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_Economists unanimously agree that the ECB will reduce its key interest rates by 25 basis points this week, marking the first much-anticipated cut in five years._

The Governing Council of the European Central Bank will meet this Thursday, June 6, to announce, for the first time in almost five years, a reduction in the eurozone banks' key interest rates. This 25 basis point cut comes despite uncertain macroeconomic conditions and persistent inflation. Experts predict several rate cuts by the end of 2024, each of 25 basis points. However, the overall reduction for this year will depend heavily on GDP growth and inflation, two elements that are difficult to anticipate at this stage, although there are signs of improvement in inflation.

If these cuts materialize, they could potentially give a boost to the still-struggling Luxembourg real estate market. While professionals note a slight improvement in the number of transactions in existing residential real estate, new constructions are struggling to find buyers. Projects are delayed due to a lack of financing, and reservations from private individuals as well as investors in new constructions remain rare.

The economic impact of this upcoming cut will be assessed soon, and based on this evolution, the schedule for further cuts will be set. The ECB has adopted a cautious approach and avoids committing to further rate cuts in advance. It will likely reduce rates gradually to maintain a consistent level of monetary restriction.

The borrowing rate is a key factor in acquiring property through a mortgage. Its drastic increase has flattened the real estate market in Luxembourg and caused an unprecedented crisis. We anticipate a rate cut of 75 basis points before the end of 2024, which should significantly ease borrowers' monthly payments.

Evolution of Mortgage Interest Rates in Luxembourg in June 2024

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On May 14, 2024, Luxembourg's Chamber of Deputies approved a new housing stimulus package. 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 primary goal is to facilitate access to housing and support the construction sector through various short and medium-term measures.

## Enhanced eligibility for housing assistance

More households are now eligible for various forms of assistance for renting and purchasing homes. Public investments in creating affordable housing have been strengthened. Additionally, a series of temporary tax measures—limited to the year 2024 and retroactive to January 1, 2024—have been implemented by the Ministry of Finance. These measures target homebuyers, homeowners, and investors.

## Upcoming initiatives for housing sector collaboration

Beyond this initial housing stimulus package, the government is currently discussing additional measures to enhance collaboration between the public and private sectors, aiming at administrative simplification and mobilizing private and public land for creating more affordable housing. The results of these discussions will be communicated in June.

## Increased housing assistance for more households

_"In this challenging real estate market situation affecting more and more households, it was important for us to provide more support to families. We have therefore placed particular emphasis on families with children, who are particularly suffering from the shortage of affordable housing,"_ highlighted Claude Meisch, Minister of Housing and Spatial Planning, at a press conference on May 15, 2024.

## Revised income limits for housing assistance

The income limits for all individual housing assistance have been adjusted to reflect the corrected standard of living and household composition. Income limits for single individuals have increased by an average of 6%, and those for households with children have increased by 8% to 25%, depending on the number of children.

## Enhanced support for tenants with children

The rent subsidy has been increased for households with dependent children. The amount per child in the household has been raised to 80 euros per child, up from the previous 40 euros.

## Support for homebuyers

**Homeownership subsidies:** The income limits for homeownership subsidies have been increased, making 59% of all households theoretically eligible for a homeownership subsidy.

**Interest subsidy:** The maximum rate for the interest subsidy has been increased to 3.5%. This measure helps reduce the interest burden for homebuyers and applies to both new and existing mortgages, assisting households struggling with unexpectedly high interest rates. The income limits for interest subsidy eligibility have also been raised.

**State guarantee for homeownership:** In cases where the required down payment for a mortgage is unavailable, the state can provide a guarantee under certain conditions. The conditions for this state guarantee have been improved:

- The maximum debtor rate for the guaranteed loan has been increased from 3% to 6%.

- The maximum state guarantee rate relative to the project cost has been increased from 30% to 40%.

- The income limits for state guarantee eligibility have been raised.

## Expanded eligibility for affordable and moderately priced housing

The eligibility criteria for housing created by public developers (municipalities, the Housing Fund, SNHBM) for affordable or moderately priced sales have been raised. This significantly expands the pool of potential buyers for these properties, which are sold below market prices. Currently, 70% of households are eligible to purchase affordable housing, and 80% can purchase moderately priced housing.

