The primary objectives of these initiatives are to stimulate increased construction activity, bolster housing supply, and facilitate accessibility to homeownership and rental options.
-> Real estate recovery?: Construction sector welcomes new measures despite no overnight fix
The announced measures have garnered a relatively positive response from the opposition. The Green Party (déi Gréng) commended the government’s commitment to expanding the state’s housing portfolio. Notably, the government revealed plans to invest in the acquisition of 800 ongoing construction projects, known as VEFA, from the private market. Additionally, an earmarked €920 million will be allocated towards the construction of affordable housing units.
However, MP François Bausch expressed reservations regarding the long-term efficacy of these measures in addressing the housing crisis. The Green Party also raised concerns about certain tax incentives, including accelerated depreciation and reduced taxes on property sales, cautioning that these benefits may disproportionately favour the real estate industry rather than benefiting the people.
MP Paulette Lenert of the Luxembourg Socialist Workers’ Party (LSAP) stated that the largest opposition party remains sceptical. Lenert asserted that while the proposed measures represent a step in the right direction, they fall short of adequately addressing the depth of the crisis. There is an expectation for more concrete actions, particularly in support of tenants and expedited public sector intervention. Lenert emphasised the urgency of the situation, advocating for comprehensive measures to be implemented promptly.
Among the announced tax revisions, the reintroduction of accelerated depreciation at a rate of 6% over six years stands out as a key incentive for property reinvestment. This incentive is applicable exclusively to new constructions, with a capped limit of €250,000. Additionally, under the proposed tax adjustments, the threshold for notarial deeds associated with property transactions, commonly known as the “Bëllegen Akt,” will be raised from €30,000 to €40,000 for owner-occupied flats. Furthermore, individuals purchasing properties for rental purposes will be eligible for a tax credit amounting to €20,000.
In addition, the government announced reduced taxes on added property value for home sellers in 2024.
The Left Party (déi Lénk) welcomed the government’s initiative to acquire private projects still in development but highlights a missed opportunity in not extending support to individuals burdened by expensive bridging loans. MP Gary Diederich asserted the pressing need for such assistance.
The Alternative Democratic Reform Party (adr) expressed satisfaction with the proposed increase in the threshold for notarial deeds related to property transactions. However, MP Alexandra Schoos suggested that the government could have been more ambitious by raising the upper limit to qualify for a reduced VAT rate of 3%, as opposed to the current 17%.
Similarly, the Pirate Party finds merit in the announced measures but voices concerns about the absence of a strong social component. MP Marc Goergen criticised the perceived lack of assurance that increased subsidies will directly benefit tenants. To address this, the Pirate Party advocates for tying favourable investment conditions to affordable rental rates, ensuring that owners adhere to fixed average values for rent.
Full report by RTL Télé (in Luxembourgish)
