L-R: Henri Kox, Minister of Housing; Taina Bofferding, Minister of the Interior; Frank Goeders, Ministry of the Interior; Credit: MLOG

Luxembourg's Minister of Housing, Henri Kox, and Minister of the Interior, Taina Bofferding, presented earlier today the new housing pact, which will come into effect at the start of 2021.

On 31 December 2020, the housing pact currently in force will expire. Since 2017, the Ministry of Housing has been preparing a new support programme for municipalities intended to further develop the supply of housing at affordable prices. The ministry has opted to develop the "Housing Pact 2.0" on the basis of a participatory process with the municipalities.

Following various interactive regional workshops with representatives of the municipalities last year, concrete work on the implementation of the preliminary draft law for the new housing pact began. Yesterday, on 29 July 2020, the Cabinet of the Luxembourg government approved the draft bill of this new pact, which will be in force until 2032 and allows a new approach to be taken for housing policy at the municipal level. 

The following instruments and mechanisms have been introduced to achieve the aim of better supporting the municipalities as partners of the state in order to increase housing supply, mobilise land potential and improve residential quality:

  • a housing adviser, who will assist the municipalities in the development of a housing strategy and its implementation;
  • a local action programme for housing, which constitutes a real municipal strategy for the promotion of affordable housing, defines priorities and lists the municipality's housing projects;
  • state financial support, which will depend directly on the number of affordable housing units created and which aims to carry out projects supporting the objectives of the housing pact.

Housing Minister Henri Kox explained during today's press conference: “The municipalities are the state's privileged partners in creating this necessary supply of affordable housing, which is unfortunately lacking today. The housing pact 2.0 will be the lever that will help to change course in the area of ​​housing".

In order to give municipalities an effective means of acquiring affordable housing or land allowing the construction of affordable housing, there are plans to insert a new article in the 2004 amended law concerning municipal planning and urban development. The instrument introduced by the first housing pact turned out to be ineffective, given that a good number of dwellings thus created were sooner or later sold at market prices.

The new provision therefore provides that the land intended for affordable housing is ceded by real estate developers either to the municipalities or to the state so that they can become housing owners. The acquisition of a significant number of housing units by the public sector is considered essential to increase the supply of affordable housing and maintain a good social mix in future residential areas.

In addition, the development of affordable housing will be reinforced by the obligation to reserve a significantly larger share of land for this purpose. 

Interior Minister Taina Bofferding concluded: “If we want to prevent the social divide from widening in Luxembourg, it is the duty of the public authorities to further develop their own housing stock and to actively intervene in the housing market. The measures of the new housing pact will give them the necessary and effective means to do this”.