## Maintaining high investment levels for affordable housing creation

In addition to the measures included in the stimulus package, the state is committing substantial resources to massively invest in creating affordable housing.

**Extension and strengthening of the VEFA program:** This measure aims to increase the public affordable housing stock and support developers facing liquidity shortages who struggle to sell their housing projects. The special fund for affordable housing has been allocated an additional multi-annual budget of 480 million euros for 2024-2027.

**Increasing the special fund allocation for affordable housing:** Significant increases in the creation of public affordable housing are planned. This will support access to affordable housing and boost construction activity. According to the 2024 budget, the special fund for affordable housing will invest 1.45 billion euros (1,447,654,152 euros) over 2024-2027, averaging over 360 million euros annually, doubling the 2023 expenditure of 184 million euros.

_"The state is massively investing in public housing! This can only be achieved through good collaboration between the public and private sectors. From my discussions with all housing stakeholders in recent months, I can see that we are all moving in the same direction,"_ noted Claude Meisch, Minister of Housing and Spatial Planning.

The Ministry of Housing and Spatial Planning is planning several targeted campaigns to promote various assistance options to private market tenants and homebuyers.

For information on the tax measures implemented by the stimulus package, the public can contact the Ministry of Finance.

## Public information

To learn more about various housing assistance options, potential applicants can visit www.logement.lu for information on eligibility conditions. The Housing Assistance Service staff is available to provide information at the following location:

11, rue de Hollerich L-1741 Luxembourg

Monday to Friday from 8:00 to 12:00 and 13:30 to 16:00, Thursday 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.


New housing stimulus package approved by Luxembourg's Chamber

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_The demand for real estate purchases in Luxembourg has increased significantly since April. At the same time, banks are once again lending money, making it possible to envision oneself as a future homeowner in Luxembourg. Purchasing an existing property and buying one under construction each have their own advantages and disadvantages._

Here are some points to consider for each option:


## Buying an existing property

### Pros:

**Immediate Availability:** You can move in quickly after the purchase, which is ideal if you need housing without delay.

**Negotiable Price:** You have the opportunity to negotiate the price with the seller, depending on the market conditions and the urgency of the sale.

**Transparency: **You can visit the property and get a clear idea of what you're buying, reducing the risk of unpleasant surprises.

### Cons:

**Renovation needs:** Some existing properties may require renovation or repair work, resulting in additional costs.

**Limited options:** You might be restricted by the features and layout of the existing property, which may not exactly match your needs.

**Hidden costs:** In addition to the purchase price, you may need to pay additional fees such as notary fees, property taxes, and moving costs.

**Energy efficiency:** Existing properties are often lacking in good insulation and may be more costly in terms of energy maintenance.


## Buying a property under construction

### Pros:

**Customization options:** You have the opportunity to customize certain aspects of the design and finishes of the property according to your preferences.

**Novelty:** You get a new property, often equipped with the latest technologies and construction standards, which can reduce long-term maintenance costs.

**Guarantees:** New constructions come with construction guarantees, providing you with some peace of mind in case of structural issues.

**Energy efficiency:** New properties are typically well-insulated and have optimal energy efficiency.

### Cons:

**Waiting period:** You'll need to wait for the construction to be completed before you can move in, which can take several months or even more than a year.

**Uncertainty:** Plans and renderings may differ from reality, which can lead to disappointments.

**Risk of delays:** Construction projects sometimes face delays due to technical issues, weather conditions, or administrative delays, which can extend the initial waiting period.

**Purchase price:** The purchase price of a property under construction is typically higher than that of a similar existing property, requiring a greater financial effort from the buyer.

Whether you opt for buying an existing property or one under construction largely depends on your personal preferences, financial situation, and housing needs. Buying an existing property offers the opportunity to move in quickly and gain immediate clarity on what you're buying. However, renovations may be needed, and the available options may be limited. On the other hand, buying a property under construction offers the opportunity to customize the property to your liking but requires a longer waiting period and carries a higher risk of delays and uncertainties compared to the original plans. Therefore, it's important to carefully weigh the pros and cons of each option before making a decision.


