Luxembourg to deliver 4,000 affordable homes by 2025

Luxembourg aims to deliver 4,000 affordable housing units by 2025 to alleviate one of Europe's worst housing squeezes that has seen housing prices rise by 17% year on year.

There are plans for 18 large projects dotted around the country, including the Neischmelz project in Dudelange and the Alzette Quarter in Mersch, the government said on Thursday, as Luxembourg's poorest households pay 40% of their income on rent.

Luxembourg set up a development fund that bundles all public investments into affordable housing in April last year, which allows people to see how much money goes into solving the problem in one place. 

Two public developers, the Société Nationale des Habitations à Bon Marché  (SNHBM) and the Fonds du Logement are developing 70% of the affordable housing projects at the moment, the government said. 

As of last year, there were 300 projects in the development fund, for a total of more than 3,125 housing units and a total price € 514 million. In 2020, the fund spent €96 million, the government said on Thursday.

Of the total stock of affordable housing built in 2020, 53% were rental properties, while the remainder were sold into ownership. The government hopes to have signed agreements for 8,200 new housing units by 2025.

Still, projections by the Statec national statistics agency suggest the country needs at least 5,600 new housing units each year, given that it has the highest population growth in the  European Union.

Using more wood for building could accelerate the process, but Luxembourg faces bureaucratic hurdles. Last year, major housing plans in Kirchberg were nixed by a court over environmental concerns.

The government and lawmakers are currently also working on a law that would support councils more to build affordable housing and give the state more leeway to intervene. Another law overhaul would see renters better protected.

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