During the press conference of 30 July 2020, Minister of Housing Henri Kox and Minister of the Interior Taina Bofferding presented the bill that defines the future collaboration between the state and the municipalities in order to stimulate the supply of affordable housing. The bill also includes the introduction of a new rule allowing the public sector to acquire a certain number of affordable dwellings in special "new neighbourhood" development plans.

Ministers Henri Kox and Taina Bofferding present the new Housing Pact 

On 31 December 2020, the current Housing Pact expires. Since 2017, the Ministry of Housing has been preparing a new support programme for municipalities to further develop the supply of affordable housing. The Ministry of Housing has opted to develop the Housing Pact 2.0 on the basis of a participatory process with the municipalities.

For example, the Ministry of Housing carried out in 2019 six regional interactive workshops The results of these exchanges were presented to the Chamber of Deputies and discussed in a consultation debate. The results of these exchanges were presented to the Chamber of Deputies and were the subject of a consultation debate.

Subsequently, the concrete work on the implementation of the draft law for the New Housing Pact was started. On 29 July 2020 the Government Council approved the draft law of the New Housing Pact.

The Housing Pact 2.0 will be in force until 2032 and allows for a new approach to housing policy at the municipal level. The aim is to better support the municipalities as partners of the state in order to increase the supply of housing, to mobilise land potential and to improve residential quality.

To that end, new instruments and mechanisms are introduced:

1. the housing advisorThis is a service that assists municipalities in the development of a housing strategy and in its implementation;
2. the local action programme - housing (PAL), which is a real communal strategy for the promotion of affordable housing that defines the priorities and lists the commune's housing projects;
3. financial support from the StateThis will be directly dependent on the number of affordable homes created and is aimed at the delivery of projects that support the objectives of the Housing Pact.

"The municipalities are the privileged partners of the State to create this necessary supply of affordable housing, which is unfortunately lacking today. The Housing Pact 2.0 will be the lever that will contribute to changing the course of housing", emphasised Housing Minister Henri Kox at the press conference.

In order to provide municipalities with an effective means of acquiring affordable housing or land for affordable housing, it is proposed to insert a new Article 29bis in the amended law of 19 July 2004 on municipal planning and urban development. Indeed, the instrument introduced by the first Housing Pact proved to be ineffective, as many of the dwellings created in this way were sooner or later sold at market prices.

The new provision therefore foresees that the land for affordable housing is to be transferred by the developers either to the municipalities or to the state, so that the latter can acquire the housing. The acquisition of a significant number of dwellings by the public sector is indeed essential to increase the supply of affordable housing and to maintain a good social mix in future housing areas.

In addition, the provision of affordable housing will be strengthened by the requirement to set aside a significantly higher proportion of land for this purpose. According to the current legislation, only special development plans (SDPs) with more than 25 dwellings must reserve 10% of the built area for housing for affordable housing. The Housing Pact Bill proposes to include smaller SPPs and to provide for a reservation of up to 30% of the larger built area.

"If we want to prevent the social divide from widening in Luxembourg, it is the duty of the public authorities to further develop their own housing stock and to actively intervene in the housing market. The measures of the new Housing Pact will give them the necessary and effective means to do so", concluded the Minister of the Interior, Taina Bofferding.

Press release Ministry of Housing and Ministry of the Interior