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The goal of the Anti-Money Laundering (AML) procedure is to combat money laundering and terrorist financing. Real estate agencies, such as Nextimmo, must comply with a set of legal obligations to adhere to current regulations.  

## **1. Client identification (Know Your Customer – KYC)**  

From the first contact, all essential information must be collected:  

- **For individuals:**  
  - Name, date of birth, address  
  - Copy of an identity card or passport  
  - Proof of address (e.g., electricity bill)  

- **For businesses:**  
  - Extract from the commercial register  
  - Company statutes  
  - Identification of ultimate beneficial owners (see next step)  

💡 If the client is not physically present, a certified copy of identity documents is mandatory.  

## **2. Identification of the ultimate beneficial owner (UBO)**  

When the client is a company, it is essential to determine who truly controls the entity.  
**Rules to follow:**  
- Any person owning more than 25% of the shares is considered a beneficial owner.  
- If no individual exceeds 25%, the company’s manager is considered the UBO.  

💡 Be cautious of complex structures (trusts, holdings) that may obscure the true identity of beneficiaries.  

## **3. Client risk assessment (Risk matrix)**  

Each client is classified according to their AML risk level:  

- **Low risk:** Local clients with transparent income sources.  
- **Medium risk:** Clients from countries with weak AML regulations or complex corporate structures.  
- **High risk:**  
  - Politically Exposed Persons (PEPs)  
  - Offshore companies or entities located in high-risk countries  
  - Funds with unclear origins  

💡 High-risk clients require enhanced due diligence.  

## **4. Monitoring transactions and financial flows**  

Every transaction must be analysed to identify potential anomalies:  

- Unusually high amounts without a clear explanation  
- Transactions originating from high-risk countries  
- Cash payments (strictly prohibited)  

💡 No transaction should be approved before completing the identification process.  

## **5. Sanctions list screening (Name screening)**  

Clients’ names must be cross-checked against international databases:  

- **Sanctions lists** (EU, UN, OFAC, Interpol)  
- **PEP databases** (Politically Exposed Persons)  
- **Interpol and fraud reports**  

💡 If a client appears on one of these lists, the transaction must be halted and reported.  

## **6. Ongoing monitoring & reporting obligations**  

Nextimmo is required to report any suspicious activity immediately:  

- Suspicious transactions must be reported to the Financial Intelligence Unit (FIU).  
- If suspicion arises, the transaction may be blocked.  
- A client may be reclassified as "high risk" if new concerning elements emerge after the initial identification.  

💡 Key rule: Any communication regarding an ongoing AML investigation is strictly prohibited (No-Tipping-Off principle).  

## **7. Data storage & retention**  

All client information must be retained for at least **five years**.  

**Documents to archive:**  
- Identity documents and proof of address  
- Contracts and mandates  
- Risk assessments  
- Transaction details  

💡 Authorities must be able to access these documents at any time.  

## **8. Training & internal controls**  

All employees must receive regular training on AML obligations.  

A **Compliance Officer for Anti-Money Laundering (AMLCO)** is responsible for:  
- Ensuring proper application of AML rules.  
- Reporting suspicious transactions.  
- Updating AML procedures.  

💡 Non-compliance with AML regulations can result in fines of up to **€5 million** or the **revocation of the business license**.  

## **Conclusion**  

🔹 AML compliance is not an option; it is a legal obligation.  
🔹 Many real estate agencies underestimate this risk, exposing themselves to severe penalties.  
🔹 Ignoring these regulations puts your business at risk.  

💡 The only solution: **Implement AML procedures from the very first client contact.**

Anti-Money Laundering procedure: A legal obligation for real estate agencies

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Every real estate agent knows the problem: sellers set unrealistic prices.  
"My house is worth more than that!" – a phrase heard all too often.  
But why? And more importantly, how do sellers end up hurting themselves by listing their property at an inflated price?  

### 10 reasons why homeowners overprice their property  

- **Emotional attachment** – Their home is more than just a property; it’s filled with memories.  

- **Comparing with the wrong references** – "My neighbour sold for X!" without considering key differences.  

- **Lack of market knowledge** – They don’t realize the market fluctuates and not all prices are realistic.  

