The controversial rent cap presented by the former government is off the table, the government council confirmed on Monday.

Presented by previous housing minister Henri Kox, the rent cap was intended to drop from 5 percent of the invested capital to 3.5 percent "to prevent the most outrageous rents", Kox had said.

The current government will drop this component due to the criticism surrounding it.

Some opponents argued that imposing such a cap could deter investors, potentially reducing real estate investments and exacerbating the housing shortage. Kox had disagreed with this.

Furthermore, flaws in the proposed formula raised fears of disproportionately high rents for older properties compared to newer developments, drawing criticism from groups like the Tenants' Protection Association.

Despite efforts to salvage elements of the bill through separate votes, including proposals to reduce rental deposits, split agency fees equally between tenants and landlords, and establish a legal framework for shared flats, the legislative project ultimately failed to pass through the Chamber of Deputies.

Read more: Political gridlock stalls progress on tenant protections

Other components of the draft law are being worked on.

Amendments specify, for example, the provisions in terms of colocation, rent guarantees or the subject of partial fees in a collaboration with real estate agents.

The cost of renting a home in Luxembourg City has more than doubled since 2010, while announced rents increased by 4.7% between 2021 and 2022.