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Luxembourg ramps up rent subsidy by 50% from August
Housing

Luxembourg ramps up rent subsidy by 50% from August

by Heledd PRITCHARD 2 min. 02.08.2022
Low earners struggling to meet rising energy and accommodation costs will receive monthly payments of up to €400, housing ministry announces
New flats being built in Luxembourg, where housing prices have more than doubled in the last decade
New flats being built in Luxembourg, where housing prices have more than doubled in the last decade
Photo credit: Gerry Huberty

People struggling to afford their rent in Luxembourg will receive a payment of up to €400 - a 50% increase on the current subsidy - starting this month to combat the rising cost of living, the government announced on Monday.

Low earners struggling to pay huge energy bills sparked by the war in Ukraine and high accommodation costs resulting from the Grand Duchy’s overheated housing market will receive up to €400 to help towards rent, the Housing Ministry said.

Housing has become a pressing electoral issue in Luxembourg with prices more than doubling over the past decade, increasing by 17% in 2020.

The cost of buying a home rose by more than 10% in the first quarter of this year compared to 2021, according to figures published last month by the Observatoire de l’Habitat, which carries out housing research for the government. 

More than a third of tenants spend around 40% of their income after taxes on rent, a study by the same body found two years ago.

The level of state aid available will now increase by an average of 50% from August onwards, the government said.

A person living alone and earning less than €3,126 per month before tax will receive €200, while a single parent earning below €5,664 per month will be paid €320 towards rental costs.

Only 15% of eligible households took advantage of the government’s rent subsidy programme in 2020, the government said at the time. The housing ministry estimates that around 34,000 families qualified for the financial assistance but just over 5,000 benefited from it two years ago.

One of the main reasons behind the housing squeeze is a shortage of land to build on. Many plots on which housing could be built lie in the hands of private owners, who are reluctant to sell as they see the value of their land increase rapidly. Nearly 50 land owners collectively own a quarter of the country's housing plots, the government said earlier this year.  


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