Wunnen Luxembourg
Published on thursday february 23rd 2023

The housing conference is packed

On Wednesday February 22, the Edmond Dune room at the Neumünster Abbey Cultural Meeting Centre was packed with 175 people representing 75 associations and organisations, in addition to all the media.

Having been the subject of much criticism in recent weeks, the Minister of Housing, Henri Kox, presented proposals for improvements to his bills on tenancy and affordable housing. By organising this day of exchange and debate, the Minister intends to set up a structured dialogue with the actors of the sector around a set of coherent measures gathered in the framework of the "National Strategy for Affordable Housing".

The two days of the Housing Conference were initially planned for next May, but the Minister wished to bring forward part of this meeting in order to take into account the deep concern of the professionals of the sector in the face of the brutal slowdown in transactions and also to respond to the multiple reactions to the reforms launched by the Ministry of Housing.

The event was attended by 175 participants: a large number of participants which shows the interest in the subject. A large number of organisations were represented: the Chamber of Deputies, public and private developers, partner associations of the Ministry of Housing working for access to affordable housing, employee and employer organisations, housing advisors of the municipalities, social offices.

A comprehensive strategy for the right to housing

In the first part of the morning, the Minister again defended the measures put in place since 2018 as part of the National Affordable Housing Strategy. A set of measures and reforms whose aim is to counteract the dynamics that have been at work for years in the field of housing: explosion of prices on the private market, continuous growth in the effort rates of tenants and young buyers, in a context of rising interest rates and a largely insufficient supply of affordable housing. The difficulty of access to housing for an ever-increasing number of people generates a real problem of equity and social cohesion.

Taking into account the different opinions that have been expressed on the draft reforms, Henri Kox presented proposals for improvements to the pending affordable housing and tenancy bills. He also reaffirmed his support for "Social Rental Management" which will be strengthened. The Council of State has yet to give its opinion on the various bills drawn up by the Ministry of Housing: the bill on affordable housing, the lease agreement and individual aid. It should be noted that a first adaptation, the rent subsidy, came into force in 2022, as part of the measures decided during the tripartite. The Ministry increased its budget from €10 million to €25 million for the rent subsidy alone.

After the Minister's introductory speech, the day was invested by two large round tables: the first one had as a theme "the stakes of the private housing market", and tackled the reform of the rental lease, the crisis that the construction sector is currently going through and the need for cooperation between public and private actors to promote access to housing. Participants in this first debate were: Henri Kox, Minister of Housing, Julien Licheron, researcher at Liser and the Housing Observatory, Roland Kuhn, company director and member of the Chamber of Trades, Jean-Michel Campanella, president of Mieterschutz Lëtzebuerg asbl, Guy Entringer, director of SNHBM, Claude Thill, mayor of Diekirch

The second round table took place in the afternoon, with the following panel: Henri Kox, Minister of Housing, Jacques Vandivinit, Director of the Housing Fund, Gilles Hempel, Director of the Foundation for Access to Housing, Raoul Schaaf, President of the Social Office of the Canton of Redange, Jean-Paul Scheuren, President of the Real Estate Chamber, and Serge Hoffmann, Vice-President of Syvicol.

New proposals to support the sector and better protect tenants

1. Accelerating the development of affordable housing

Henri Kox announced that he will propose to the government a series of modifications to the Bill 7937 on affordable housing, which was tabled in December 2021 and is still awaiting an opinion from the Council of State. Indeed, following the exchanges and research carried out for more than a year with the actors in the field and taking into account a series of opinions from professional chambers and other entities concerned, the Minister wishes to introduce a series of improvements and simplifications aimed at reinforcing the development of this second housing market entirely dedicated to "affordability". These proposals will then be cast in amendments and proposed to the government for adoption. Henri Kox: "This Bill is the cornerstone of the National Affordable Housing Strategy. It is urgent that it can be meaningfully discussed in the Chamber of Deputies so that it can be voted on before the end of the legislature. The housing crisis is too urgent to put off this issue for ever.

