How to buy a home in Luxembourg

Luxembourg is a highly regulated real estate market and may be a source of great confusion for expats moving to Luxembourg. House prices vary greatly from area to area and rules on foreign ownership can confuse anyone. In this article we explain how to purchase real estate in Luxembourg as an expat.

Should you rent or buy in Luxembourg

Many expats initially moving to Luxembourg for work choose to rent a property. However with limited supply and sky high prices, it may be challenging at first to find an appropriate home for a family. Yet, renting allows time to research where you would like to live in the longer term. There are no restrictions on renting by expats although you will usually need to provide identification, proof of your right to work in Luxembourg, employment details, and a reference from your last landlord if you’ve previously rented in Luxembourg.

Can foreigners buy property in Luxembourg

There are no restrictions for foreigners to buy property in Luxembourg although you may need a good-sized bank account to be approved for a mortgage. You will also require the services of a translator unless you speak one of the official languages.
The property market is a very stable market with house prices having increased significantly over the last decade, with a cost increase of 131% between 2010 and 2022. At the beginning of 2022 house prices in Luxembourg averaged EUR 1,200,000, and apartments EUR 800,000. In 2020 Luxembourg City was the second most expensive city in Europe to buy a square meter of property, just after Paris. Prices for a house averaged Euro 2,100,000 and Euro 940,000 for an apartment in Luxembourg City.

Cost of buying property in Luxembourg

Buying property in Luxembourg means various additional costs on top of the asking price. Such prices include the following but may not be limited to it:

Registration fee

The registration fees are the biggest additional fees to be paid when buying property in Luxembourg. Fees are charged on the total value of the transaction. A total of 7% are payable, made up of 6% registration fee and 1% transcription fee.
This can be reduced, however. Buyers can get a tax credit of up to EUR 20,000 (EUR 40,000 for a couple). This is called the EUR 100 fee. The credit is available to legal residents and expats who aren’t yet residents but state an intention to remain in Luxembourg. If you rent or resell the property within two years, you’ll need to repay the credit.

Notary fee

Buyers usually purchase property with the help of a notary who oversees the process. Fees for a notary are paid at 1.5% of the total sales price.

Real Estate Agent fee

Generally commissions to agents are paid by the seller. However, if a buyer wishes to have an agent work for them and scout the best properties, a fee would naturally be applicable and payable by the buyer. This fee is not enshrined in the law and may be negotiated by the buyer with the agent.

Mortgage fee

When you take out a mortgage in Luxembourg, you’ll usually need to pay mortgage fees. These can include application fees, advance fees, and account handling charges. Rather than charging fees as separate lump sums, lenders generally build them into the rate of interest you pay on the mortgage.

Home insurance

If you buy a property with a mortgage, the lender will likely require you to take out payment insurance and buildings insurance as part of your contract. You can set these up in advance to come into force on the day you move into the property. Shop around before accepting insurance products offered by your mortgage lender. Contents insurance isn’t required by law, but you may wish to take out a policy to protect your belongings against theft or damage.

Buying process of property in Luxembourg

1) Once you have found a property you like you can make an offer to the seller directly or through their agent.

2) Once your offer has been accepted you will need to sign a commitment to buy the property at the offered price called “compromis de vente”. This is a legally binding document confirming that you will buy the property subject to your mortgage being approved. Should a buyer pull out of the deal it would usually require to pay a 10% charge of the agreed price.

3) Paying a deposit is the next step and is usually at least 10% of the total price.
Hiring a solicitor or notary would usually have already been done by the seller but you may wish to choose someone else. The solicitor or notary will handle all the paperwork and register the change of ownership and normally works for both parties simultaneously.

4) On the day you exchange contracts, you must visit the bank to verify you have the required funds to pay your deposit. The bank will provide you with a document confirming proof of funds and that you have a legal right to buy a property in Luxembourg. Your notary will prepare the contract (based on the compromis) and agree a moving-out day with the vendor. This can sometimes be as long as six to eight weeks after the date you exchange contracts.

5) Once the sale is complete, you’ll sign an “acte de vente” and exchange keys. Your notary will arrange for the funds to be transferred to the seller.