- **Hoping for the perfect buyer** – "Someone will eventually pay this price!"  

- **Confusing investment with market value** – "I spent €50,000 on renovations!" – that doesn’t mean the market will pay for it.  

- **No urgency to sell** – Without pressure, they try their luck with an inflated price.  

- **Bad advice** – Friends, family, and even some accountants give unrealistic opinions.  

- **Betting on price increases** – "The market will rise soon!" (Spoiler: it rarely does.)  
- **Fear of undervaluing** – The fear of "being ripped off" prevents them from setting a realistic price.  

- **Testing the agent** – Seeing if the agent inflates the estimate just to secure the listing.  

### 10 Tactics sellers use to manipulate real estate agents  

Here’s how some sellers convince agents to list their properties at inflated prices:  

- **Biased sales comparisons** – They provide misleading data about local sales.  

- **"A friend told me that..."** – Relying on unqualified "experts."  

- **Hiding defects** – The agent only discovers later that the roof leaks.  

- **Exaggerating features** – "Luxury location!" when it’s next to a highway.  

- **Inflated valuations** – Costly appraisals that don’t reflect real market value.  

- **Pressuring the agent** – "If you don’t list at this price, I’ll go elsewhere!"  

- **Fake buyers** – "I have a buyer ready to pay this price!" (Spoiler: they don’t exist.) 

- **Offering a higher commission** – "We’ll pay more if you sell at this price!"  

- **Misleading statistics** – "Look at how prices have risen over the last decade!" – ignoring current market conditions.  

- **Emotional manipulation** – "I can’t accept less; my whole life depends on this!"  

### The harsh consequences of overpricing  

What happens next? Those who list at unrealistic prices lose more than they gain:  

- **The property sits too long on the market** – Buyers assume something is wrong.  

- **The listing becomes "stale"** – The longer it's online, the less attractive it becomes.  

- **Serious buyers move on** – They ignore overpriced listings.  

- **Forced price reductions** – After months without offers, sellers must slash their price.  

- **Final selling price below market value** – Buyers negotiate harder on old listings.  

- **High holding costs** – Mortgages, fees, and taxes continue to pile up.  

- **Agent disinterest** – Agents invest less in overpriced properties.  

- **Delays in moving forward** – If the seller wants to buy another home, everything gets delayed.  

- **Harder negotiations** – The buyer has the upper hand.  

- **Seller’s reputation suffers** – They are seen as "unrealistic."  

### The rue cost of overpricing  

Studies show that overpriced properties end up selling for 5-10% below market value.  
Sellers who think they are negotiating "from the top" actually lose money in the end.  

#### Example:  

- Market value: €500,000  
- Initially listed at: €600,000 (too high)  
- Sold after 12 months for: €450,000 (instead of €500,000!)  
- Net loss: €50,000 – just because of poor pricing strategy.  

### Conclusion: Sell smart, not with wishful thinking  

The solution?  

- A realistic starting price gets the best final price.  
- A good agent will explain why your asking price is unrealistic.  
- Every property has a true value – and it’s not negotiable.  
- Selling quickly is better than gambling on a dream price.  

Don’t let ego or bad advice cost you thousands.  
Those who understand the market sell faster and for more – without tricks or manipulation.  

Have you experienced this? Share your thoughts below! 👇

Why property owners overvalue their homes – and how it hurts them?

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Calculating living space in Luxembourg is a key issue for buyers, sellers and real estate professionals. To ensure transparency and uniformity, ILNAS 101:2016 establishes clear rules for determining which areas should be included or excluded from the calculation.

## What is living area?

Habitable surface is defined as all floor areas intended for the main uses of a dwelling and complying with habitability criteria. It includes

- **Living areas:** living rooms, bedrooms, kitchen, dressing rooms, closets
- **Wet rooms:** bathrooms, sanitary facilities
- **Interior passageways:** corridors, staircases, etc.

However, certain areas are not included in the living area:

- Communal areas
- Rooms with ceiling heights of less than 2 meters
- Walls, partitions and load-bearing elements
- Door and window openings
- Stairwells (holes in the floor not overhung by another staircase)
- staircase)
- Unfinished attics and mezzanines
- Cellars, garages, terraces, balconies, loggias, outdoor drying rooms
- Unheated verandas and service shafts

**Special case: staircases**

The inclusion of staircases depends on their position and function:

**Accounted for:**
- Staircases located inside the dwelling
- Spaces under staircases if the floor is continuous and usable. 



