Common Real Estate Buying Mistakes in Luxembourg

Published on October 1, 2025 and written by Cyril Jarnias

The Luxembourg real estate market is renowned as one of the most dynamic and expensive in Europe. With prices continuously climbing and demand ever-increasing, purchasing property in the Grand Duchy can prove to be a real obstacle course. To help you navigate these sometimes murky waters, here is a guide to the most common mistakes to avoid during your real estate acquisition in Luxembourg.

Not clearly defining your objectives and budget

One of the first mistakes many buyers make is diving into their property search without clearly defining their objectives and budget. In Luxembourg, where prices per square meter can easily exceed €10,000 in sought-after areas, it’s crucial to have a precise idea of what you’re looking for and what you can afford.

Defining your priorities is essential. Do you want a downtown apartment or a house in the suburbs? How many bedrooms do you need? What is your maximum budget, taking into account not only the purchase price but also additional costs (notary fees, potential renovations, etc.)?

Not having a clear vision of these elements can waste precious time in your search, or even lead you to make compromises you’ll regret later. In Luxembourg, where the market is particularly tight, being indecisive can cause you to miss great opportunities.

The budget must be realistic and account for all costs. Beyond the purchase price, don’t forget to include notary fees (which can represent up to 7% of the purchase price), potential renovation costs, and property taxes. In Luxembourg, these elements can quickly inflate the final bill.

Underestimating the importance of location

“Location, location, location”: this well-known real estate maxim takes on its full meaning in Luxembourg. Neglecting this aspect can prove to be a costly mistake in the long term.

The Grand Duchy, although small, shows significant disparities in terms of prices and quality of life depending on the area. The capital, Luxembourg City, is by far the most expensive, with prices that can reach peaks in certain neighborhoods like Kirchberg or Limpertsberg. Outlying municipalities like Strassen, Bertrange, or Hesperange often offer better value for money while remaining close to the center.

It’s crucial to consider not only the price per square meter but also accessibility, public transportation (the expanding tram in Luxembourg City is a major asset), proximity to schools and shops, and long-term appreciation potential.

Also don’t neglect future urban planning projects. Luxembourg is constantly evolving, with numerous development projects underway or planned. A neighborhood that’s unattractive today could become the new “hot spot” in a few years. Conversely, a quiet neighborhood could be impacted by the construction of a new road or shopping center.

Neglecting the property’s condition and potential renovations

In the frenzy of the Luxembourg real estate market, it’s tempting to jump on the first opportunity that comes along. However, neglecting the property’s actual condition and potential renovations needed can prove to be a costly mistake.

The Luxembourg property market is varied, ranging from charming old houses to ultra-modern constructions. Each type of property presents its own challenges. Older houses may require significant renovations, particularly in terms of insulation or electrical updates. Recent constructions, meanwhile, may sometimes hide defects due to rapid construction to meet growing demand.

It’s crucial to have a comprehensive property inspection done before purchase. In Luxembourg, unlike other countries, there’s no legal obligation for the seller to provide a complete technical inspection. So it’s up to the buyer to be vigilant.

Hire an independent expert to assess the property’s condition. This may cost you between €500 and €1,500 depending on the property size, but it’s an investment that can save you from bad surprises later. Pay particular attention to thermal insulation, as energy standards in Luxembourg are becoming increasingly strict.

Also don’t forget to check for any easements or restrictions related to the property. In Luxembourg, certain areas are subject to specific regulations regarding urban planning or heritage protection.

Rushing into purchase without knowing the market well

The Luxembourg real estate market is known for its speed and competitiveness. Faced with this pressure, many buyers rush into their acquisition without taking the time to properly understand the local market mechanisms. This is a mistake that can be costly.

Take the time to study the market in depth. Prices in Luxembourg can vary considerably from one municipality to another, even from one neighborhood to another. For example, while the average price per square meter for an apartment in Luxembourg City can exceed €10,000, it can drop to €6,000 in some northern municipalities.

It’s also important to understand market trends. Luxembourg is experiencing sustained demographic growth, with a population increasing by about 2% annually. This growth, combined with a housing supply struggling to keep up, maintains upward pressure on prices.

