# Luxembourg's legal rent ceiling: 5% of the landlord's capital, not the market

How the invested-capital rule works, what the 2024 reform changed, and why the 3.5% cut you may have read about is not the law

Canonical: [https://chathome.lu/en/insights/luxembourg-legal-rent-ceiling-capital-invested](https://chathome.lu/en/insights/luxembourg-legal-rent-ceiling-capital-invested)
Published: 2026-07-30T15:41:23.157Z
Updated: 2026-08-13T10:09:08.911Z

An unfurnished home's annual base rent may not exceed 5% of the landlord's revalued, depreciated invested capital (law of 21 September 2006). Revaluation uses the article 102(6) LIR coefficients; depreciation is 2% per two-year period once the dwelling is 15 years old, on buildings and works but never on land. Reading it backwards, €2,000 a month requires €480,000 of revalued capital. The 2024 reform (adopted 10 July 2024) changed agency fees, co-tenancy and written-lease rules but kept the rate at 5% — the proposed cut to 3.5% was not adopted. On 17 April 2026 the Observatoire de l'Habitat published three studies reopening the question; no bill, rate or timetable exists today.

## Key takeaways

- A cheap, long-held property has a low legal ceiling however high the market goes.
- €2,000 a month implies at least €480,000 of revalued, depreciated capital.
- Your written lease must state that the rent respects the legal ceiling — so asking for the calculation is routine.
- Disputes go to the commune's commission des loyers, free of charge.

## Luxembourg caps rent against the landlord's capital, not against the market

In most countries a rent is "too high" only if the market says so. Luxembourg is
different. Under the [law of 21 September 2006 on residential
leases](https://legilux.public.lu/eli/etat/leg/loi/2006/09/21/n1/consolide), the
annual base rent of an unfurnished home may not exceed **5% of the revalued,
depreciated capital the landlord invested in it**. The comparable flat down the
street is legally irrelevant. What matters is what the owner actually put in, and
when.

That single sentence has two consequences most tenants never hear. A landlord who
bought cheaply decades ago has a low legal ceiling no matter what the market now
pays. And a landlord who bought recently at today's prices has a high one. Two
identical flats on the same landing can carry very different legal maxima.

## What counts as "invested capital"

The capital is the purchase price plus acquisition costs plus dated improvement
works — evidenced by the notarial deed and invoices, not estimated from market
value. Two adjustments then apply.

**Revaluation.** Each element is multiplied by the coefficient for the year it was
spent, under article 102, paragraph 6 LIR. A franc spent in 1970 and a euro spent
in 2015 are not the same money; the coefficient table, running from 1918 to the
present, is what makes them comparable.

**Depreciation for age (*vétusté*).** Once the dwelling is 15 years old, 2% is
deducted **per additional two-year period** — not 2% per year, which is the single
most common error in secondary summaries. It applies to construction and
improvement costs, never to land.

The ministry's worked example fixes what the prose leaves open. For a house built
in 1970 and valued in 2020, the building is 50 years old, so the periods count is
⌊(50 − 15) ÷ 2⌋ = **17**, giving **34%** depreciation — applied to the whole
revalued non-land capital, including recent works.

## Reading the formula backwards

Because the rule is arithmetic, it inverts. If you know the rent, you know the
minimum capital the landlord would have to be able to document:

> annual rent ÷ 5% = minimum revalued, depreciated invested capital

A flat advertised at **€2,000 per month** means €24,000 a year, which requires
**€480,000** of revalued, depreciated capital for that rent to sit inside the
ceiling. At **€3,000 per month** the requirement is **€720,000**.

**This arithmetic is not a legal test, and it cannot show that a rent is
unlawful.** It is the formula inverted, nothing more. Only the landlord holds the
deed, the acquisition fees and the dated improvement invoices that make up
invested capital, so no figure derived from rent alone establishes any particular
property's legal ceiling. Treat it as a question worth asking, not as a finding.
For an older, long-held property, revaluation and 34% depreciation often land well
below the number above.

You can run your own figure with the [ChatHome rent
check](/en/discover/rent-check).

For context, chathome.lu data shows [Luxembourg
City](/en/commune/luxembourg) carrying a rent median of 34 €/m² per month across
**528 active listings**, computed on 2026-07-30 from 1,219 active listings
advertised [for rent](/en/rent) nationwide. A 75 m² flat at that median is roughly
€2,550 a month. Read backwards that would imply roughly **€612,000** of revalued,
depreciated capital — an illustration of the arithmetic only, not a claim about
any real property: these are asking rents from agency listings rather than signed
leases, and nothing in them reveals what was actually invested in those specific
homes. See our [price methodology](/en/prices/methodology).

## What the 2024 reform actually did — and did not do

Bill 7642, deposited in July 2020, was adopted on **10 July 2024** and published in
Mémorial A n°311 on **25 July 2024**. It reformed the lease regime substantially:
agency commission is now split 50/50 between landlord and tenant, co-tenancy is
regulated, leases must be in writing with mandatory mentions including a statement
that the rent respects the legal ceiling, and rent adjustments are capped at 10%
per two-year period.

