Supporting first-time buyers

“Offer state subsidies via banks in interest for first-time buyers,” say , managing director of BPI Luxembourg, , country manager of BPI Real Estate, and Christophe Gilain, CFO of BPI Real Estate. “The aim of this measure is to anchor people in Luxembourg and new arrivals to the area on a long-term basis, whilst promoting VAT and registration duty entries at the time of purchase and in day-to-day expenditure, as well as improving mobility.”

“A property loan where first-time buyers have the option of repaying, in addition to interest, a minimum of 20% of the capital, but not necessarily 100% of the capital,” says , chairman of Luxreal.

“Introduce specific financing schemes to help first-time buyers, based on the model of the zero-rate loan in France, which allows part of the purchase to be financed interest-free,” suggests , CEO of Iko Real Estate. “Another avenue would be to strengthen collaboration between developers and banks, as has already been done in some projects where buyers benefit from preferential financing terms negotiated upstream.”

“The possibility for employers to grant a tax-free annual bonus, if the amount of the bonus is used as a downpayment to take out a mortgage on the main home of a first-time buyer,” says , managing partner of Dentons Luxembourg. “A law framing the possibility for tenants to pay a high rent coupled with a five-year purchase option with a fraction of that rent (25% to 30%) earmarked for savings with a view to purchase from the developer within five years would be welcome. So on a rent of €3,000, if the tenant exercises his option and buys, he would have 12 × 5 × 1,000, i.e., €60,000 euros in savings that would be deducted from the fixed purchase price. This could be matched by a government grant of the same amount for first-time buyers.”

“Set up a mechanism where the state guarantees part of the property loans for developers and buyers in order to facilitate access to credit,” says Laurent Olmedo, CEO of Creahaus.

“Reduced bank requirements for first-time buyers to obtain a loan without having to provide too high a down payment,” puts forth , director of Poeckes.

Review administrative procedures

“Set response time limits for services such as AGE, Creos, CGDIS, ANF.…” says , partner at Lionstone Capital Management.

“Lighten the regulatory and normative millefeuille that is becoming heavier by the day (urban planning impositions from local authorities, the AGE, the environment, the CGDIS, PMR standards, concessionaires [Creos], etc),” says Gerber-Lemaire from Dentons Luxembourg. “These impositions lengthen the time required to appraise and finalise projects and increase costs (when these requirements are not incompatible with each other!).”

“Digitalise administrative procedures to make processes smoother, including a single AML/KYC procedure for the entire acquisition process,” suggests Olmedo from Creahaus.

“Standardise, as much as possible, to limit the differences in approach from one municipality to another.” That’s a suggestion from , partner at Elvinger Hoss Prussen, and Aurélie Petersen, senior associate.  “Put in place common IT tools available to local authorities and inter-municipal skills sharing to enable administrations to deal more quickly with requests that require technical skills that not all local authorities have,” they add.

“Reverse the burden of proof for construction projects,” says Max Leners, avocat à la cour, Leners. “It would be up to the authorities to prove to the owner of the building land, who has applied for planning permission, why he could not build on his land. This proof would have to be produced within four weeks, failing which construction on the building plot could irreversibly begin.”

Build more densely

“By encouraging the construction of studios and one-bedroom flats, we are increasing the number of homes available and meeting demand, since 37% of residents live alone,” say Thibaut Gasparini and Diane Baradel from Arcane Architectes et urbanistes.

“Urban densification would make it possible to increase supply without increasing the number of land transactions. To achieve this, it would be appropriate to increase the CUS (land use coefficient) and DL (housing density) in areas subject to a PAP NQ (special development plan for new districts). In this way, more homes could be built on the same plot of land that is well served (transport, shops, services), thereby reducing the costs of servicing and building, and therefore the selling price. In existing neighbourhood-specific development plans (PAP QE), an increase in the height template would also make it possible to increase the number of homes without increasing the footprint,” say Gasparini and Baradel. “In addition, the development of lightweight construction solutions for elevation, such as timber, would offer a sustainable alternative by enhancing existing buildings whilst limiting the carbon impact.”

“Increase the heights--the last floors of old buildings--with the creation of volumes, thus avoiding the co-ownership system for mixed buildings and encouraging the construction of housing. The owner of a volume is the owner of a delimited and located space, in the same way as the owner of a plot of land. The volume is a space expressed in three dimensions, whereas the plot is expressed in two dimensions. The result will be the creation of a three-dimensional land register. The division into volumes makes it possible to superimpose independent cubes held in full ownership for an unlimited period, particularly for complex property developments, including basement car parks, ground floor shops and office or residential towers or coliving,” says Dentons Luxembourg’s Gerber-Lemaire.

“Reduce the size of flats: the average surface area of a three-bedroom flat is 110 m2 in Luxembourg, compared with 80 m2 in Paris,” adds Gerber-Lemaire. “Bedrooms, bathrooms and passageways (entrance, corridor) are too large, with no possibility of converting spaces, for example to turn two bedrooms into three. The average studio apartment is 35m2, whereas in France, for a surface area of this size, the bedroom is separate. It’s the whole construction system with the width of the windows that needs to be rethought.”

This article was written in  for the  of Paperjam magazine, published on 24 April. The content is produced exclusively for the magazine. It is published on the site to contribute to the full Paperjam archive. .

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