The Housing Observatory publishes its Note 46, entitled « Enjeux de régulation liés au développement de nouveaux segments sur le marché locatif privé » (“Regulatory issues related to the development of new segments in the private rental market”).

This publication offers an analysis of regulatory instruments and points to issues and grey areas associated with the development of co-living and short-term rentals in Luxembourg’s private rental market. These new and rapidly expanding market segments are redefining how housing is used and challenge existing regulatory frameworks.

A rental market in transition

Following up on Note 41 (December 2024), this new publication discusses the regulation of three emerging segments in the private rental market:

• Co-living, consisting of furnished rooms managed by specialised companies, with shared spaces and services;
• Short-term rentals, referring to furnished units rented out for a few nights, notably to mobile workers;
• High-density Shared housing, i.e. newly-built developments designed to combine studios (and possibly rooms) and shared spaces.

These new segments tend to position themselves at the interface between housing and hospitality, raising questions on regulation, taxation, and urban planning.

Grey areas within the regulatory framework

Based on an analysis of the national and municipal legal and regulatory frameworks, the study identifies grey areas that complexify the work of public authorities:

• Absence of specific criteria – this gap creates a dependence of municipalities on private international actors, whose projects with standardised programmes are not always suited to the Luxembourg context;
• Blurred boundaries between furnished rooms and flat-sharing, opening the door to regulatory loopholes, particularly regarding fire safety;
• Projects at the crossroads between housing and hospitality, creating legal and land-use challenges; excessive alignment with hospitality regulations could worsen the shortage of rental housing for households who need long-term accommodation;
• Underestimated housing density – the way co-living units are delineated (one cluster of rooms sharing the same collective spaces is considered as a single housing unit) tends to underestimate the real density of occupation.

Heterogeneous practices at the municipal level

The analysis of building regulations and land-use plans across eleven municipalities throughout Luxembourg reveals discrepancies in planning regulations. This includes differences in minimum floor space requirements, or specific parking criteria for certain types of rental arrangements.

Such disparities can influence the decisions of property and project developers.

Clarifying and better coordinating

Note 46 calls for greater clarity at the national level and possibly  rethinking the definition of what underpins “housing”, considering all possible typologies and their multifaceted implications.

It also recommends improving knowledge of the rental housing stock, in particular through the forthcoming national building and housing register (registre national des bâtiments et des logements).