The extension of tax measures for another six months is not a "gift," but a responsible move to help keep the construction industry afloat, said housing minister Claude Meisch to RTL on Monday.
In November, Meisch had announced that these tax measures would expire on 31 December 2024. However, on 6 December, Prime Minister Luc Frieden revealed that the measures would be extended until the end of June 2025.
The package include an increased low-cost tax rate for both private individuals and investors, accelerated depreciation at 6%, and lower taxes on capital gains from property sales. Since October, registration fees have also been reduced.
While there has been a rise in the purchase of existing properties, demand for new off-plan apartments (VEFA - Sales in the Future State of Completion) continues to decline, despite the tax measures. In 2023, 814 off-plan apartments were sold, but by December 2024, only 758 had been sold, with the state purchasing 208 and the Housing Fund buying 61. Private demand, therefore, remains much lower.
Although prices for existing properties are falling, figures from athome show a slight uptick in off-plan apartment sales during the last quarter of 2024. Despite this, Minister Meisch believes the tax measures will continue to support the construction sector.
"It’s clear that some developers are adjusting their pricing strategies," Meisch noted. "We’re seeing developers adopt more aggressive market strategies, offering tax reductions, price cuts, and new financing options to make properties more accessible."
Rent cap not on the agenda for now
In April, Meisch announced that the issue of a national rent cap would be revisited. Speaking on RTL this Monday, he emphasised that a rent cap is needed across the country but stressed the importance of gathering the right data to make informed decisions.
"That’s why we are currently working with LISER to collect the necessary information," he said. However, in the current uncertain economic climate, Meisch believes it’s not the right time to implement a rent cap. "We need investors in the housing market, otherwise, we won't have the necessary supply of housing," he explained.
