Tenants for thousand empty properties in ministry scheme

More than 1,000 landlords let struggling tenants into vacant properties in return for tax breaks, the housing ministry organising the scheme said on Tuesday, as the country grapples with an explosion in housing prices.

Landlords can partner with one of 37 organisations - such as the Luxembourg Red Cross or social welfare agencies - in the government-funded scheme to help families in emergency situations find affordable housing.

Tenants benefit from rental prices 30-40% below market value, while the owner in turn gets a 50% tax exemption on the income.

Thousands of housing units are standing empty in Luxembourg, according to research bodies and pressure groups, a sign real estate speculation is aggravating one of Europe's worst housing squeezes, which is increasingly forcing less well-off residents out of the country.

In March, the International Monetary Fund urged the government to urgently intervene in the housing market. Recent government steps to address the housing shortage, such as plans to tax owners of empty dwellings and order land owners to build on their plot, may face obstacles and will take time to produce results, the IMF said in its assessment.

Housing Minister Henri Kox on Tuesday urged more communes to get on board with the GLS government scheme. Last year, tenants moved into one of 1,073 properties under the programme, an increase of 50% since 2018.

In January, Kox introduced legislation aimed at addressing one of Europe's most severe shortages of affordable housing, though no action is expected before next year. Amongst the measures is a proposal to get the state more involved in building affordable housing and create a register of such properties.

The price of a flat in Luxembourg almost doubled between the start of 2013 and the end of last year, figures from the country's official statistics agency Statec showed last month. Overall, real estate in Luxembourg almost doubled in value in the decade from 2010, the third-highest increase in the EU in that period.

The issue of rising house prices across the continent was on the agenda at a meeting of finance ministers from across the eurozone in Luxembourg on Monday. Pascal Donohoe, the Irish president of the meeting, said house prices in the eurozone area had increased by 40% between 2013 and 2021.

"Half of those price rises" had occurred during the two years of the pandemic, he said, a period when people were largely confined to working from home.