New Housing Stimulus Package Approved by the House

On May 14, 2024, the Luxembourg Chamber of Deputies approved a new stimulus package for housing. This package was developed by the Ministry of Housing and Spatial Planning and the Ministry of Finance through intensive discussions with various representatives of the housing sector. The main objective is to facilitate access to housing and support the construction sector through various short- and medium-term measures.

Increased eligibility for housing assistance

From now on, more households are eligible for the various forms of assistance provided for renting and purchasing homes. Public investments for the creation of affordable housing are being strengthened. In addition, a series of temporary tax measures − limited to the year 2024 and retroactive to January 1, 2024 − are being implemented by the Ministry of Finance. These measures target buyers, owners, and investors.

Upcoming initiatives for collaboration in the housing sector

Beyond this initial stimulus package, the government is currently conducting discussions to implement additional measures aimed at strengthening collaboration between the public and private sectors, simplifying administration, and mobilizing private and public land for the creation of affordable housing. The results of these discussions will be communicated in June.

More housing assistance for more households

"In this difficult situation on the real estate market, affecting more and more households, it was important for us to provide more support to families. We have therefore placed a particular focus on families with children, who suffer especially from the shortage of affordable housing," emphasized Claude Meisch, Minister for Housing and Spatial Planning, during a press conference on May 15, 2024.

Raised income ceilings for housing assistance

The income ceilings for all individual housing aids are adapted to the evolution of the adjusted standard of living and take into account household composition. Thus, the income ceilings for single individuals increase by an average of 6% and those for households with children by 8% to 25% (depending on the number of children).

Support for tenants with children

The rent subsidy is increased for households with dependent children. Thus, for each dependent child, the planned portion is raised to 80 euros per child, instead of the previous 40 euros.

Support for homebuyers

Homeownership grants: The income limits for homeownership grants are increased, making 59% of all households theoretically eligible for a homeownership grant.

Interest subsidy: The maximum rate of the interest subsidy is increased to 3.5%. This measure helps alleviate the interest burden for real estate buyers and applies to new mortgage loans as well as existing ones, thus helping households in difficulty following an unpredictable rise in interest rates. The income ceilings to qualify for the interest subsidy are also raised.

State guarantee for homeownership: In the absence of the base capital required to obtain a mortgage loan from the bank, the State can, under certain conditions, act as a guarantor for the loan. With the stimulus package, the conditions for granting the State guarantee have been revised upwards:

The ceiling for the maximum borrowing rate of the guaranteed loan is increased from 3% to 6%.
The maximum rate of the State guarantee relative to the project cost is increased from 30% to 40%.
The income ceilings applicable to the State guarantee are raised.

Broadening of eligible buyers for affordable and moderate-cost sales

The eligibility criteria for housing built by public developers (municipalities, Fonds du Logement, SNHBM) intended for affordable or moderate-cost sales have been raised. Thus, the pool of potential buyers for these properties sold (under emphyteutic lease) well below market prices is significantly broadened. In principle, 70% of households are now eligible to purchase affordable housing, and 80% of households for moderate-cost housing.

The Ministry of Housing and Spatial Planning is planning several targeted campaigns promoting the various forms of assistance aimed at private market tenants and homebuyers.

Regarding the tax measures put in place by the stimulus package, the public can find out more information from the Ministry of Finance.

Maintaining a high level of investment for the creation of affordable housing: Alongside the measures planned in the stimulus package, the State is providing itself with substantial resources to invest heavily in the creation of affordable housing.

Extension and strengthening of the off-plan sale program (Vente en l'État Futur d'Achèvement - VEFA): This measure helps increase the public affordable housing stock and supports developers short on liquidity who are experiencing difficulties selling their housing projects. The Special Fund for Affordable Housing is endowed with an additional multi-year financial envelope of 480 million euros for 2024-2027.

Increased Allocation for the Special Fund for Affordable Housing: It is planned to significantly increase the creation of public affordable housing. This will help support access to affordable housing and revive the activity of construction companies. According to the budget voted for 2024, 1.45 billion euros (1,447,654,152 euros) will be invested through the Special Fund for Affordable Housing into the creation of affordable housing (for rent and sale) over the 2024-2027 period. This corresponds to an annual average of more than 360 million euros, doubling the Special Fund's expenditures from 2023, which stood at 184 million euros.

"The State is investing massively in public housing! This can only be done through good collaboration between the public and private sectors. Through the discussions I have had in recent months with all housing stakeholders, I note that we are all moving together in the same direction", noted Claude Meisch, Minister for Housing and Spatial Planning.

Information for the public

To learn more about the various housing aids for individuals, potential applicants can find information on the granting conditions and check their eligibility for the different aids at www.logement.lu. The staff of the Housing Assistance Department (Service des aides au logement) are available to inform the public at the offices of the Single Point of Contact for Housing Assistance (Guichet unique des aides au logement) located at:

11, rue de Hollerich L 1741 Luxembourg

Hours: Monday to Friday from 8:00 to 12:00 and from 13:30 to 16:00, Thursdays from 8:00 to 17:30 by appointment only.

You can also contact them by email at guichet@ml.etat.lu or by phone at (+352) 8002 10 10, Monday to Friday from 8:00 to 16:00.