 Buying new or existing property for your primary residence in 2024?

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**Nextimmo introduces its brand new predictive tool for assessing future prices of existing residential real estate, named "Trends 2024".** As a pioneering player in the real estate sector, the Nextimmo team is committed to leveraging cutting-edge technologies to enhance market transparency. This innovative tool is designed to forecast price trends for the upcoming quarters.

Founded in response to a sectoral crisis, this hybrid real estate agency has developed a platform dedicated to promoting mandate properties as well as offerings from its partner agencies. **This user-centric platform provides significant advantages to potential buyers by offering crucial information for informed purchasing decisions in the Luxembourg residential real estate market.**

Their team of real estate data experts has developed an analysis tool for current price trends, enabling short- and medium-term projections of prices per square meter and per commune. This tool, a first in Luxembourg, offers an accurate comparison of property positioning on the platform compared to other similar listings, thereby helping future buyers assess property attractiveness.

The Luxembourg real estate market, often criticized for its lack of transparency, has seen prices soar after the pandemic, contributing to a recent sharp correction in prices. In response, Nextimmo has leveraged publicly available data since 2016 to create detailed graphs depicting the evolution of real estate prices in Luxembourg. **These graphs illustrate price increases before their recent adjustment. Additionally, they have developed an algorithm to forecast prices per square meter per commune for 2024, where data is sufficient to establish future trends.** Nextimmo will continue to gather data to refine the accuracy of their predictions and consider integrating artificial intelligence into their future models.

This new tool is now available for existing properties in communes where there are enough listings to provide a reliable projection, accessible through sales listings on the www.nextimmo.lu platform.

**To access these indicators, simply visit the Sales section of Nextimmo and scroll down to the bottom of the listing of your choice. Currently in beta phase, this tool aims to predict listed and recorded prices over a one-year period.**

New predictive tool for existing residential real estate prices

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_If you are considering purchasing a property in Luxembourg and wondering what interest rates are currently in effect, this article will provide you with all the essential information for your future purchase or real estate investment._

Following the sharp increase in interest rates at the end of 2022, a first significant decrease was observed at the beginning of the current year. Dropping from 4.8% to 3.8%, the mortgage interest rate is becoming increasingly attractive. Some banks even offer rates of around 3.5%, provided that your dossier is solid and the property you're aiming for has a good energy class, ideally A or B.

**Choosing between fixed rates, variable rates, and revisable rates: Which is the best choice?**

In Luxembourg, various types of interest rates are available for mortgage loans:

**Fixed Rates:** The interest rate remains constant throughout the loan term. It is possible to renegotiate this rate during the loan term, but this may incur penalties to the bank.

**Variable Rates:** The interest rate varies based on fluctuations in the financial market. This type of rate was popular in Luxembourg before the sharp increase in interest rates in 2022. Since then, it has become less attractive as it is generally higher than the fixed rate.

**Revisable Rates:** The rate is fixed for a certain period (e.g., three years) and then becomes variable for the remainder of the loan term. When the revisable period expires, it is possible to renegotiate the loan and switch to a more advantageous fixed rate, provided that interest rates have decreased during this period.

Each type of interest rate has its pros and cons, and the choice will depend on your personal financial situation, risk tolerance, and outlook on interest rate movements. Before making a decision, it is advisable to consult a financial expert to assess the various options available and choose the one that best suits your needs.

The ECB forecasts a decrease in interest rates by the end of the year, and this trend could continue in the coming years. Therefore, it may be worthwhile to switch to a revisable fixed rate in 3 to 4 years to take advantage of future interest rate cuts without penalties.

Through collaboration with local mortgage brokers, Nextimmo is able to negotiate the best terms for you. Feel free to [contact us](https://nextimmo.lu/en/contact) for further information.

Evolution of interest rates for new real estate loans in the Luxembourg in 2024

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The reform of rent caps will not see the light of day, but the Ministry of Housing highlights "other important aspects" of the bill. The Government Council approved on Monday, April 15, 2024, the government amendments to the bill amending the rules on residential leases.

