Robert Krieps Foundation calls for land sale regulation

The socialist foundation presented a paper on Friday containing reflections on the housing market, authored by Minister of the Economy Franz Fayot and Max Leners, a high-ranking member of the LSAP.

Fayot urged that the housing market must be redeveloped with a change in mentality, in order to move forward, as he clarified to the press that he was speaking as a co-author rather than as Minister of the Economy.

Property tax reform and quicker procedures

While property tax reform is a long-term measure, the paper suggests making small adjustments in the short term, such as providing clear information on any taxes due for land not being used for construction.

The paper argues in favour of speeding up procedures by making them clearer and more concise, with reasonable legal deadlines, while substantially simplifying the overall administrative process. It suggests the creation of a one-stop-shop to centralise and monitor applications, while also introducing a period of three months for approving building permits. This would involve switching from a system of studies to one based on 'default authorisations': meaning the administration would be responsible for proving to owners why they should not be able to build on their own land - all within a strict 3-month deadline.

In terms of housing prices, more transparency could be achieved by including the historical cost of acquisition related to the land - as well as the cost price of construction - in the final sales contract.

In addition, maximum profit margins ought to be legally required for the development of a real estate project, in order to prevent "cheap" land acquisition from being turned into unaffordable housing. The paper argues that legislators must utilise real economic calculations, by providing for a margin rate to be applied, and thereby limit the free market from justifying selling prices.

As for rent: the Foundation proposes capping rents for leases for residential use, using a national committee of various stakeholders. It suggests introducing a rent cap for commercial lease contracts, as well as appropriate legislation and a rent cap for professional lease contracts (such as those held by non-profit associations, trade unions or members of a liberal profession).

© Laurent Weber / RTL

The paper also calls for improvement of legal texts for new construction projects. The reimbursement guarantee should be removed, leaving only the completion guarantee to ensure the complete execution of the stipulated work, while permitting reasonable costs for the buyer.

Leners added that sustainability should not be neglected in the reflection of land use.

Complementary to LSAP's election programme

The reflection paper on the housing market goes beyond the LSAP's election programme, mainly due to the deterioration of the housing market since the programme was first published. The co-authors said their proposals were specifically designed as a response to the Competition Authority's recent analysis.

Although the current government has taken steps in the right direction, Fayot said it was clear the next government would have to seriously consider how to deal with the issue of real estate. It would have to be approached "very aggressively" in the next legislation period, the minister said.