Claude Meisch: "The housing market in Luxembourg requires urgent and profound changes"

In an extensive interview with Paperjam, Housing Minister Claude Meisch detailed the critical situation on the Luxembourg property market, calling it a "double crisis". On the one hand, the country has long experienced a chronic housing shortage. On the other hand, over the past two years there has been a sharp collapse in sales of new buildings against the backdrop of soaring interest rates.

The resale segment has started to recover, but sales under construction (Vefa) are still stagnating. The reason is that property developers are in no hurry to adjust prices downwards, waiting for demand to recover. In addition, a series of bankruptcies in the construction sector has created mistrust among potential buyers who are afraid of being left without invested funds.

The Ministry of Justice and the Ministry of Housing have launched a working group to revise the Vefa legislation, especially with regard to the protection of buyers in the event of developer bankruptcy. New mechanisms are planned to guarantee construction completion and refunds.

In order to contain the crisis, the state has started buying up projects in the construction phase to be handed over to the state affordable housing agencies. Out of the allocated budget of 480 million euros, notarial deeds have already been signed for the purchase of about 270 flats. Negotiations on other projects are ongoing.

In addition to outright purchases, the government is looking at innovative schemes such as long-term leases followed by the purchase of built housing to place it in the affordable rental scheme.

The shortage is exacerbated by the fact that there are around 10,000 empty houses in Luxembourg. The government intends to activate a tax on empty housing and increase support for social rental programmes to bring these properties into the market.

Also under discussion is a new tax on undeveloped plots already reserved for housing, to encourage owners to bring land into circulation more quickly.

One of Meish's key policy goals remains the provision of housing for all categories of citizens, including those who build roads, clean streets or deliver food. The minister insists that affordable housing must be an element of social justice, not just an economic necessity.

To facilitate access to assistance, the authorities also plan to better inform the population about existing subsidies and benefits, as many people simply do not know about them.

Claude Meisch rejected the idea of a "state of emergency" to solve the housing crisis. Instead, the government is focusing on legislative reforms, intensifying land policy and attracting private investors through partnership programmes.