Purchase a Property in Luxembourg
Purchase a property in LuxembourgUpdated on Wednesday 22nd February 2023
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Foreigners who want to purchase a property in Luxembourg have no restrictions. There are many factors that could influence the decision to buy or rent in Luxembourg and one of the most common is the duration of the stay in the country.
We invite you to read below on the main steps to complete when buying real estate in Luxembourg. Our lawyers in Luxembourg can help local and foreign citizens and investors purchase various types of properties, among which residential and commercial real estate.
How to find a property in Luxembourg
Most properties on the market are advertised by real-estate agents (agents immobiliers). Foreigners are advised to be cautious when dealing with real estate agents and companies. The agents should have certain qualifications and approvals for legally conducting their business, such as a professional card and an approval from the Ministry of Middles Classes, Tourism and Housing (Direction Générale des Classes Moyennes). Some real-estate agents are members of the Chambre immobilière du Grand-Duché de Luxembourg, a non-profit association that guarantees quality real-estate trades.
It is possible to see private sale signs on properties, but the most common methods are advertising via important newspapers or various specialized websites.
Real estate due diligence when buying properties in Luxembourg
Once the future owner has found a property that matches his or her criteria it is best to have it verified. The real estate due diligence process is important when buying an already built property because it can reveal hidden information on the respective apartment, house, or even industrial facility. When it comes to commercial real estate purchases this procedure is even more important given the high costs of such purchases.
In most cases, when the property is bought with the help of specialized agencies, the real estate due diligence could seem unnecessary, however, the buyer is advised to perform a search with the Luxembourg Land Register and ask for the following information:
- information about the previous and current owners of the property to be purchased;
- information about any tenancy agreements and third-party rights over the property;
- information about debts related to the property, such as unpaid mortgages;
- information about specific authorizations that might be required if changes are to be made to the property.
Our law firm in Luxembourg can make such verifications with the Land Register in the Grand Duchy in order to ensure a safe real estate purchase.
Other verifications that can be made refer to technical and architectural real estate due diligence, however, these must be performed by specialists. We advise clients in pursuing such verifications in order to make sure the property complies with safety regulations.
Property prices in Luxembourg
Luxembourg is not a large country, therefore the offers listed by real estate agencies, newspapers and other publications are not as many as in large European countries. Real estate prices are higher than in other neighboring countries because of the increased demand and not so many offers, but also because of the high living costs here.
In order to help buyers find suitable residential properties they can buy, the Ministry of Housing created the Housing Observatory in 2003, a body which collects information on the housing market and evolution of prices which can be researched when looking for the property prices in Luxembourg.
Steps in buying a property in Luxembourg
Once a suitable property is found, the buyer will need to complete a few steps before becoming the legal owner of the respective property. These steps include:
- signing a pre-sale agreement which can contain various clauses depending on the type of property to by bought;
- paying an advance on the property in order to secure the transaction (in most cases the advance can go up to 25% of the entire price);
- applying for one of the governmental assistance schemes (the State home loan, the State financial aid), however this step is not mandatory;
- applying for the energy certificate when buying commercial real estate properties;
- singing the sale-purchase agreement and paying the fees associated with the purchase;
- registering the property with the Luxembourg Land Register and obtaining the property title.
It is important to note that the sale-purchase agreement must be registered with the Land Registry within 3 months after the buyer has acquired the property.
These steps are not hard to complete and foreign citizens who want to relocate to the Grand Duchy can grant one of our Luxembourg lawyers a power of attorney in order to conclude some of the steps associated with the purchase of real estate.
The advantage of being a citizen of a country in the European Union (EU), European Economic Area (EEA), or Switzerland is that you don’t need to fulfill any specific conditions for immigration to Luxembourg. If you need support in moving here with other administrative tasks, such as registering for taxation or healthcare, please contact us.
Costs when buying a property in Luxembourg
When performing a real-estate transaction, both the seller and the buyer pay certain costs.
The buyer must pay for:
- registration tax;
- notary fee (a notary must transfer the title after the price has been negotiated to its final value);
- transcript tax.
The seller will pay only for the real-estate agent’s fee.
The purchase agreement
The property purchase agreement is a contract signed between the parties. It is not mandatory, however, if it is drawn up, the contract will legally bind the two parties, ensuring that neither will discontinue the sale process. If the buyer and the seller choose to conclude a contract, it should include:
- identification details for both the seller and the buyer;
- a full description of the property and the surface area;
- purchase price;
- mortgage information;
- any penalties, if one of the parties does not conclude the sale etc.
The buyer may be asked to make a deposit for the property. The purchase must be completed by a notary in Luxembourg.
Why buy a property in Luxembourg?
Luxembourg is one of the most appealing countries to live in Europe. Home to most of the EU’s structures, Luxembourg is also a very safe country while the minimum wage for employees here is one of the highest in Europe.
When choosing to buy a property in Luxembourg it is useful to know that housing prices are cheaper in the northern part of the country compared to the Canton of Luxembourg.
Those buying properties in Luxembourg should also know that the government has in place several assistance schemes and tax benefits for buyers. Among these, we mention the following aids and taxes associated with the purchase of real estate:
- the tax credit for notarial instruments which implies a reduction of the registration fees in the limit of 20,000 euros;
- the deduction of loan financing costs for non-resident taxpayers which is calculated every year if the individuals keep the property for at least 10 years;
- the transcript tax which is set at 1.2% of the property value;
- a surtax of 3% if the property is located in Luxembourg City.
Our lawyers in Luxembourg can offer you legal representation and counseling for purchasing a property in Luxembourg. Contact us for more information.