**Excluded:**
- Shared stairwells in apartment buildings
- Stairwells (openings in the floor without continuity) 

## Load-bearing walls and partitions: what's the difference?

Load-bearing walls are essential structural elements of a building. They are generally thick (15-20 cm or more) and are always excluded from the living area.
Partitions, on the other hand, are non-load-bearing elements and serve only to divide interior space. They are counted as living space because they are removable.

## Why is this standard essential?

The ILNAS 101:2016 standard prevents misuse and ensures transparency in the surface areas advertised by sellers and developers. It is therefore essential to check measurements before buying or renting.

## Need professional advice?

At Nextimmo.lu, we can help you understand and verify the living area of your property. Contact us now for an accurate assessment that complies with current standards!

Official sources and references:
- ILNAS 101:2016 standard - Living area
- Detailed explanation on Guichet.lu
- ILNAS press release

Share this article to help other homeowners and buyers see things more clearly!

Understanding the calculation of living space in Luxembourg

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_Tax initiatives in Luxembourg extended until July 2025_

The Luxembourg government recently announced a series of measures to support the real estate sector and facilitate access to housing for its residents. These initiatives, originally scheduled to expire at the end of 2024, have been extended to June 30, 2025, offering further opportunity to buyers, investors and tenants.  

## Main measures extended :

### 1. Reduced registration fees (“Bëllegen Akt”):

This measure enables a significant reduction in costs when purchasing real estate, making the purchase more affordable for many households.

### 2. Tax benefits for rental investors :

Investors who purchase property for rental benefit from tax incentives, encouraging an increase in the rental supply on the market.

### 3. Accelerated depreciation: 

A depreciation rate of 6% per year for six years is applied to new homes under construction, with a ceiling set at €250,000.

### 4. Reduced capital gains tax: 

The capital gains tax rate on the sale of real estate is reduced to 10.5%, instead of the usual 21%.

These measures are designed to strengthen the construction sector, increase the supply of housing and support private individuals in their acquisition or rental activities. Prime Minister Luc Frieden emphasized that these initiatives have a triple objective: to boost the construction and craft industries, create jobs, and facilitate access to housing for residents. 

For Luxembourg residents, this extension represents a significant opportunity. Whether you're a buyer, investor or tenant, it's essential to find out about these measures and take advantage of these benefits before they expire in June 2025.

At **Nextimmo**, we are committed to supporting you in your real estate projects by providing up-to-date information and helping you make the most of the opportunities offered by these government measures.

Government measures to support the real estate sector

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The dynamics of the Luxembourg real estate market have undergone a **radical shift** in recent years. While the period from 2018 to 2022 was marked by a **spectacular rise in prices**, the trend reversed in 2023 due to rising interest rates. This turnaround has **weakened the profitability of rental investments** and forced investors to rethink their strategies.  

---

## **📉 A Market Reversal After a Period of Strong Growth**  

Between 2018 and 2022, real estate prices in Luxembourg experienced **impressive growth**, peaking at **+15% at the end of 2020**. This surge was driven by **favorable credit conditions**, strong demand, and limited supply. However, the interest rate hikes initiated in **2022** put an end to this expansion.  

Apartment prices have since fallen by approximately **15.7% between Q3 2022 and Q4 2023**. This correction has partially **offset the loss of purchasing power** caused by the rising cost of mortgage loans, but it has also made rental investment less attractive.  

---

## **📊 Declining Rental Profitability**  

The real estate market has traditionally been attractive due to its **stable rental yield**. Between **2010 and 2018**, the gross rental yield fluctuated between **4.26% and 4.56%**. However, with the surge in housing prices until 2022, this yield dropped to **3.04%**.  

In 2023, a slight correction allowed the **gross rental yield** to rise to **3.74%**, and it is expected to continue approaching the 2010-2018 levels by 2024. However, this apparent improvement does not compensate for **the decline in capital gains prospects**.  

