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On Thursday 24 November 2022, Luxemnbourg's Minister of Housing, Henri Kox, presented the final assessment of the so-called Housing Pact 1.0 law, which entered into force in 2008 and concerns both the agreements signed and the instruments used between October 2008 and December 2020, produced in collaboration with the Housing Observatory, to the Parliamentary Committee on Housing.

The Housing Pact 1.0 – far below the initial objectives

The municipalities had the possibility of signing an agreement called “Housing Pact” with the State with the aim of increasing the construction of housing on their territory. They have undertaken to increase their number of inhabitants by more than 15% over a period of ten years. At the same time, their population was to increase by at least 1% and at least 30 inhabitants in absolute numbers per year. In return, the State participated in the financing of the costs related to the creation of new housing and collective facilities induced by the increase in the population to the tune of €478.5 million.

Depending on the type of agreement and the date of signature, the observation periods for population growth differ, but always cover a period of ten years. Of the 96 municipalities that have signed the Housing Pact agreement, 20 of them have not reached the population growth target during the ten years observed. 29% of the budget envelope received by the municipalities has not yet been spent until the end of 2021.

All municipalities had the possibility of using other instruments made available by the Housing Pact 1.0 law. An important instrument known as "article 29" of the amended law of 19 July 2004 concerning municipal planning and urban development. For each PAP whose gross building land area is greater than 1 ha, the law required 10% of the net building land area or 10% of future housing to be reserved for the construction of affordable housing. According to the modification of the Omnibus law, for each "new district" PAP with a number of dwellings greater than 25 units, at least 10% of the gross built area is to be allocated to the construction of affordable housing.

In this context, some 5,200 affordable housing units should have been created. Unfortunately, due to the lack of binding measures and control instruments, there are currently no means of verifying how many of these dwellings are actually affordable dwellings today.

More financial resources for municipalities under the Housing Pact 2.0

“By emphasising population growth, the Housing Pact 1.0 did not encourage municipalities to create public and affordable housing. It is only with the Housing Pact 2.0, which supports the creation of these housing units in a targeted manner, that an obligation of result is introduced!”, underlined Minister Kox, during the presentation of the final monitoring in the Chamber of Deputies (Luxembourg's parliament).

And in order to further support municipalities in their efforts to increase the supply of affordable housing on their territory, the government has proposed a legislative adaptation of the law on the Housing Pact 2.0. The Ministry of Housing estimated that due to this adaptation, the allocation would increase by 88% from €15.5 million to €29.1 million, if all the municipalities signed the agreement for the implementation of the Housing Pact.