Luxembourg Approves Financial Aid for 464 New Housing Units in 2022

On Thursday 29 June 2023, Luxembourg’s Minister for Housing, Henri Kox, presented the third report of the Special Housing Development Support Fund.

This report highlights the structural turn of public investments for housing and illustrates the results of the efforts made for affordable housing since 2018.

“My objective is to create a stock of at least 20% affordable, public and sustainable housing. If as many homes are in public hands, this will have an overall positive effect on the prices of all homes,” said Minister Kox. “The pressure on the market will be released and will facilitate the right to housing for all income classes. Housing policy means social policy, it is a policy in the interest of the whole of society. This is the purpose of the National Affordable Housing Strategy deployed since 2018.

In recent years, the Ministry of Housing has worked to create a new dynamic in the development of social housing, more recently termed “affordable housing”, to reflect the ambition of creating a substantial stock of rental housing owned by public authorities.

From 2019, the duration of agreements has been extended from 20 to 40 years. According to the ministry, this makes it possible to double affordable housing in the long term, and on the other hand, this approach reportedly allows the social actors active in the field to be able to plan for the longer term.

From 2020, the creation of the Special Housing Development Support Fund aims to allow for a more coherent approach to the financing of public and private projects while increasing transparency in relation to the general public and the Chamber of Deputies (Luxembourg’s parliament).

Since 2020, the Chamber of Deputies has passed the financing laws for six new large-scale affordable housing projects. These projects are currently being carried out throughout the country, namely in Kehlen, Wiltz, Dudelange, Mamer, Biwer and Diekirch. These six projects alone represent more than 2,100 housing units and state participation of more than €1.1 billion. In addition, by 2027, social developers have announced the delivery of 3,900 additional housing units for more than 250 other projects.

In 2021, the introduction of the specifications applicable to urbanisation and the development of affordable housing projects marked another important step, according to the ministry, in boosting the construction of affordable housing.

Moreover, the new Housing Pact 2.0 has been in place since 2021. So far, 48 municipalities have already finalised their local affordable housing strategy and the ministry has been able to reserve more than €25 million in additional funding for municipalities in 2022 alone. The financial aspects of the Housing Pact 2.0 were also managed through the Special Fund.

According to the new report, between 2017 and 2022, the investments of the Ministry of Housing increased from €40 million to €174 million, i.e. an increase of more than 330%. In 2022, the stock of affordable publicly owned rental housing increased by more than 6% to reach 4,117 housing units. Added to this are affordable housing co-financed by the ministry and built by social promoters.

Key figures from the Special Fund's annual report for the year 2022

The report of the Special Housing Development Support Fund brings together the housing projects approved by the Ministry of Housing benefiting from state financial contributions. It provides an overview of the number of affordable housing projects underway or in planning, as well as the amounts committed and the budgets in prospect.

The special report also presents the results of the financial allocations of the Housing Pact 2.0. There were 3,306 approved housing units by the end of 2022, representing 261 projects. In 2022, there were 464 additional approved housing units and 387 housing units delivered. €174 million financial contributions were paid in relation to construction of such projects (i.e. “Aides à la pierre”). 59% of the approved housing is intended for affordable rental.

As part of the Housing Pact 2.0, more than €25 million were granted to municipalities and services for housing advisers. More than 1,100 ares have been acquired with a potential for the construction of more than 450 housing units. Public developers (Housing Fund, SNHBM, municipalities) are building 88% of approved housing.

Relating to the Housing Pact 2.0, 99 municipalities have signed an "initial agreement" with the Ministry of Housing as of 31 December 2022. On the same date, €25.8 million were allocated to municipalities. As of 31 May 2023, 48 municipalities developed their Local Housing Action Programme and 48 municipalities subsequently signed an “implementation agreement”.