The **net rental yield**, which factors in financing costs, taxation, and market price trends, turned **negative at the end of 2022 or in 2023**. This situation is leading many investors to **reassess their strategies**, with some preferring to wait for better conditions, while others turn to **more profitable alternative investments**.  

---

## **📉 Growing Disinterest in Rental Investment**  

With a negative net yield, rental investment becomes **less attractive**. Additionally, other asset classes, particularly **bonds**, have regained appeal due to rising interest rates.  

In this context, several **trends are emerging**:  

✅ **A decline in the number of investor buyers**, who prefer to wait for market stabilization.  
✅ **Increased pressure on housing prices**, as sellers adjust expectations to find buyers.  
✅ **A rental market that remains tight**, but with lower profitability than in previous years.  

---

## **🏡 Future Scenarios?**  

The Luxembourg real estate market is entering a **phase of adjustment**. While price declines help **rebalance supply and demand**, they also lead to **a depreciation of capital gains prospects**, making real estate investment **less lucrative** in the short term.  

Two key factors will determine the future outlook:  

📌 **Interest rate trends**: A stabilization or reduction in rates could **restore buyer confidence** and **revive demand**.  
📌 **Fiscal and regulatory policies**: Incentive measures could boost the rental market and attract new investors.  

---

## **📌 A Market in Transformation**  

The Luxembourg real estate market is experiencing a **profound transformation**, with an erosion of capital gains prospects and **weakened rental profitability**. For investors, **caution and adaptability** are key. Some will choose to wait for better market conditions, while others will seek more profitable short-term alternatives.  

💡 **Real estate investment remains a strategic choice, but it now requires a more thorough analysis and adaptation to the new market realities.**



Real Estate Capital Gains Outlook in Luxembourg in the Negative

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**Leasehold** is an interesting alternative to traditional property ownership. It is becoming increasingly popular in Luxembourg as it allows individuals to acquire long-term usage rights to a property or land without bearing the full cost of direct ownership. However, before committing to this option, it is crucial to understand its **advantages, disadvantages, and legal implications**.


## **What is Leasehold?**

A leasehold is a **long-term agreement** (typically between **27 and 99 years**) that allows a leaseholder (**the emphyteutic lessee**) to use a property or land owned by a freeholder (**the landlord**). Unlike a traditional rental agreement, this lease grants the tenant **extensive rights**, including the ability to modify, rent out, or even sell the property under certain conditions.


## **Advantages of Leasehold**

✅ **Lower acquisition costs**: The leaseholder does not pay the full purchase price of the land but instead pays an annual fee, significantly reducing the initial investment.

✅ **Freedom to modify**: The leaseholder can renovate, build, or use the property as they wish.

✅ **Easier access to real estate**: This solution is particularly attractive in high-cost areas such as Luxembourg.

✅ **Ability to sell the leasehold right**: The leaseholder can sell their usage rights, providing liquidity.


## **Disadvantages and Risks to Consider**

❌ **Not full ownership**: At the end of the lease, the land and any buildings on it revert to the original owner unless otherwise specified in the contract.

❌ **Potentially increasing fees and costs**: Depending on the terms, annual fees may be indexed or adjusted.

❌ **Difficulties in obtaining financing**: Some banks are reluctant to offer mortgages for leasehold properties, although financing is possible under certain conditions.

❌ **Loss of usage rights**: If contractual obligations are not met, the lease may be terminated early.


## **How to Successfully Invest in a Leasehold Property**

Before purchasing a leasehold property, consider these **important precautions**:

🔹 **Review the contract carefully**: Check for annual fees, maintenance obligations, and transfer rights.

🔹 **Check the remaining lease term**: The longer the remaining lease period, the more stable the property value.

🔹 **Investigate options for renewal or purchase**: Some agreements include an option to buy at the end of the lease.

🔹 **Consult a notary or real estate expert**: Legal advice is essential to minimize risks.

**Leasehold** is an attractive solution for those looking to enter the real estate market at a lower cost while enjoying extensive usage rights. However, it is essential to understand its obligations and risks before committing. With proper research and necessary precautions, it can be a **cost-effective alternative** to traditional property ownership—especially in Luxembourg, where land prices continue to rise.



