Luxembourg's real estate chamber, the CIGDL, has released a statement in which it rejects remarks reportedly made by the Minister of the Economy during a recent radio interview.
According to the CIGDL, Minister Franz Fayot cited the 3% commission charged by real estate agencies on the sale of buildings as one of the sources of an "explosion" in housing prices in the Grand Duchy. He reportedly added that this commission was not deserved. In response, the chamber has stated it "cannot accept such remarks, since they constitute an affront to the real estate sector".
The CIGDL clarified that sales commissions are not responsible for significant price increases, "otherwise the prices in Germany or France would be much higher than in Luxembourg, since commissions of up to 6% are applied there".
The chamber added that the law on the maximum commission of 3% was introduced on in January 1972 and repealed in May 2004. In 2012, the sector was the subject of an investigation by the competition directorate (Direction de la concurrence) which ended with a dismissal. The directorate thus concluded that that competition between real estate agents is "a sufficient guarantee of the rules of competition".
The CIGDL emphasised that market prices are the result of supply and demand. The chamber noted that the activity of real estate agents has "become an extremely heavy administrative work, especially in terms of the fight against money laundering and data protection". It thus argued that a reduction or even a legal cap on this commission was "not appropriate".
The CIGDL also argued that successive governments had "repeatedly made decisions that have resulted in shrinking supply and increasing prices". Added to this are "countless taxes and urban planning and environmental regulations which have also increased the price of housing".
According to the chamber, we are not currently experiencing a housing crisis in Luxembourg but rather "an affordable housing crisis".
"It's time to stop with the smokescreens and tackle the problem head-on", argued the chamber. "Stop blaming us for your endless commissioned studies. Stop being argumentative and start implementing a proactive housing policy".
The CIGDL argued that it was the Luxembourg Government and the Minister of Housing who were responsible for "blocking cooperation with the private sector that the real estate chamber represents".
The statement continued: "To make voters believe that rising house prices are due to real estate agent commissions is populism and scapegoating".
The CIGDL concluded that it hoped that the Economy Minister's remarks were "a simple lapse in speech [...] that he will correct [...] quickly".
