The coliving model is most often based on a double contractualisation: a main lease between the owner and the operator, followed by a sublease to the residents.
Luxembourg case law is clear: this first lease is a commercial lease, even if the property is residential, as long as the operator is pursuing a profit motive. This classification allows for freedom of negotiation, particularly with regard to rent. The courts allow a reasonable mark-up (up to 10% in practice) between the main rent and that paid by the occupants, intended to cover management costs and generate a margin.
The coliving model is most often based on a double contractualisation: a main lease between the owner and the operator, then a sublease to the residents.
The contractual relationship between the coliving operator and the occupants remains the most legally uncertain to date. In the absence of a specific framework, two main qualifications can be envisaged depending on the nature of the occupation:
- lease for residential use, provided that the occupant resides in the premises on a principal basis, for a significant period of time, without any predominant ancillary services;
- the civil lease, when the occupation is temporary, not domiciled, or strongly associated with additional services.
The applicable regime determines very different obligations, particularly in terms of rent, charges or termination. Regardless of the classification chosen by the parties, the judge remains free to reclassify the contract in the event of a dispute. An individual analysis of the operating model and the concrete conditions of occupation is therefore essential.
Apprehending applicable taxation
The VAT treatment of coliving activity also remains uncertain. Depending on the structure of the service provided (accommodation only, or with ancillary services), the operator could be subject to different regimes, with or without the right to deduct. Here again, a case-by-case analysis is required.
Supporting innovation without insecurity
Coliving is neither an improved form of shared accommodation, or a hybrid product with no status. It reflects a changing relationship with housing: individuality in the home, shared services, flexible tenancy. Its growth depends on the ability of players to structure their projects rigorously, reconciling economic attractiveness with legal certainty.
Coliving is neither an improved form of shared accommodation, nor a hybrid product with no status.
As practitioners of property and construction law, our role is to support developers, operators, investors and local authorities in this structuring. The aim: to make coliving a sustainable, compliant and secure model, serving urban innovation and better residential living.