“The measures proposed in this bill are the result of comments made by those involved in the field and are the fruit of feedback,” introduced (DP) during his presentation of the bill to optimise the application of the amended law of 7 August 2023 (and which came into force on 1 October 2023) on affordable housing. The bill was endorsed at the cabinet meeting on 4 April.

The aim of these amendments is to optimise the existing legislative framework to facilitate and amplify the creation of affordable housing. “I am still convinced of the fundamentals of this law, but there is indeed room for optimisation,” acknowledged the housing minister, who reiterated that “providing affordable housing is a mission of public utility.”

Comments made by representatives of Fedas (the federation of social sector players in Luxembourg), Syvicol, the Fonds du Logement, the Société Nationale des Habitations à Bon Marché (SNHBM) and the housing ministry were coupled with feedback from the municipalities that the minister met, all of which enabled “obstacles to be identified, land potential to be developed and intentions to be transformed into concrete projects.”

As a result, these initiatives have led to the emergence of concrete ways of optimising the law to make the work of social developers and social landlords more attractive and effective.

Direct optimisations for social challenges

One of the major changes is the introduction of single parenthood as a criterion for the allocation of affordable housing. This is intended to protect (according to Statec, 44% of single-parent families live below the poverty line).

Since the construction of new homes is not enough to meet the demand for affordable housing, financial incentives have been introduced to encourage the renovation of existing buildings. The maximum amount of eligible costs has been increased by 15%. This aid can be combined with that for climate change resilience and that linked to innovation, up to a limit of 25%.

Aid for local authorities

“I want municipalities to be able to play a greater role in the creation of affordable housing,” argued Meisch. To help them do this, he announced that they will receive a return on the capital invested in affordable housing projects. This measure is even retroactive to 1 October 2023. Other financial assistance is also being introduced for the acquisition of land, depending on its geographical location. This will enable the public sector to focus more effectively on areas where the need for affordable housing is greatest. Land located in strategic sectors, such as those that are well-served by public transport, will become more accessible thanks to increased financial support.

Aid for social landlords

To support social landlords in their day-to-day activities, the affordable lease is being revised. Additional financial aid is introduced for the management of housing dedicated to employees and students.

The bill also introduces a new threshold for the “free quota” of so-called “all public” housing, which is now accessible to any social landlord managing a stock of 100 units or more. This change is intended to widen the circle of social developers and strengthen the social and functional mix of neighbourhoods.

We can also expect to see a call for projects for senior housing announced shortly, similar to what has been announced for young people or employees.

A strengthened public-private partnership

In order to put more affordable housing up for rent, the government is proposing to rent out homes built by the private sector under an agreement between the housing ministry, the landlord and the social landlord. The owner will rent the homes to a social landlord, who will pay an indexed rent below the market price. The homes will then be managed by the social landlord, who will allocate them to tenants who meet the eligibility criteria for the affordable tenancy agreement, and who will pay the social landlord an affordable rent. The ministry will then pay to cover the difference between the rent received from the tenant and that owed to the landlord.

As part of this process, the law governing the Fonds du Logement is being revised to enshrine the public utility of its missions and adapt its tools and operating methods to better meet today’s challenges. Amendments to the law will also make it possible to simplify the administrative procedures required to obtain housing benefits, thereby making the process less arduous for beneficiaries and ensuring greater efficiency for the administration that manages it.

This article was originally published in .