The housing package of 31 January 2024 concerns two ministries: the finance ministry for everything to do with tax measures; and the housing ministry for everything to do with support for renting and buying a home, as well as public investment in the creation of affordable housing. Regarding the latter measures, housing minister (DP) explained: “In a difficult situation on the property market, affecting more and more households, it was important for us to give more support to families with children who are particularly suffering from the shortage of affordable housing.” Meisch hopes that this housing package will “get the market moving again.”
The various measures in the package are as follows:
—The income ceilings for all individual housing allowances have been revised upwards to reflect changes in living standards and now take account of household composition. “Income ceilings for single people will rise by an average of 6%, and those for households with children by between 8% and 25%,” said the minister.
—The rent subsidy is being increased for households with dependent children. For each dependent child in a household, the share per child is increased to €80, compared with €40 previously.
—The income limits for home-ownership grants have been increased. “In theory, 59% of households are now eligible for a home-ownership grant,” said Meisch.
—The maximum rate of interest subsidy--through which the state covers part of the cost of interest on subsidised home loans--has been increased by 3.5%. “This measure will apply to new loans as well as existing ones. Households that have found themselves in difficulty as a result of the rise in interest rates will therefore also receive support.” The income limit used to qualify for this subsidy has also been increased.
—The terms of the state guarantee for home loans have also been revised upwards. The maximum borrowing rate for the guaranteed loan has been raised from 3% to 6%. The maximum rate of the state guarantee has been increased from 30% to 40% of the cost of the project. The income limits for benefiting from this guarantee have also been raised.
A boost for public developers
The final aspect of the reform is the extension of the range of buyers eligible for affordable and low-cost sales.
The eligibility ceilings for homes built by public developers for affordable or low-cost sale have been raised. As a result, said Meisch, 70% of households will now be eligible to purchase affordable housing and 80% of households will be eligible to purchase low-cost housing. “This measure will also support sales by public developers,” he added. “Public developers are finding it difficult to find eligible buyers.”
Meisch pointed out that the prices of homes sold under the affordable sales scheme remain below market levels. “By way of example, the two- to three-bedroom flats sold in Elmen by SNHBM are between 36% and 42% cheaper than similar flats sold in this region.”
Details of housing subsidies and the conditions under which they are granted are available on (French only).
Other measures in the pipeline
Meisch and the government have high hopes that these measures will revitalise the property market. But the government is not likely to stop there. “The government is currently conducting discussions to put in place additional measures to strengthen public sector collaboration with the private sector and to mobilise more private and public land to create more affordable housing,” said the minister. The results of this project--to be known in June--could become the Frieden government’s second housing package.
The measures in the housing package will generate tax waste of €130m. The 2024 budget allocates €363.9m to housing policy. The budget also strengthened the government’s programme for acquiring projects for sale before completion. This programme included a budget of €170m for the acquisition of 110 homes, while a further €480m has been added for the period 2024-2028.
This article in Paperjam. It has been translated and edited for Delano.