Don’t hesitate to consult different information sources. The Housing Observatory, a Luxembourg public body, regularly publishes detailed reports on real estate price trends. Local real estate agencies can also provide valuable information about market trends.

Finally, take the time to visit several properties before deciding. Even though the market is fast, a rushed decision could lead you to overpay or buy a property that doesn’t truly meet your needs.

Underestimating additional costs and taxation

A common mistake when buying property in Luxembourg is focusing solely on the purchase price, neglecting the many additional costs and tax aspects that can significantly increase the final bill.

Notary fees are particularly high in Luxembourg. They include registration fees (6% of the purchase price), transcription fees (1%), and notary fees. For a €500,000 property, these fees can easily reach €35,000.

Also don’t forget real estate agency fees, which are typically the buyer’s responsibility in Luxembourg. They can represent between 2% and 3% of the sale price.

Luxembourg real estate taxation has its particularities. If you buy a new property, you’ll have to pay 17% VAT on the portion of the price corresponding to construction (VAT doesn’t apply to the land). For an older property, you won’t pay VAT but the registration fees mentioned above.

You also need to account for property tax, which is relatively low in Luxembourg compared to other European countries but varies by municipality.

Finally, if you plan to rent out your property, be aware that rental income is taxable. The tax rate depends on your overall tax bracket, which can go up to 42% for the highest incomes.

Neglecting legal and administrative aspects

The Luxembourg legal and administrative system, although generally efficient, can prove complex for the uninitiated. Neglecting these aspects can lead to costly complications in time and money.

The sales agreement is a crucial document in the purchase process. In Luxembourg, it’s legally binding and commits both buyer and seller. Therefore, it’s essential to have it reviewed by a professional before signing. Make sure all necessary conditions precedent are included, particularly those related to obtaining bank financing.

Carefully verify the property’s legal status. If it’s an apartment, request to review the co-ownership regulations and minutes of recent general meetings. This will give you an idea of any planned renovations or ongoing conflicts.

For houses, ensure all constructions and modifications comply with urban planning permits. In Luxembourg, urban planning violations can be penalized even years after they occurred.

Also don’t forget to check for any potential easements. Certain areas of Luxembourg are subject to specific restrictions, particularly regarding heritage or environmental protection.

Finally, if you’re not a Luxembourg resident, familiarize yourself with the specific rules that apply to foreign buyers. Although there are no major restrictions on property purchases by non-residents in Luxembourg, some administrative procedures may be more complex.

Not anticipating future developments

In a real estate market as dynamic as Luxembourg’s, not anticipating future developments can be a costly mistake. The Grand Duchy is undergoing rapid changes, both in terms of urban planning and demographics, which can significantly impact your property’s long-term value.

Stay informed about major urban development projects. Luxembourg is heavily investing in its infrastructure, with projects like the tram network extension, development of new business districts, or creation of eco-friendly residential areas. These projects can significantly influence the attractiveness and therefore the value of nearby properties.

For example, the development project for the Cloche d’Or neighborhood south of Luxembourg City has transformed an area once considered undesirable into a new center of attraction, with a significant increase in real estate prices.

Take demographic and economic trends into account. Luxembourg is experiencing sustained demographic growth, mainly fueled by immigration. This trend is expected to continue in the coming years, maintaining strong demand in the real estate market.

Additionally, the Luxembourg economy, largely based on financial services, is seeking to diversify. Sectors like information technology, space, or biotechnology are booming. These developments can create new areas of attractiveness for real estate.

Also don’t forget regulatory developments. Luxembourg is gradually strengthening its building energy efficiency standards. A property that doesn’t meet future standards might require costly renovations in the coming years.

Finally, anticipate your own future needs. If you’re buying to live there, think about the evolution of your family or professional situation. If it’s a rental investment, consider the types of tenants you’ll be able to attract long-term.

In conclusion, buying property in Luxembourg can be an excellent opportunity, but it requires careful preparation and a good understanding of the local market. By avoiding these common mistakes, you’ll maximize your chances of making a wise and profitable long-term investment.