property is regulated by the Article 1642 of the Civil Code.
Buy a building in construction
There are two types of sales in the case of buildings in construction: the sale for settlement and the future state of completion sale. The property's completion has to be established either by a qualified person or by both parties, and has to be sealed by a notarized deed.
In the case of a sale for settlement, the seller concludes a contract with the buyer, according to which he commits to deliver the property while the buyer commits to pay the agreed amount upon delivery. The ownership transfer then comes into full operation according to law by the recognition of the completion of the building and takes effect on the sale date.
Note that the sale for settlement agreement has to be concluded before a notary. It is characterized, namely, by the transfer of ownership that takes place only when the building has been completed, and by payment which will be made by the buyer on the date of ownership transfer (delivery date). Deposits are to be made on a blocked bank account in the seller's name. These can be either seized or transferred according to the work's progress.
In the case of a future completion sale, on the other hand, ownership rights are immediately transferred from the seller to the buyer. Thus, the buyer becomes the owner of all property constructed as the works progress. He then has to settle his dues according to their evolution. However, the seller still has the power over the works' progress until the property is delivered to the seller.
The booking contract
The booking contract applies to both to the sale for settlement and the future state of completion sale. Accordingly, a deposit has to be made to on a special account opened in the seller's name. The latter then commits to book part or the whole of the property for you. Note that a sale agreement cannot be established before the sale of a built property. In fact, the booking contract is the only document that intervenes before the sale for settlement or future state of completion sale.
The notarized sales act
Both the sale for settlement and the future state of completion sale have to be concluded by a notarized deed. This step is mandatory. The document must indicate the land and building owner's identity details, the date of issue of administrative authorizations and conditions applied (mandatory to establish the act), the whole or concerned part of the building's description and the degree of completion agreed between both parties, the agreed price and terms of payment term and any terms of revision, the delivery period and guarantee for full completion of the building in the case of a sale in the future state of completion).
The following documents have to be attached to the deed: construction plans (sides, different levels and plane-cutting the building) with useful ratings and details on the surfaces of parts and clearances, a descriptive note on the building's consistency and technical characteristics of the building and the materials used, work and necessary equipment. In the context of the construction of a condominium, you also have to produce the building regulations. Note that the act will be considered null and void in the absence of any of these documents.
Transfer of ownership
In the case of a future state of completion sale, the buyer becomes the owner of the building shown in the sale act upon completion and their incorporation into the construction works. However, the land ownership transfer is concluded immediately when the contract is signed.
Building on land
Any owner wishing to build on his land has to contact an architect who shall not only take care of the building plan but also of necessary administrative authorizations. The owner can also conclude several contracts with different architects, but he must ensure their coordination on the construction site.
If major works are to be performed, it is necessary to request for an authorization for road works and public facilities. In the case of acquisition of land or a building, you can request for a public facilities permit straightaway, a comodo/incommodo authorization for classified buildings, authorizations relating to the protection of nature and of natural resources, a land clearance permit, an authorization in the case of national sites and monuments and an authorization from the Transports Department or the Ministry of Sustainable Development and Infrastructure.
Moreover, before starting any construction, expansion, renovation, alteration or demolition, you are required to obtain a building permit from the nearest local authority to the property's location. As procedures differ from one municipality to another, make sure to inquire with these before starting.
In case you cannot call at the municipality personally, you can seek the assistance of a specialized intermediate agency (architect office, etc). The application to the Mayor has to be made in writing in several copies. Fees apply, depending on the municipality and the size of the project. Works cannot start before the building permit is received.
Civil Code of the sales - Articles 1582 to 1701 www.legilux.public.lu
Administration of the Registration and Estates - Mortgage Offices www.aed.public.lu
Administration of the Registration and Estates - Registration Offices www.aed.public.lu/functions
Housing Fund - Buying property www.fondsdulogement.lu
Department of Environment www.environnement.public.lu
Inspectorate of Labor and Mines www.itm.lu
Directory of municipal administrations www.syvicol.lu
BGL – Your Home Buying Plan www.bgl.lu