Leasehold: What You Need to Know Before Buying

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# Buying a Property with a Low Energy Rating: An Opportunity or a Risk?

For several years, the European Union’s energy policy has encouraged the improvement of existing buildings' energy performance while imposing strict standards on new constructions. However, a crucial question remains: what should be done with older buildings that have a low energy rating, such as properties classified as H or I in Luxembourg? Buying such a property with a renovation plan in mind can be a great opportunity but also a significant challenge.

## A More Attractive Purchase Price

Properties classified as H or I are generally cheaper to buy than newer or already renovated ones. This can be an excellent opportunity for buyers with a limited budget or those looking to invest in a renovation project.

## 🔨 High Potential for Value Appreciation
A well-executed renovation can significantly increase the value of a property. By improving insulation, replacing heating systems, and optimizing energy consumption, it is possible to reach a higher energy class, making the property more attractive for resale.

## 🏡 A Home Tailored to Your Needs
Renovating an older property allows you to customize every space according to your tastes and needs. Unlike newly built homes, which are often standardized, older houses offer a unique architecture and distinctive charm.

## 💰 Financial Aids and Subsidies

In Luxembourg, several public aids support energy renovation work:

- Grants and subsidies for insulation, window replacement, and installation of more efficient heating systems.
- Reduced VAT (3%) on certain energy renovation works.
- Tax credits for specific ecological improvements.

# Risks and Challenges of Energy Renovation

## 💸 Potentially High Renovation Costs

While the purchase price is more attractive, renovation costs can quickly add up. Replacing windows, insulating walls and roofs, and installing a new heating system can cost tens of thousands of euros.

## 📜 Legal Requirements to Consider

With new European energy regulations, homeowners may be required to carry out mandatory renovations in the future. Starting in 2030, some EU rules may restrict the use of low-efficiency buildings.

## 🛠️ Long and Complex Renovation Work

Renovating an old house requires time and good planning. You need to coordinate multiple contractors, obtain necessary permits, and handle unexpected structural issues (poor insulation, asbestos, etc.).

## 🏦 Difficulty in Obtaining Financing

Some banks are becoming more demanding when granting loans for properties with a very low energy rating. They may require a detailed renovation plan before approving financing.

## 🔎 Buying an Old Property: A Decision That Requires Preparation

To avoid unpleasant surprises, it is essential to:

✔ Conduct an energy audit to estimate the renovation costs accurately.
✔ Research available grants and subsidies to reduce the investment.
✔ Compare multiple quotes before hiring contractors.
✔ Plan ahead: some renovations can take several months to complete.

## 💡 Conclusion: An Opportunity If Well Prepared

Buying a property with a low energy rating can be an excellent investment, but it’s important to be aware of the challenges involved. A well-planned renovation, a thorough cost assessment, and professional guidance can turn an energy-consuming property into a comfortable, eco-friendly, and highly valued home.

👉 Thinking about buying an old property in Luxembourg? Contact us for personalized support and expert advice on energy renovation!



Advantages of Buying an Older Property with Low Energy Performance

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The European Central Bank (ECB) announced on Thursday, January 30, a new interest rate cut. The deposit rate, the main reference indicator, has been lowered by 0.25 percentage points, now standing at 2.75%. This decision marks the fifth cut since June 2024 and the fourth consecutive one, confirming the institution's intention to stimulate the eurozone economy in an uncertain context.

## Necessary Support for a Fragile Growth

Faced with a persistent economic slowdown, the ECB continues its accommodative policy to reduce credit costs and encourage investment and consumption. By easing monetary conditions, it aims to revive sluggish growth in the eurozone, weakened by international tensions and a gloomy economic climate.

However, the ECB must navigate a complex environment. Uncertainty regarding Donald Trump’s economic policies, particularly in international trade and financial regulation, weighs on growth prospects and complicates the anticipation of the effects of monetary measures taken by Frankfurt.

## Inflation on the Path to Stabilization

Despite a rise in prices to 2.4% in December 2024, ECB officials remain confident about inflation trends. According to their statement, "the disinflation process is well underway", and the objective of bringing inflation back to 2% by the end of the year remains unchanged.

