Entry into the housing market should be made easier with the adoption of new legislation, the government parties argue.
Photo: Romain Gamba/Maison Moderne
As part of our Summer like no other series Delano and sister publication Paperjam examine some of the immediate challenges facing the country after the summer holidays. Today our colleague Nicolas Léonard examines housing legislation reform.
Minister of housing Henri Kox (Déi Gréng) loves sport, and the triathlon in particular. In these long-distance events he knows that during the cycling phase he should not hesitate to change gear when the opportunity arises, to go faster, stronger and surprise anyone watching. And he asked his teams at the ministry to do just that. Less immediately impacted than others by the covid-19 health crisis, they were asked to work hard between March and July on two major projects: the reform of the law on rental leasing and the future housing pact.
Mission accomplished, the minister was able to present both projects at the end of July, a few weeks ahead of his initial ambition. The legislative process should be completed by the end of the year.
But until then, there is certain to be some passionate debate. More than ever, housing and its accessibility is a sensitive subject in Luxembourg. It is politically important and potentially explosive. The opposition will not fail to point out what they consider to be failings in the texts, obviously hoping to obtain amendments.
David Wagner of Déi Lénk, for example, says that while the projects were presented to the press, MPs received little information. “We just got the highlights from a PowerPoint document,” he says. worries David Wagner (Déi Lénk). The leftist party is not soft on rent lease reform. “A number of shortcomings could be improved,” argues Wagner. “This is the case for [articles on] furnished rooms, roommates or agency fees. On this point, they are just taking half measures.”
Realties of the market
But, according to Wagner, the crux of the matter is the question of invested capital. “In my opinion, the reform should have two major objectives: on the one hand, effective protection of tenants, and on the other hand, a consequent reduction in rents. I believe that reform will not achieve any of these objectives. Henri Kox pretends that landlords and tenants are on an equal footing. I do not think he knows the realities of the market. Tenants will still not have the opportunity to inquire with the registration administration about the amount of capital invested in their accommodation in order to determine the maximum rent. As for tenant protection, I do not yet see how it would be effective”.
The ADR seems partially in tune with Déi Lénk on a few points. Sharing agency costs, according to its MP Roy Reding, is “a lazy compromise”, he told Wort.lu. For Reding, the major flaw is that the new law does not help address the housing shortage. The ADR is advocating to abolish the legal extension of rental contracts, which means that a limited-term lease is automatically extended beyond the deadline for an unlimited period. “We need a stronger legal framework,” the ADR argued on Wort.lu.
The future housing pact is disappointing in the eyes of the CSV. “What we see is that we are delegating a large part of the responsibility to the municipalities. The government is letting itself off the hook,” says CSV deputy Marc Lies. But he believes that claiming that the communes will have more means is “a sham. It will be the opposite”.
On the other hand, the requirement increasing to 30% the proportion of low-rent units that have to be made available in projects with 25 or more housing units, as well as the extension of the construction parameters, “are indeed CSV proposals,” says Lies.
Definition of affordable housing
The CSV also takes issue with the fact that the notion of affordable or low-rent housing is not yet clearly defined. It is also a reproach of Déi Lénk, “this definition is the central problem,” argues David Wagner. He is also dissatisfied that the future pact is not more binding on the communes. “Municipalities should be obliged to build or make available a certain percentage of really affordable housing. This is still typical of Luxembourg’s reluctance when it comes to doing social obligations,” Wagner says.
The ADR will also be calling for a definition of affordable housing. “If an apartment that normally costs €800,000 arrives on the market at a reduced price of €500,000, that did not create affordable housing,” Roy Reding said as example cited in the Wort.
It has even been suggested that not all coalition parties were perfectly in tune with the two reforms. Compromises had to be found. The LSAP probably had the most to lose, with low-income households and individuals, as well as the lower middle class, among the most affected by difficulties in accessing housing. It was therefore hardly surprising that the socialists made pronouncements to reaffirm their position and reassure their voters as soon as Kox unveiled details of the reforms.
Yves Cruchten, party president and housing policy spokesperson, said “that legal innovations will not solve all problems, but at least aim to protect the weakest”. Mars Di Bartolomeo (LSAP) for welcomed the reduction of entry fees into the housing market.
Minister of the interior, Taina Bofferding (LSAP), reiterated that she was convinced that Pact 2.0 would boost housing supply and push the municipalities to build housing.
But opposition voices, notably Déi Lénk and the CSV, have retorted that to make that possible it will also be necessary to be able to acquire land, which means putting in place tools to fight against real estate speculation. Which they say is not currently the case.