Buying a property in Luxembourg

Overview of the Luxembourg real estate market

The real estate market in Luxembourg has undergone significant changes in recent years. After a period of strong growth driven by sustained demand, prices began to decline in 2023 before gradually stabilizing in 2024. These fluctuations are largely due to rising interest rates, which have slowed access to homeownership, and a persistently limited supply of buildable land. Despite this, real estate prices in the country remain high and significantly exceed those in other European countries.

Major cities like Luxembourg City and Esch-sur-Alzette continue to experience strong housing demand, keeping prices at elevated levels. In contrast, regions farther from the capital, particularly in the north of the country, offer more affordable prices. Regional disparities can be significant, but real estate prices remain generally high across the entire country.

An important factor to consider is the scarcity of available land. Most plots are quickly acquired by construction companies, often requiring buyers to build their property through the company that sold the land. As a result, it is rare to purchase a plot of land independently and manage the construction process with contractors of one's own choosing. This unique aspect of the Luxembourg real estate market limits options for buyers, particularly those who wish to have full control over their construction projects.

Finally, the government continues to implement policies aimed at promoting access to affordable housing and supporting citizens on their residential journey. For a precise assessment of the current real estate market and available opportunities, it is recommended to consult specialized agencies or experts with up-to-date data. 

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Buying a turnkey property in Luxembourg

To purchase an existing property in Luxembourg, there are several steps that must be completed. A preliminary sales agreement, known as "compromis de vente," must be prepared and provided to the prospective buyer by the seller. This agreement serves as a preliminary contract before the final sale is formalized through a notarial deed. It outlines the mutual consent of the seller and buyer to proceed with the sale at the agreed-upon price.

The sales agreement of the property in Luxembourg

The sales agreement is a crucial contract that legally binds both the seller and the buyer until the real estate transaction is finalized. To ensure the security of both parties, this document must include certain basic information, such as:

• Identification of the parties: Full names and addresses of both the seller and the buyer.
• Description of the property: Detailed information about the property, including cadastral references and address.
• Existing easements: Mention of any easements affecting the property.
• Sales price and payment terms: The agreed amount and payment conditions.
• Details of the notary and date of signing the deed: The name of the chosen notary and the scheduled date for the authentic deed.
• Date of transfer of possession: The date when the buyer will take possession of the property.
• Suspensive clauses: For example, a clause allowing the agreement to be canceled if the buyer fails to secure the necessary financing.
• Penalty clause: Stipulating compensation in the event of unjustified withdrawal by one of the parties.

It is recommended to register the sales agreement with the Registration Duties, Estates, and VAT Authority within three months of signing to make it enforceable against third parties. For further details on the sales agreement and associated procedures, consult the Guichet.lu website.

Registration of the "compromis de vente" in Luxembourg

The sales agreement ("compromis de vente") can be registered with the Registration Duties, Estates, and VAT Authority (AED) within three months of its signing. While not mandatory and rarely practiced, this step is strongly recommended as it makes the agreement enforceable against third parties from the date of registration, providing enhanced legal protection for the buyer.

Registration fees vary depending on the inclusion of suspensive clauses: 12 euros if such clauses are included, and 7% of the sale price if they are not. However, these amounts may vary, so it is advisable to check with the AED. These fees must be paid by the person submitting the agreement to the AED, usually the buyer or their representative.

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The notarial deed in Luxembourg

The notarial deed, drafted by a notary, is mandatory for all property transfers in Luxembourg. While the sales agreement legally binds the parties, only the notarial deed formalizes the change of ownership and triggers the timelines for legal guarantees, including those related to hidden defects, as regulated by Articles 1641 and following of the Luxembourg Civil Code.

Notary fees, payable by the buyer, amount to 7% of the purchase price (reduced to 3.5% until June 30, 2025). These fees include registration duties, transcription fees, and the notary's remuneration. However, Luxembourg has introduced the “Bëllegen Akt”, a tax credit on notarial acts. It allows buyers who have not yet used this benefit and are purchasing a primary residence for personal use to receive a tax credit of €30,000 per person (€60,000 for a couple). This amount typically covers notary fees.

Beneficiaries of the “Bëllegen Akt” are prohibited from renting out their property for two years (four years for a building plot or a property under construction) or they risk having to repay the tax credit. Note that some property listings already include this tax credit in the displayed price, artificially reducing it by up to €60,000. It is therefore crucial to verify that the actual price of the property is also indicated in the listing to avoid any confusion.

Buying a building under construction in Luxembourg

In Luxembourg, the purchase of a property (commonly referred to as “immeuble,” even when it is a house) under construction can be done through two types of contracts: the term sale and the sale in the future state of completion (VEFA).

• In a term sale, the seller commits to delivering the property once it is completed, and the buyer commits to paying the full price at the time of delivery. Ownership is transferred upon completion, which is documented by a notarial deed. During this period, the seller is responsible for financing the construction.
• In a VEFA, the rights to the land and any existing structures are immediately transferred to the buyer. Future constructions become the buyer's property as they progress, with payments made in installments according to the advancement of the work. However, the seller retains the role of project manager until the construction is completed.

In both cases, a notarial deed is mandatory to formalize the transaction and safeguard the rights of the parties involved.

