Luxembourg 5 % rent rule: calculation and 2026 reform
How Luxembourg's statutory rent cap works, how to compute it, and the impact of the upcoming reform.
01Principle of the 5% rule
Article 3 of the modified law of 21 September 2006 on residential leases sets the maximum annual rent at 5% of the revalued capital invested in the rented property. It is an imperative cap: any clause providing a higher rent is void, and the tenant can obtain a retroactive rent reduction before the municipal Rent Commission or the justice of the peace.
The mechanism seeks a balance between a reasonable return for the landlord (5% gross/year) and tenant protection. The rule applies to rent excluding charges. Service charges (water, heating, common area maintenance, elevator) are billed separately at actual cost, within the recoverable charges set by the Grand Ducal Regulation of 16 June 2015.
02Revalued invested capital
Invested capital comprises: the property's purchase price (land + construction), deed costs (duties, emoluments, mortgage), and subsequent durable improvement expenses (extensions, transformation, major energy renovation). Excluded are routine maintenance, decoration, furniture, and finance costs.
Capital is revalued at the date of rent setting using the revaluation coefficient of the investment year, published by STATEC. Key 2026 coefficients: 1.48 (2026), 1.52 (2025), 1.57 (2024), 1.64 (2023), 1.77 (2022), 2.07 (2015), 2.33 (2010). A 2%/year wear-and-tear discount applies to the construction share (RGD 16.06.2015).
03Practical calculation and formula
Full formula: Max annual rent = (revalued invested capital − construction wear-and-tear discount) × 5%. Max monthly rent = max annual rent / 12. Example: apartment bought €400,000 in 2015 (€30,000 in costs), no works. 2015 coefficient = 2.07. Revalued capital = €430,000 × 2.07 = €890,100. Wear-and-tear 11 years × 2% = 22% (on the ~70% construction share). Capital after wear-and-tear ≈ €753,700. Max annual rent = 5% × €753,700 = €37,685/year, i.e., ~€3,140/month.
In case of dispute, tenant or landlord can refer to the municipal Rent Commission (free procedure, Art. 7 of the 2006 law). The Commission issues an opinion based on the documents: acquisition deed, works invoices, quotes, STATEC indices. If the opinion is ignored, the matter can go before the justice of the peace, who can impose retroactive reduction and refund of overpayments.
04Worked examples by purchase year
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| Purchase year | STATEC coefficient | Revalued capital | Max rent/month (5%) |
|---|---|---|---|
| 2010 | 2.33 | €1,001,900 | ≈ €4,030 |
| 2015 | 2.07 | €890,100 | ≈ €3,140 |
| 2020 | 1.95 | €838,500 | ≈ €3,270 |
| 2022 | 1.77 | €761,100 | ≈ €2,990 |
| 2025 | 1.52 | €653,600 | ≈ €2,690 |
Compute your legal maximum rent
Our calculator applies the STATEC coefficient of your purchase year, the annual wear-and-tear discount, integrates improvement works, and returns the maximum monthly rent. Adjustment available for the 3.5% reform.
Run the calculationFrequently asked questions
Short answers to the most common questions on this topic.
How to calculate the maximum rent in Luxembourg?
Multiply invested capital (purchase price + deed costs + improvement works) by the STATEC coefficient of the investment year. Apply the 2%/year wear-and-tear discount on the construction share. Multiply the result by 5% to get the max annual rent, then divide by 12 for monthly.
Will the 5% rule change in Luxembourg?
Bill 8184 plans to lower the cap from 5% to 3.5% for new leases, aiming to better protect tenants against rising prices. The text is in parliamentary discussion and could enter into force during 2026. Existing leases would not be retroactively affected.
What exactly is included in invested capital?
The purchase price of land and construction, deed costs (duties, emoluments, mortgage), and durable improvement expenses (extensions, transformation, major energy renovation). Routine maintenance, decoration and furniture are excluded.
How does the 2% wear-and-tear discount work?
The construction share (excluding land, typically 60-75% of price depending on the municipality) is discounted by 2% per year elapsed since purchase or last structural works. The discount cumulates up to a floor (typically 30% of the initial value).
Are service charges included in the 5% cap?
No. Charges (water, heating, common maintenance, elevator) are billed on top of the capped rent, on an actual cost basis and limitatively listed in the Grand Ducal Regulation of 16 June 2015 (waste tax, common utilities, etc.). The landlord cannot pass on major works or a margin.
What if my rent exceeds the legal cap?
Refer free of charge to your municipality's Rent Commission with the landlord's acquisition deed (request it), your lease and works invoices. The Commission issues an opinion; if the landlord refuses to comply, you can go before the justice of the peace, who can order a retroactive reduction and refund of overpayments.
Official sources
Statutes, circulars and publications consulted for this guide.
Related tools
Complete your analysis with these other tevaxia tools.
5% of revalued invested capital + wear-and-tear + reform adjustment.
Letter templates for challenge, charge tracking, commission appeal.
Median observed rent by municipality and dwelling type for comparison.
Track gross/net yield of your rented properties.
Related articles
Continue reading with these complementary guides.
Duration, termination, rental deposit, charges and obligations of landlord and tenant.
Duration, renewal, eviction indemnity, key money and essential clauses of commercial leases.
Co-ownership rules, general meetings, common charges and reserve funds.