Support schemes for the construction and housing sectors, along with various small incentives, are being rolled out one after another. Since taking office, the government has introduced a series of measures aimed at reviving activity in the construction sector, tackling supply bottlenecks – notably by streamlining administrative red tape and seeking to coordinate public and private sector stakeholders – and building a sustainable model for affordable housing. Not to mention the housing component of the national plan to tackle poverty. Halfway through its term, the Prime Minister Luc Frieden acknowledged that the market is not developing as the government would like. Demand remains high and supply is insufficient.

The latest of these packages was presented on 16 July by the Minister of Finance Gilles Roth and the Minister of Housing Claude Meisch, and has been named “‘Booster fir de Wunnengsbau’ − Méi bauen. Méi erschwénglech. Méi Wunnengen”. This translates as “‘A boost for housing construction’ — build more. More affordable. More homes”. The aim? “To provide concrete and sustainable solutions to citizens’ primary concern: housing”, according to the ministers. This involves sustainably boosting housing construction, supporting home ownership and increasing the supply of affordable housing in Luxembourg.

What’s on the agenda? A temporary exemption from registration and transcription fees on the construction portion of a dwelling intended as a main residence where up to 80 per cent of the work has been completed – a further support measure for the off-plan property sector; an increase in the Bëllegen Akt tax credit from €40,000 to €45,000; a reduced VAT rate of 8% is introduced for the creation of social housing; a new accelerated depreciation scheme of 6 per cent over six years with a capped depreciation base to improve the profitability of rental investments; the launch of a 250 million housing loan scheme, the adjustment of individual housing support schemes for young people and first-time buyers; and the continued implementation of the off-plan property purchase programme with an additional budget of 300 million, on top of the 480 million already committed.

This package has been presented to the Finance and Housing Committees. It is now due to be incorporated into draft bills, which will join others that are strategic yet currently at a standstill.

Taxation and simplification on the MPs’ agenda

The first of these projects is two-fold: it concerns the reform of property taxation – and not specifically the reform of the land tax, which is to include a tax on the use of land (parliamentary document 8082A) – and the introduction of a tax on the non-occupation of dwellings (Parliamentary Bill 8082B). A tax reform included from the outset in a bill that was split into two parts to speed up the process.

A simplification drive that never materialised. The entry into force of the land mobilisation tax is scheduled to come into effect by 2028, with the first penalties due to be imposed in 2035. A tax on vacant properties? The project has been on hold since 2023, stalled by the deadlock surrounding Bill 8086 establishing the National Register of Buildings and Dwellings (RNBL). This essential technical tool, which enables local authorities to legally identify vacant properties and levy the tax in question, is struggling to meet the requirements of the General Data Protection Regulation (GDPR).

In the meantime, policymakers are feeling their way in the dark, with no truly reliable statistics on the number of homes in Luxembourg, whether vacant or occupied. Statec has confirmed that no national statistical update on the 15,337 unoccupied homes recorded in 2021 will be published before the next census. That is, in 2031. Worse still, in response to a parliamentary question, Claude Meisch admitted that he did not have a an updated estimate of the sector’s actual production capacity in Luxembourg.

Administrative simplification has been identified as a means of speeding up the start of construction on new homes. ‘Build more and faster’? This 40-point emergency plan, announced in June 2024, is coming up against the realities of parliamentary procedure: you have to give it time. Time is running out. The key issue for the start of the parliamentary session will be Bill 8792, which aims to make the governance of general (PAG) and specific (PAP) development plans more flexible. The bill was tabled on 15 July 2026 by the Minister for Home Affairs Leon Gloden, it aims to simplify and speed up administrative procedures. The principle of ‘no objection means consent’ is central to this. As is the streamlining of environmental impact assessments. This is likely to be a source of controversy.