Rent Calculator — Invested Capital

In Luxembourg, residential rents are regulated by the amended law of 21 September 2006 on residential leases. Article 3 stipulates that annual rent cannot exceed 5% of the invested capital in the property. This cap applies to all residential leases, whether unfurnished or furnished.

The 21 March 2024 reform (law no. 8257) introduced important changes:

• Reduction of the rate from 5% to 3.5% for properties below a certain revalued capital threshold
• Strengthened penalties for abusive rents (fines up to EUR 5,000)
• Obligation to attach detailed invested capital calculation to the lease

The invested capital consists of the acquisition price of the property, revalued using STATEC revaluation coefficients (construction price index), plus the cost of improvement works also revalued.

The formula is:

Invested capital = (Purchase price x Coefficient for purchase year) + (Works x Coefficient for works year)

The revaluation coefficients are published by STATEC under the residential construction price index. They are used to update acquisition prices and works costs to determine invested capital under the residential lease law.

• Base 1960 = 1.00
• The 2024 coefficient is 8.86 (provisional)
• Coefficients are revised annually, typically published in March for the previous year

Depreciation is a discount applied to the invested capital to account for wear and obsolescence over time. Luxembourg case law recognises an annual rate of 1% to 2%, capped at 50% maximum.

• A 30-year-old property with 2%/year depreciation sees its invested capital reduced by 60%, capped at 50%
• Renovation works 'reset the clock' for the renovated portion