The proposals made by the Minister mainly concern

  • the introduction of a range of housing intended for specific groups such as young people, the 60+, employees or members of cooperative societies active as social developers;
  • the simplification of procedures for the allocation of affordable rental housing at the request of social landlords
  • the adaptation of the management lump sums to which developers and social landlords are entitled for their efforts, as well as a simplification of the conditions for the approval of social landlords
  • the consideration of land made available by natural and legal persons to social developers via emphyteusis for the development of affordable housing projects;
  • the establishment of a structured dialogue proposed to the actors on the ground in order to move forward together towards the right to housing for all.

2. Purchase of private projects in "sale in future state of completion

The Minister for Housing has recalled the possibility for private developers to propose housing projects to the State for acquisition in "sale in future state of completion" (VEFA). This option, which is open to all players, will only be possible, however, for projects that meet the criteria of the specifications applied to projects for the creation of affordable housing benefiting from stone aid from the Ministry. An internal state commission is currently evaluating a number of acquisition proposals. In this way, the continuity of construction activity is guaranteed, the jobs of employees in the sector are protected and, at the same time, the Ministry of Housing is given an opportunity to further increase the number of affordable housing units.

At the Housing Conference, the Minister of Housing, Henri Kox, pointed out that every affordable house is built by the private sector and that therefore, thanks to the 200 million euros that the State invests in the creation of affordable housing, this sector is also supported by the government.

3. Tax measures for first-time buyers

In the context of the decrease in investors that the new housing market is experiencing, the Minister of Housing spoke in favour of tax measures supporting people buying their first home.

"I support an increase in the tax credit for notarial acts from 20,000 euros to 30,000 euros over the next twelve months (Bëllegen Akt). Unlike other tax measures which tend to boost demand and prices, this one seems to me to be beneficial and targeted at young people, those who want to realise their dream of home ownership", said Henri Kox.

In the same vein, the Minister insisted on the idea of abolishing, for VEFA sales and for twelve months, only the registration fees on the share of construction already completed. "These two measures will support first-time buyers on the one hand and the continuation of new housing starts on the other. Of course, I also expect real estate professionals to take their responsibility and - instead of hoarding land and delaying future projects - to continue building housing by responding to market signals. These signals are instead guiding us towards a stabilisation of prices and putting an end to the continued increases we have seen in recent years."

4. The rent cap: two targeted and calibrated improvements to the bill

One of the measures under the National Affordable Housing Strategy is the proposed rent cap reform, developed to combat excessive rents and provide landlords, tenants, rent boards and peace courts with the means to ensure fair rents for everyone. "The reform of the rent ceiling is essential for the attractiveness of the country, especially when recruiting additional labour", Henri Kox recalled, "but it is also a challenge to achieve social equity and realise the right to housing provided for in our new constitution."

22, during the Conference. The Minister of Housing took advantage of this day to announce his intention to make two changes to the bill currently before the legislature, in order to respond to the questions and legitimate expectations that have been raised.

a. Simplify the rule of annual thirds

Currently, the bill provides that rent increases of more than 10% must be applied automatically under the "annual thirds" regime. This means that an increase of more than 10% has to be spread equally over three consecutive years before a further rent increase has to be applied again after two years. As this approach is too complex and does not effectively combat excessive rent increases, it is proposed to replace the one-third annual rule with a biennial rent increase limit of 10%. As a result, rents may not be adjusted upwards by more than 10%.

b. Strengthening the consideration of renovation efforts

In the determination of the invested capital, revalued and discounted, which serves as a basis for the calculation of the rent ceiling, it will be specified that the expenses related to the renovation and improvement of the dwellings will only be discounted from the moment of their effective realisation. This approach allows to better take into account major works aiming at energy renovation and to encourage landlords in general to fight against the dilapidation of dwellings.

An ongoing dialogue with housing stakeholders

At the end of the day's discussions, the Minister thanked all the participants for their availability and their commitment to this structured dialogue conducted around a shared objective: the realisation of the right to housing for all. The next step will be to review the improvements to the bills based on the debates and views exchanged, before formalising them and presenting them as amendments in the coming months and weeks. "With the National Affordable Housing Strategy, the groundwork has been laid. Now, it is a question of adjusting and accelerating the activation of its different levers to ensure a targeted and coordinated implementation with all the interested actors", concluded Henri Kox.

The next meeting with housing stakeholders is scheduled for May 11 2023 for a second day of Housing Conference.

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