The real estate sector continues to grow in 2021

Despite the pandemic, real estate in Luxembourg recorded an increase of 13.9% between the end of 2019 and the end of 2020, a record compared to the average increase of 5.2% in Europe. A new flat will now cost 583,072 euros, an increase of 10.8%, while existing flats have seen their price rise by 15.3%. And if housing was the number one concern of Luxembourg residents in 2020, 2021 will be no exception with the arrival of new standards.

Faced with ever-increasing demand, new laws come into force in 2021

In order to avoid the explosion of the real estate bubble and to protect individuals from over-indebtedness, Luxembourg banks are now subject to new standards for real estate loans. Since 1 January 2021, the deposit required by banks has increased from 10% to 20%; only first-time buyers will be able to benefit from a financing of 100% of the amount of the property depending on their file.

Another of the new laws concerns rental housing: for new buildings acquired from 1 January 2021, the accelerated depreciation rate will be reduced from 6% to 5% and will last for 5 years, compared to 6 years previously. This 5% rate will apply to owners whose sum of depreciable bases of the buildings does not exceed one million euros. The amount of depreciable bases exceeding one million euros will be depreciated at the rate of 4%.

Will rents, more or less spared from the increase of the last years, be impacted? Answer this year!

Source: Eurostat