The seven concrete housing measures presented last Thursday by Luxembourg's housing and finance ministers are being welcomed by the construction sector as a step in the right direction. Their main objective is to revive residential construction, although industry representatives say additional reforms will be needed to increase building activity and address the country's housing crisis.
Anyone looking to buy a new build, whether an apartment or a house, will now benefit from additional tax measures. These include exemption from registration fees when purchasing off-plan, reduced notarial fees, and increased interest subsidies, especially for young families.
Roland Kuhn, President of the Federation of Construction Companies, noted that the accelerated depreciation, if guaranteed, and the 8% VAT are very important aspects, even if certain details might still have to be slightly adjusted.
Steve Vermeer, spokesperson for the Federation of Real Estate Developers, reckons that these measures are mainly targeted at private buyers, adding that they would have hoped that legal entities would have been considered, since many institutions, foundations, and companies also purchase property.
Over the past 18 to 20 months, demand for new housing has collapsed. Barely 1,000 units per year have been built, compared to around 4,000 before the crisis. According to Statec, about 6,500 units per year would need to be constructed. One reason for this change is that many potential purchasers are either lacking the funds or the willingness to invest in housing.
Roland Kuhn notes that, for example, with single-family homes, anything around the one-million mark is pretty much the maximum that most people can or want to afford.
Steve Vermeer also points out that purchasing power has decreased and that a rethink is needed, for instance by focusing on constructing smaller apartments. Buyer behaviour is constantly changing, and the sector needs to respond and adapt to those changes.
Roland Kuhn argues that procedural changes, both in terms of time and quality, are required. The Federation of Construction Companies is currently drawing up a list of all the points that could be improved without compromising quality together with the Federation of Craftworkers.
Undoubtedly, one approach is to reform the guarantee of completion, which comes into play in the event of a developer's bankruptcy. Roland Kuhn explains that to build trust in buildings under construction (VEFA), a guarantee of completion, which includes the land, is required.
There will be no shortage of topics for discussion at the next planned Housing roundtable. While the sector broadly welcomes the government's latest package, industry representatives agree that further adjustments will be necessary to build more and get on top of the housing crisis.