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The reservation contract in Luxembourg

Before signing a contract for the sale in the future state of completion (VEFA) or a term sale, it is common to enter into a reservation contract. This preliminary agreement commits the seller to reserve a specific property for the buyer in exchange for a deposit. This deposit, typically limited to a percentage of the estimated sale price, is paid into a special account in the buyer's name and cannot be used by the seller until the final sale deed is signed.

It is important to note that, unlike the purchase of an already constructed property where a sales agreement is generally used, in the case of a VEFA or a term sale, the sales agreement is not applicable. Only the reservation contract is valid as a preliminary agreement before the signing of the final notarial deed.

The reservation contract must include essential information, such as:

• A detailed description of the reserved property;
• Its geographical location;
• The technical specifications and planned features;
• The estimated sale price and payment terms;
• The estimated timeline for signing the final contract.

It is recommended to read this contract carefully and ensure all information aligns with expectations before signing. The reservation contract is therefore a key step in purchasing a property under construction in Luxembourg, ensuring the buyer secures the desired property while awaiting the completion of the sale through a notarial deed.

The deed of sale drawn up before a notary in Luxembourg

When purchasing a property under a term sale or a sale in the future state of completion (VEFA), the sales contract must be concluded as an authentic deed before a notary. This deed must include the following essential information:

• Identity of the owner: Name and contact details of the owner of the land and buildings.
• Administrative authorizations: Date of issuance of the necessary permits and associated conditions.
• Description of the property: Precise details of the building or the relevant part, including the agreed degree of completion.
• Price and payment terms: Agreed amount, payment conditions, and any revision clauses.
• Delivery timeline: Scheduled date for handing over the property to the buyer.
• Completion guarantee: Assurance of the full completion of the building (specific to VEFA).

The notarial deed must be accompanied by the following documents:

• Construction plans: Including façades, various levels, and building sections, with dimensions and details of room and clearance areas.
• Descriptive notice: Specifying the structure, technical characteristics of the building, materials used, work to be carried out, and planned equipment.
• Co-ownership regulations: If the building is subject to co-ownership.

The absence of any of these documents can compromise the validity of the sales deed. It is therefore crucial to ensure that all required elements are present and comply with legal requirements to guarantee the legal security of the transaction.

Transfer of ownership in Luxembourg

In a sale in the future state of completion (vente en état futur d'achèvement), the buyer acquires ownership of the buildings specified in the sales agreement as soon as they are completed and integrated into the ongoing construction. Additionally, ownership of the land designated for building is transferred immediately upon the conclusion of the contract.

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Building or Undertaking Construction Work in Luxembourg

Anyone wishing to construct a property (referred to as “immeuble” in legal terms) generally needs to hire an architect to create plans and obtain the necessary administrative authorizations. The project owner is responsible for signing contracts with the various trades and coordinating the stakeholders on the construction site.

Before undertaking any construction, extension, transformation, renovation, or demolition work, it is mandatory to obtain a building permit from the municipal administration where the property or land is located. Procedures may vary between municipalities, so it is recommended to consult the relevant municipal administration before starting any work.

The building permit application must be submitted in writing to the mayor (referred to as “bourgmestre” in Luxembourg), usually in multiple copies. This process includes the payment of a municipal fee, which varies depending on the municipality and the scale of the project. Work may not start until the building permit has been received.

Depending on the nature and scope of the work, additional authorizations may be required, including:

• Road permit: For work affecting public roads.
• Commodo/incommodo authorization: For classified establishments.
• Nature and natural resource protection permits: In cases of environmental impact.
• Deforestation/clearing permit: If trees need to be cut down.
• Authorization for national heritage sites and monuments: If the project involves a listed building or a protected area.
• Authorization from the Department of Transport or the Ministry of Sustainable Development and Infrastructure: For projects impacting transport infrastructure.

It is essential to check the specific requirements for your project and consult the appropriate authorities to ensure compliance with current regulations. For more information, you can visit the Guichet.lu website.

Subsidies for Buying or Renovating a Property in Luxembourg

Given the exorbitant prices of the real estate market, more and more residents are finding it difficult to become homeowners. To address this issue, Luxembourg has implemented various measures to support its residents.

In addition to the tax credit on notarial acts (Bëllegen Akt), other types of assistance are available for both purchasing a property and renovating it. For example, it is generally possible to deduct mortgage loan interest from taxes, within certain limits. Additionally, some types of work may qualify for a so-called “super-reduced” VAT rate, subject to conditions.

It is also possible to apply for a subsidized property, under certain conditions. Moreover, improvements aimed at making a building more eco-friendly, such as installing solar panels or a rainwater harvesting system, may qualify for government subsidies or financial assistance.

As these programs are numerous and often tailored to specific situations, it is strongly recommended to seek information to understand your rights. The Guichet.lu website and the Fond du Logement are excellent resources for obtaining detailed information. You can also schedule an appointment with the  Single point of contact for housing assistance for clear and personalized support.

Useful links:

Guichet.lu - Acquisition & Sales
Contractual aspects for sales
Financial aid for housing
Assistance for housing
Applying for a tax credit on notarial instruments ('Bëllegen Akt')
Booking an appointment online with the Single point of contact for housing assistance
The Registration Duties, Estates and VAT Authority (AED)
Fonds du logement

Application for building permits:

Construction, transformation and demolition works
Labor and Mining Inspectorate
Directory of local authorities