This declaration aims to reassure markets and investors regarding price stability. However, some analysts believe that the price increase observed at the end of 2024 could limit the ECB’s room for maneuver in the coming months.

## A Divergence with Fed Policy

While the ECB lowers its rates, the U.S. Federal Reserve (Fed) has chosen to keep its rates unchanged, within a range of 4.25% to 4.50%.

This divergence between the two major central banks is mainly due to differences in economic dynamics between the two regions. In the United States, inflation remains higher, and the labor market remains strong, prompting the Fed to be cautious before considering monetary easing.

In contrast, in the eurozone, weaker growth justifies a more accommodative monetary policy, despite the uncertainties.

## What Are the Impacts on the European Economy?

The ECB’s interest rate cut could have several effects:

- Encouraging business investment by reducing financing costs.

- Supporting household consumption through more accessible credit.

- Easing the debt burden for eurozone states, particularly the most indebted ones.

However, this strategy is not without risks. A monetary policy that is too lax could fuel speculative bubbles or limit the ECB’s future room for action in the event of a major economic shock.

## A Strategy Under Scrutiny

By implementing this new rate cut, the ECB confirms its commitment to supporting the European economy in the face of fragile growth. However, it will need to remain vigilant regarding inflationary pressures and geopolitical uncertainties that could complicate its mission.

The evolution of markets and the reaction of businesses and households to these monetary easing measures will be crucial in assessing the effectiveness of this policy in the coming months.



New ECB rate cut: support for growth under pressure

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With the energy transition and new environmental regulations, the **energy efficiency rating** of real estate in Luxembourg plays an increasingly significant role in property transactions. Buyers, sellers, and investors are now highly aware of energy performance, not only for ecological reasons but also for long-term financial considerations. This article explores the impact of energy efficiency ratings on Luxembourg's real estate market and its implications for stakeholders.

## **🔧 What is an Energy Efficiency Rating?**

An energy efficiency rating indicates a building's energy performance. It is determined by an **Energy Performance Certificate (EPC)**, which classifies properties on a scale from A (very efficient) to I (very inefficient). This classification considers several factors, including:

- Thermal insulation.
- Heating and hot water systems.
- Primary energy consumption.
- Greenhouse gas emissions.

A property rated A or B is considered energy-efficient, while a property rated F or G is deemed energy-intensive and may require renovation.


## **📊 Impact on Property Value**

1. **High-Efficiency Properties (Class A or B):**
   - These properties are highly sought after as they guarantee **lower energy bills**.
   - Buyers are willing to pay a premium for such properties due to their compliance with modern standards.
   - Investors see these properties as sustainable and eco-friendly investments.

2. **Low-Efficiency Properties (Class E to I):**
   - These properties often suffer from a **significant devaluation**, as they involve higher energy costs and renovation needs to meet current standards.
   - Potential buyers are cautious or even reluctant, as these properties may become **less attractive in the long term**.


## **🛠️ Impact of New Regulations**

1. **Carbon Neutrality Goals:**
   - Luxembourg aims to significantly reduce CO2 emissions by 2050, which translates into stricter energy standards.
   - Properties failing to meet these standards may become unsellable in the future without upgrades.

2. **Obligations for Sellers:**
   - Since 2021, any property for sale or rent must be accompanied by a valid Energy Performance Certificate (EPC).
   - This certificate is a **key selling point**, especially for buyers concerned about energy efficiency.

---

## **🔹 Tips for Buyers and Sellers**

### **For Buyers:**

- **Always check the energy performance certificate** before purchasing a property.
- Prioritize properties rated A to C to reduce energy expenses.
- If buying a low-efficiency property, budget for energy renovations.

### **For Sellers:**

- **Improve the energy rating** of your property before putting it on the market. Investments in insulation, heating systems, or windows can significantly increase your property’s value.
- Highlight the energy-efficient features in your listing to attract buyers.


## **🎡 Conclusion**

Energy efficiency ratings have become a critical factor in Luxembourg’s real estate market. They directly influence property value, market attractiveness, and compliance with current and future regulations. Whether you are a buyer, seller, or investor, understanding and optimizing this aspect is essential for successful real estate transactions in a context where ecology and energy efficiency are becoming central.



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