These amendments are now in the legislative process, so that the bill can be reviewed by the Council of State and voted on by the Chamber of Deputies "very soon".

**Sharing of real estate agency fees**

In the future, real estate agency commission fees will be shared equally - that is, 50/50 - between the landlord and the tenant, assures the Ministry of Housing.

**Abolition of the notion of luxury housing**

The notion of "luxury housing," which allowed avoiding the application of rent caps (defined by the 5% rule of the capital invested in the housing), will be abolished, notes the government.

**Reduction of the deposit from 3 to a maximum of 2 months**

The maximum legal amount of the security deposit is reduced from three to two months' rent.

_"The bill introduces a procedure for the return of the security deposit, with precise modalities, including a penalty in case of non-compliance with the deadlines provided by the law when the tenant leaves the housing,"_ specifies the Ministry of Housing.

**Limitation of rent increases to 10% every two years**

The rule of annual thirds is replaced by a biennial limit on rents of 10%, notes the ministry. Therefore, during each rent adjustment, the rent cannot be increased by more than 10%.

It should be noted that a furniture surcharge may be requested by the landlord for furnished housing.

**Obligation of a written lease and compliance with the legal rent cap**

All residential lease contracts must be in writing in the future and contain certain mandatory mentions, explains the government.

_"For example, the mention that the rent requested by the landlord for the leased housing complies with the legal annual rent cap (5% of the capital invested in the housing) must be stipulated in any future lease contract,"_ it illustrates.

**Roommate**

The bill provides for specific legal provisions for roommates, "which are still lacking in current legislation," explains the government. A "single cohabitation contract" is established between the tenants and the landlord. In addition, roommates "establish in writing" a cohabitation agreement, in order to formalize the aspects of communal living and the practical modalities of this form of rental.

When a roommate wishes to be released from their obligations before the end of the lease, _"they notify the landlord and their roommates simultaneously with a three-month notice period."_ The notification to the landlord is made "by registered letter" with acknowledgment of receipt. This roommate "is required," before the expiration of their notice period, to search for a replacement roommate.

The other roommates or the landlord "may also propose a replacement candidate." Failing to present a replacement candidate, the outgoing roommate "must be able to demonstrate having actively and sufficiently searched" for a new roommate.

New rules for real estate leasing in Luxembourg: soon to take effect?

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After a period of free-fall in real estate prices in Luxembourg due to the market downturn, a glimmer of hope seems to be emerging on the horizon. The first quarter of 2024 saw an increase in the number of transactions, a sign that buyers are gradually regaining confidence in the market. But what are the prospects for those aspiring to become homeowners?

Firstly, the supply remains relatively abundant, providing a range of choices for potential buyers. Additionally, prices have undergone a significant decrease, ranging between 20 and 30% depending on the municipalities, making real estate accessible again for many buyers. Although mortgage rates are still far from their pre-crisis levels, a downward trend is beginning to emerge, especially for fixed rates. Furthermore, even by contracting at a relatively high rate, it may be possible to renegotiate it in a few years through refinancing.

Real estate remains a major issue in the Grand Duchy, and ensuring the construction of new housing to rapidly increase supply could prove to be a challenge. Nevertheless, the measures implemented by the government to stimulate the market should mitigate the effects of the crisis and revive it in the short term. Therefore, an increase in demand is expected in the coming months, which should help stabilize prices by the end of the year. For tenants considering staying in Luxembourg long term, it is time to develop a strategy to finally achieve homeownership.

Real estate prices are expected to stabilize throughout the year, and the timing is right to search for your future home. When rates drop below 3% (currently the fixed rate is at 3.5%), prices will rise again due to the lack of supply. After hitting rock bottom, real estate prices are expected to rebound, which is a logical consequence of emerging from the crisis, thereby stimulating economic growth.

When real estate is thriving, it can be a positive sign for all other economic activities. Therefore, let us follow this path towards a prosperous future, within our own homes!

Nextimmo is committed to guiding you through all your search processes and helping you realize your real estate projects.


Real estate in Luxembourg: towards price stabilization in 2024?