What it did **not** do is change the rate. The ministry's own [note
explicative](https://logement.public.lu/dam-assets/documents/politique/bail-loyer/note-explicative.pdf)
on the reform proposed lowering the ceiling to **3.5%** — and to **3%** for homes
in energy classes F to I — together with a fallback limit of €8 per m² where the
landlord fails to determine the invested capital. None of that survived into the
adopted text. **5% remains the law today.**

This matters because the 3.5% figure still circulates as though it were imminent.
It is not pending: the bill that carried it has completed its passage.

## What reopened in April 2026

On **17 April 2026** the Observatoire de l'Habitat published three studies on rent
regulation in Luxembourg, including proposals for how invested capital should be
calculated. That is the live development — analysis feeding a possible future
bill, not a bill itself.

As of this article's publication date there is **no deposited bill, no agreed rate
and no timetable**. Anyone telling you the ceiling is about to fall to 3.5% is
describing a 2024 proposal that was not adopted, or anticipating a 2026 process
that has not produced legislation.

## What this means if you are renting now

Ask for the invested-capital calculation. Since the 2024 reform your written lease
must state that the rent respects the legal ceiling, which makes the question a
routine one rather than a confrontational one. If the figures do not add up, rent
disputes are decided by your commune's *commission des loyers*, free of charge.

Deposits follow separate rules worth knowing alongside this one — see [getting
your rental deposit back in
Luxembourg](/en/insights/rental-deposit-not-returned-luxembourg).

*This article is informational context, not financial or legal advice. Whether a
particular rent respects the legal ceiling depends on documents only the landlord
holds. Consult a qualified professional, or your commune's commission des loyers,
before acting on anything here.*

## Methodology

The 5% rate, the article 102(6) LIR revaluation coefficients and the vétusté rule (2% per two-year period from age 15, on buildings and works, excluding land) are taken from the law and the Ministère du Logement brochure, and are reproduced in ChatHome's rent-cap engine, last verified against the brochure's own worked example on 2026-07-28. The reverse calculation is the statutory formula inverted: annual base rent divided by the statutory rate yields the minimum revalued, depreciated capital consistent with that rent. Parliamentary status was read directly from the Chambre des Députés dossier record for bill 7642 on 2026-07-30. ChatHome listing counts are active listings only, computed from production data on 2026-07-30; disabled listings are excluded.

## Limitations

The reverse calculation is arithmetic on an advertised rent, not an estimate of a specific property's legal ceiling: only the landlord holds the deed, fees and dated improvement invoices that constitute invested capital, so the true ceiling for any given home cannot be derived from the rent alone. Rent figures are asking rents from agency listings, not signed-lease rents, and therefore overstate what tenants actually pay. Furnished lettings, service charges and short-term arrangements follow different rules and are out of scope. This page is information, not legal advice; rent disputes are decided by the commune's commission des loyers. Reform status is accurate as of 2026-07-30 and should be rechecked before reuse.

## Sources

- Loi du 21 septembre 2006 sur le bail à usage d'habitation, texte consolidé — legilux.public.lu, accessed 2026-07-30
- Ministère du Logement, « Le capital investi — calcul du plafond légal du loyer » (brochure with worked examples) — logement.public.lu, accessed 2026-07-30
- Ministère du Logement, note explicative « La réforme du plafond légal du loyer (Projet de Loi 7642) » — logement.public.lu, accessed 2026-07-30
- Chambre des Députés, dossier parlementaire 7642: adopted 2024-07-10, published Mémorial A n°311 on 2024-07-25 — chd.lu, accessed 2026-07-30
- Observatoire de l'Habitat, three studies on rent regulation published 2026-04-17, incl. « Propositions pour le mode de calcul du capital investi » — logement.public.lu, accessed 2026-07-30
- Article 102, alinéa 6 LIR revaluation coefficients (table spanning 1918 onwards), Administration des contributions directes — verified 2026-07-28
- chathome.lu data: Luxembourg City rent median of 34 €/m²·month across 528 active listings, drawn from 1,219 active listings advertised for rent nationwide — computed 2026-07-30

## Frequently asked questions

### What is the legal rent ceiling in Luxembourg in 2026?

For an unfurnished home used as a main residence, annual base rent may not exceed 5% of the landlord's revalued and depreciated invested capital. This rate was retained by the law of 23 July 2024 and remains in force as of 30 July 2026.

### Is the rent ceiling dropping to 3.5%?

No. A reduction to 3.5% — and 3% for energy classes F to I — was proposed in the ministry's note explicative accompanying bill 7642, but it was not adopted. The bill passed on 10 July 2024 keeping 5%. No replacement bill has been deposited.

### How do I calculate the capital needed for my rent?

Multiply your monthly base rent by 12, then divide by 5%. A rent of €2,000 per month gives €24,000 a year, which requires €480,000 of revalued, depreciated invested capital. The ChatHome rent check does this for you.

### How is depreciation for age calculated?

Once the dwelling reaches 15 years old, 2% is deducted for each additional two-year period, applied to construction and improvement costs but not to land. A house built in 1970 and valued in 2020 is 50 years old, giving 17 periods and 34% depreciation.

### What can I do if I think my rent exceeds the ceiling?

Ask the landlord or agent for the invested-capital calculation — since the 2024 reform your written lease must state that the rent respects the legal ceiling. If it does not add up, your commune's commission des loyers decides rent disputes free of charge.