Buy-to-Let in Luxembourg: How to Calculate Rental Yield and Whether It's Worth It

Luxembourg's property market has one of the tightest rental vacancy rates in Europe — driven by a growing expat population, limited housing stock, and strong corporate demand. This sounds promising for landlords, but rental yields tell a more nuanced story.

Gross vs Net Rental Yield

Gross yield = (Annual rent ÷ Property price) × 100

Net yield accounts for costs: property tax, management fees, maintenance, insurance, and vacancy periods.

In Luxembourg, where property prices are high relative to rents, gross yields typically run at 2.5–4.5% — lower than markets like Germany (3.5–5%) or France (4–6%) in similar cities.

Example: €500,000 Apartment in Esch-sur-Alzette

Monthly rent: €2,000 → Annual: €24,000 Gross yield: 24,000 ÷ 500,000 = 4.8%

• Property management (8%): €1,920
• Maintenance reserve (1% of value): €5,000
• Insurance: €800
• Property tax (impôt foncier): ~€400
• Vacancy allowance (1 month/year): €2,000

Net income: €24,000 − €10,120 = €13,880 Net yield: 13,880 ÷ 500,000 = 2.8%

How Tax Affects Returns

• Mortgage interest
• Depreciation (typically 2% of the building value per year)
• Maintenance and renovation costs
• Management fees

With these deductions, many landlords reduce their taxable rental income significantly — often near zero in early years when mortgage interest is highest.

Luxembourg vs Neighbouring Markets

The numbers suggest that for pure yield, cross-border investors may find better returns in neighbouring France or Germany. Luxembourg property's appeal lies more in capital appreciation and the strength of the rental market.

Should You Invest?

• You're investing long-term (10+ years) and expect capital appreciation
• You're financing at a fixed rate with significant equity
• You're in a lower tax bracket where rental income is taxed at 20–25%
• You're willing to manage or hire a reliable property manager

Calculate Your Rental Yield

[👉 Use the Luxembourg Rental Yield Calculator](/calculators/rental-yield)

Enter the property price, expected monthly rent, and annual costs to see your gross and net yield — plus how tax affects your actual return.