Minister Claude Meisch; Credit: MLOGAT

During a press conference on Friday 6 June 2025, Luxembourg's Minister of Housing and Spatial Planning, Claude Meisch, launched a call for pilot projects for affordable housing through a public-private rental partnership; this partnership highlights the cooperation between public and private stakeholders in the implementation of affordable rental projects.

Principles and Operation

As part of the government's commitment to increasing the stock of affordable rental housing in Luxembourg, the Ministry of Housing and Spatial Planning has launched a call for pilot projects aimed at private developers with land. This call for pilot projects represents a strategic opportunity to combine the potential of the private sector with the State's objectives.

The initiative aims to create rental housing by the private sector on private land and lease these units to a social landlord, in this case the Fonds du Logement (Housing Fund), for a fixed term at a rent below market rate but above affordable rent.

The social landlord, in this context the Housing Fund, rents these units to households meeting the socioeconomic criteria set by the amended law of 7 August 2023 on affordable housing. Through this process, households benefit from affordable rent within the meaning of the law. The developer does not receive any public construction assistance. The developer may retain ownership or transfer the residential building to an investor, who will become the owner and enter into a 20-year lease with the Housing Fund. At the end of the lease, if the building is sold, it may be acquired by a private party, subject to the State's right of first refusal.

Having a public social landlord handle rental management reduces the administrative burden on the owner and ensures long-term occupancy of the property. The security of a fixed rental income for 20 years eliminates the risk of non-payment and provides visibility into the property's profitability. The indexation of the rent paid by the social landlord to the owner allows for tracking market trends and inflation. Rent indexation will begin upon signing the lease. The rent paid by households occupying the social landlord's housing is not indexed; it is calculated in accordance with the regulations governing affordable leasing.

A system with a triple objective

The objective of this initiative is to mobilise private land for the construction of affordable rental housing, increase the stock of affordable rental housing, and create a system complementary to that already provided for by the amended law of 7 August 2023, on affordable housing. For private developers, this represents an opportunity to carry out projects with guaranteed rents for at least 20 years, which strengthens the project's financial security and facilitates obtaining financing.

The model encourages social diversity by providing access to affordable housing for all eligible income deciles within the meaning of the forthcoming Affordable Housing Act.

"With this call for pilot projects, we are paving the way for innovative solutions to address the challenges of affordable rental housing. These projects will allow us to test new development models while fostering collaboration between public and private stakeholders. The objective is to provide accessible housing by addressing the needs of all citizens and maximizing existing potential. This scheme is part of an innovative approach aimed at exploring new solutions to increase the supply of affordable housing," emphasised Minister Meisch.

Introduction of Pilot Projects: Criteria and Procedures

The pilot projects are aligned with the criteria of the specifications for the development of affordable housing, which bring together the recommendations of the Ministry of Housing and Regional Planning regarding urban planning, architecture and economics.

The submitted applications will be reviewed by a dedicated committee composed of representatives from the Ministry of Housing and Regional Planning, the Ministry of Finance, and the Housing Fund.

To support project leaders in their efforts, essential information regarding the introduction process, selection criteria, and participation procedures is now available on the dedicated website https://www.ppp-logement.lu/.

Integration into the overall approach of public-private partnerships and review of off-plan acquisitions

This initiative is part of the public-private partnerships developed to expand the scope of Key stakeholders involved in the development of affordable housing while combining the resources and expertise of the public and private sectors.

A regular review will be conducted to assess the number of projects submitted and analyse the effectiveness of the system. These pilot projects will thus help determine the extent to which this mechanism is adopted by private developers. This evaluation will serve as a basis for adjusting and refining the public-private partnership framework based on feedback and lessons learned.

As part of the State's off-plan acquisition programme, which is also part of a public-private partnership approach, 293 housing units have been acquired for a total amount of approximately €179 million. To date, seventeen sales deeds have been signed, and six reservation contracts are in progress for 257 housing units.