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Survey shows mass opposition to accommodation VAT hike
Economics

Survey shows mass opposition to accommodation VAT hike

17.07.2014 From our online archive
The new VAT hike on second homes and constructions will only serve to push up property prices and rents, a survey conducted with construction sector workers has found.
26.03.24 illustration Baustellen Logement, chantier logement en construction, Bau von Wohnungen, Foto : Marc Wilwert

The new VAT hike on second homes and constructions will only serve to push up property prices and rents, a survey conducted with construction sector workers has found.

The poll was carried out with 500 companies associated with the construction sector by Luxembourg's Artisans Federation.

The findings suggest there is overwhelming opposition among firms working in construction towards plans to increase VAT from 3 to 17 percent on second homes or buy to let properties.

In April, the federation lamented the measure, which it said would send investors running, causing job losses, and higher property values and rents.

This survey appears to echo the federation's fears with 84 percent of respondents saying the measure will put off investors, 88 percent saying it will push up property prices and a further 88 percent saying that rents will likewise rise as a result. Furthermore, almost nine in 10 respondents (89 percent) said it would result in people working cash in hand for jobs to keep costs down.

Meanwhile, eight in 10 firms said the measure would affect their profits and two thirds said it would result in job losses.

The federation repeated earlier warnings that Luxembourg's supply of accommodation continues to be well below demand.

Furthermore it says that given STATEC analysis calling for 80,000 new homes from 2010 to 2030, there is not enough appropriate land within the country to provide for these developments.

Indeed, according to the federation's calculations based on available land, the country will be left with a shortfall of 16,000 homes.

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