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In a context where the real estate market experiences significant fluctuations, two innovative players have decided to break conventions by uniting their strengths to facilitate access to housing in Luxembourg. [Nextimmo](https://nextimmo.lu/en), the country's first hybrid agency, and [Albalux](https://www.albaluxcredit.lu/EN/Home/Index), a recognized specialist in real estate brokerage, have now formed a strategic alliance aiming to simplify and optimize the home buying journey for future homeowners.

## A pioneering collaboration for Luxembourg

Established in 2022, Nextimmo has quickly emerged as an innovative solution to the challenges of the Luxembourgish real estate sector. By adopting a unique economic model that promotes free advertising and commission sharing based on success, Nextimmo has convinced nearly 100 real estate agencies to join its platform. With over 1700 regularly updated listings on nextimmo.lu, the company positions itself as a key player in real estate search in the country.

Albalux, on the other hand, is an institution in the world of real estate brokerage in Luxembourg. Its ability to negotiate advantageous financing offers with partner banks, both Luxembourgish and international, makes it a valuable resource for any buyer in search of the best mortgage.

## A strategic partnership with multiple benefits

This partnership between Nextimmo and [Albalux](https://www.albaluxcredit.lu/EN/Home/Index) represents a real boon for future Luxembourgish buyers. Indeed, it combines Nextimmo's real estate expertise with Albalux's financial know-how, thus offering an improved user experience and easier access to Luxembourg's real estate market. The integrated credit calculation tool on Nextimmo's listings now allows users to obtain a reliable estimate of their borrowing capacity, a crucial step in the purchasing process.

## Why this partnership changes the game

The benefits of this collaboration are not limited to increased efficiency for potential buyers. They also mark a significant evolution in how real estate and financial services can work together to meet consumer needs. By pooling their resources and expertise, Nextimmo and Albalux demonstrate that a holistic and integrated approach to the real estate market can not only improve the customer experience but also stimulate the real estate sector as a whole.

## Advantages of the Nextimmo and Albalux cooperation for individuals

The collaboration between Nextimmo and Albalux opens up a multitude of opportunities for individuals looking to navigate the Luxembourgish real estate market. This strategic alliance is not only good news for both companies; it represents a revolution for buyers and real estate investors. Here are the main benefits of this cooperation for individuals:

## Simplification of the real estate purchasing process

Buying a property can often seem like an uphill battle, especially for those unfamiliar with administrative and financial procedures. The cooperation between Nextimmo and Albalux significantly simplifies this process. Users can now find their dream property on nextimmo.lu and simultaneously obtain an accurate estimate of their financing capacity through the integrated calculator, thus facilitating decision-making and accelerating the purchasing process.

Nextimmo and Albalux join forces to streamline access to housing

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With recent government announcements introducing new tax incentives for those considering buying new real estate in 2024, it seems like the perfect time to invest. These aids, available for a limited time, offer a unique opportunity for buyers.

Moreover, financing conditions have never been more attractive, especially for properties with high energy performance. Preferential rates are now accessible, reaching up to 3.4% for properties with an "A" energy passport, thanks to negotiations conducted by Nextimmo partners. This means substantial savings on the total cost of your mortgage.

In this favorable context, Nextimmo is launching "New Property Months," an initiative designed to guide you towards the best opportunities for off-plan property purchases (VEFA). This campaign will allow you to receive directly in your inbox:

- A weekly selection of new real estate programs,
- Detailed explanations about new government aids,
- Practical guides to facilitate your real estate purchase in Luxembourg,
- Interviews with local developers to explore the future of certain neighborhoods and cities in Luxembourg.

This moment is particularly conducive for investors and prospective homeowners eager to enjoy the benefits of new properties, both financially and in terms of quality of life. New real estate not only offers superior energy performance but also modern designs and extended builder warranties.

Nextimmo real estate agency invites you to seize this opportunity. Our team is at your disposal to accompany you in your purchase project, providing expert and personalized advice. Whether you are looking for your future primary residence or a rental investment, Nextimmo is your trusted partner to navigate the Luxembourg real estate market.

Don't wait any longer to realize your real estate project. Contact [Nextimmo](https://nextimmo.lu/en) now to discover how we can help you make the most of this unique opportunity.

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