New regime for the commercial lease in Luxembourg

In a first vote on 17 January 2018, the Chamber of Deputies adopted a new law amending the commercial lease regime (Bill n°6864). This new law aims to promote commercial activity and improve the protection of merchants, in particular by:

- limiting the rental guarantee to 6 months;
- prohibiting the practice of "key money";
- prohibiting sublease rents higher than the main rent (an exception is foreseen for investments made by the main tenant);
- guaranteeing a renewal of the fixed-term lease during the first 9 years (except in a few specific situations) – after these 9 years the landlord may refuse provided that he pays an eviction indemnity;
- granting the tenant a postponement of eviction of 1 to 9 months, but only under certain conditions; and
- introducing a pre-emptive right for the long-term tenant (at least 18 years) in the event of the sale of the building in which he operates.

The provisions of the law will apply to current contracts, with the exception of the provisions on subletting, for which a transitional period of one year has been granted, in order to allow main tenants to ensure that their sublease agreements are in compliance with the law.