Luxembourg's efforts to expand social and affordable housing face setbacks as an increasing number of properties intended to remain accessible have slipped into the private real estate market.
Successive Luxembourg governments, including the current one, have prioritised increasing the availability of social and affordable housing.
Properties classified under this category are often sold under a perpetual or emphyteutic lease, where the property itself is sold at a reduced price but without the land it stands on. The land remains the property of a municipality or a public entity, such as the National Society of Affordable Housing (SNHBM) or the Housing Fund. Despite these measures, the social housing market has "lost" a number of these properties to the private real estate sector in recent years.
A recent report by our colleagues from RTL Télé highlighted this issue with an example from Luxembourg City, where a 100-square-metre flat was listed for sale at €850,000 on a real estate website, equating to a price of €8,500 per square metre. This is despite the land registry indicating that the land on which the building stands is still owned by the municipality of Luxembourg City.
Patrick Goldschmidt, a member of Luxembourg City's municipal executive board ('Schäfferot'), explained that the flat was originally sold in 2012 at a price of nearly €4,700 per square metre, with a 12-year right of first refusal included in the contract. With that period now expired, the current owners are permitted to sell the property on the private market. As a result, the once-affordable flat is now being marketed at €380,000 more than its original price just 12 years later. While the municipality retains the land lease, as noted in the listing, the property is clearly no longer affordable.
Goldschmidt acknowledged that the resale is no longer subject to social or financial conditions. However, he assured that the municipality has since recognised this loophole and has updated more recent contracts to prevent similar situations.
Public property developers, including SNHBM and the Housing Fund, have also lost affordable properties to the private market. Although specific figures are unavailable, the Housing Fund stated in a written response that it estimates "a large proportion" of homes built and sold between 1979 and 2013 are likely to be resold on the private market due to the legislation in place before 2013.
Jacques Vandivinit, director of the Housing Fund, described this situation as "a big problem". Following the change in the law, the right of first refusal now extends throughout the entire duration of the perpetual lease, which is 99 years, instead of being applied only in the short term. This change allows the Housing Fund to buy back properties and resell them at affordable prices, while the land itself remains under public ownership.
Vandivinit highlighted that preventing affordable homes from being sold on the private market was a significant step forward. He emphasised the importance of keeping these homes affordable to ensure they remain accessible to individuals who cannot find suitable options in the private sector.
While specific conditions can vary, this safeguard is now generally in place for properties developed by public entities.
Currently, the municipality of Luxembourg City has around 40 flats and houses available for sale. Goldschmidt mentioned that "thousands" of additional properties are expected to become available in the future, assuring that these will remain within the public sector, even if the owners decide to sell, thus preventing them from slipping into the private market.
