© MLOGAT
Municipalities in Luxembourg are set to receive the same financial subsidies as private developers for affordable housing projects, following changes to the 2023 law aimed at boosting local government involvement in tackling the housing crisis, with the aim of creating an additional 500 affordable homes per year.
Housing Minister Claude Meisch made the announcement on Friday afternoon, revealing a series of amendments to the August 2023 legislation on affordable housing. Under the revised law, municipalities will now benefit from the same conditions as other developers, such as the Société Nationale des Habitations à Bon Marché (SNHBM), which previously received up to 75% financial aid for land and construction costs.
Under the current framework, developers were required to cover the remaining 25% of the project costs themselves, with the state offering long-term financial guarantees over 40 years. However, municipalities had not been eligible for this provision, causing them to fall behind in their ability to develop affordable housing.
With the upcoming amendments, municipalities will no longer be excluded from this financial support. Minister Meisch explained that, in the future, municipalities would receive not only the 75% direct investment from the state but would also be able to finance the remaining 25% through loans, which would be reimbursed through the same financial arrangements that guarantee long-term repayment and interest.
The Ministry of Housing is hopeful that these changes will encourage municipalities to engage more actively in the creation of affordable housing. In addition, adjustments have been made to the criteria for rent subsidies, with the new law now taking into account whether an individual is a single parent when allocating financial support.
Minister Meisch also pointed out that the new legislation would help address issues related to poverty reduction, as the amended rent subsidy criteria aim to prioritise families that would benefit the most. He added that a revised version of the Pacte Logement 2.0 would soon be announced, although no specific date was provided.
Furthermore, the law now includes provisions for regionalisation, which will ensure that the ceiling for subsidies is aligned with the real housing prices in different areas of Luxembourg. Minister Meisch explained that this adjustment would consider factors such as proximity to jobs, public transport, and the overall demand for housing in specific regions.
The new law, which was approved by the government council on Friday, is now on its way through the legislative process. The changes reflect a growing effort to tackle Luxembourg's housing shortage by making it easier for municipalities to contribute to affordable housing development, with an expected 500 additional affordable homes being built annually as a result of the amendments. This marks a significant step in ensuring more sustainable and affordable living options for Luxembourg's residents.
