Luxembourg strengthens legislation on affordable housing: families and municipalities are prioritised

The Luxembourg government has presented a new draft law streamlining the application of the law of 7 August 2023 on affordable housing. The document was drafted in dialogue with local actors and is based on an analysis of the experience gained so far. The Minister of Housing and Spatial Planning, Claude Meisch, emphasises that affordable housing is not just a matter of infrastructure, but a foundation for social solidarity and individual dignity.

The law adopted in 2023 was a landmark for Luxembourg's housing policy, introducing three structural innovations:

• Support for social property developers,
• Social landlord institute with regulated affordable rents,
• Creation of a National Registry of Affordable Housing (Registre national des logements abordables, RENLA).

These measures became the basis for a long-term model for a sustainable and affordable housing stock. Since his first days as Minister, Claude Meisch has focused his efforts on creating a sustainable framework for affordable housing. He initiated a series of consultations with representatives of entities such as the Federation of Social Developers (FEDAS), the Luxembourg Association of Municipalities (Syvicol), the Housing Fund (Fonds du logement), the National Housing Agency (Société nationale des habitations à bon marché, SNHBM) and ministries.

At the same time, the minister has begun visits to communes across the country to discuss obstacles and hidden potentials on the spot. The aim is to turn local initiatives into real projects, especially where the need for housing is most acute.

Official statistics show: 24 per cent of children in the country are at risk of poverty, and among single-parent families, almost every second. For such households, affordable housing becomes not just a necessity, but a struggle for survival: cramped flats, dampness, lack of light, inflated bills. The bill proposes to introduce "mono-parenthood" as a new criterion in the housing allocation system. This will allow vulnerable families to be prioritised in getting a flat.

To incentivise the creation of affordable housing, the government is strengthening the incentive system. In addition to bonuses for climate sustainability and innovation, a new subsidy is being introduced for retrofitting existing buildings. This is a step towards rationalising the use of old stock and reducing the environmental burden.

An important innovation is geographical segmentation. Now the level of financial support will depend on the region: the higher the land prices in a given municipality, the higher the compensation. This will make it possible to redistribute efforts to the most needy areas.

Communes become full-fledged participants in the affordable housing system. The bill proposes to compensate the capital invested by them, and retroactively - from 1 October 2023. Such a step, according to the ministry, will give a new impetus to local projects.

Social landlords play a central role in maintaining a socially and functionally mixed population. The Bill proposes:

• additional subsidy for housing management for employees - in the context of growing labour migration;
• reimbursement of student accommodation costs if it is not managed by the University of Luxembourg;
• Introducing a 'free contingent' for landlords with more than 100 units of affordable housing - they will have more flexibility in allocating flats to those in need.

Also, following the example of the Jugendwunnen initiative - a housing programme for young people - new competitions for projects for older people (60+) and workers are planned, which will ensure a more targeted approach to the needs of the population.

Another important step is that social landlords will be able to include flats built by private investors in their stock. This creates a hybrid model that can cover the lack of supply through partnerships with the private sector.

The Housing Fund (Fonds du logement) is being officially recognised as a public benefit structure. Its capacities are being expanded, its instruments are being adapted to current realities, and its mission is being emphasised as central to public housing policy.

In parallel, changes are being made to the Personal Housing Assistance Act 2023. The aim is to simplify the application procedure and ease the burden on the relevant civil service.

The draft law for the first time legally enshrines the status of affordable housing as an element of public benefit. This means that affordable housing is not seen as a temporary measure, but as a structural response to scarcity and a legal instrument for the realisation of the constitutional right to housing.

As Claude Meisch emphasised, these changes will allow more than 100 communes to become actively involved in the process. Together with structures such as the Fonds du logement and the SNHBM, this creates a uniquely wide network of actors involved in solving the country's housing crisis.