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Government wants to fill housing gaps
Luxembourg

Government wants to fill housing gaps

2 min. 12.05.2015 From our online archive
A government programme to fill available building plots in residential areas could run into difficulties, with over 80 percent of the land in private hands.

(CS/mig) A government programme to fill available building plots in residential areas could run into difficulties, with over 80 percent of the land in private hands.

In its government programme, the DP-LSAP-déi Gréng coalition set out to create a so-called “Baulückenprogramm” – construction gap programme – aiming at creating more housing by filling spaces left open in cities, town and villages around the country.

A study by the Luxembourg Institute for Socio-Economic Research (LISER) identified 957 hectares of land as so-called construction gaps.

The government's programme to fill the gaps, however, could run into problems as 82 percent of the land are privately owned. The state only owns 1 percent, as does the housing fund. Another 1 percent is owned by the “Fonds d'assainissement de la Cité Syrdall” and the “Fonds Kirchberg”. Communes own 5 percent. Ten percent are owned by developers.

These statistics were presented to a parliamentary housing commission on Monday, where it was also revealed that the government would launch an awareness raising campaign modelled on similar programmes in Germany to convince private owners of these plots to sell.

Incentives needed

Opposition MP Marc Lies of the CSV however voiced doubts that such a programme could succeed. For example, he commented that many owners were not in need of the money raised through a possible sale of land, but were instead saving he plot to gift to children or grandchildren.

“Without an incentive it will not be possible to convince people to sell,” he said, adding that the government's decision to raise VAT on real estate investment from 3 percent to 17 percent could further hinder the project.

Investors building to rent since January 1 this year no longer benefit from the super-reduced VAT rate, which is now only applicable for people building a primary residence. Projects submitted for planning permission before the end of last year have a two-year deadline to be completed.

“The government slammed that door shut and now needs to open new ones,” Lies said.

He also commented that the real estate market in Luxembourg, an international financial centre and business location, was different from rural communities in Germany, where authorities were able to to convince around 25 percent of building plot owners to sell for development.

Further details on the implementation of the construction gap programme were not revealed on Monday, with the DP's Gilles Baum saying that it was still under development.