Seven Measures

Finance Minister Gilles Roth and Housing Minister Claude Meisch presented their plan to boost construction to the Chamber committee on Thursday. The EU Commission has rejected the increase in the ceiling for super-reduced VAT from €50,000 to €100,000. The ministers found alternatives.[1]

Seven measures. The main ones:[1]

The Bëllegen Akt, the homebuyer tax credit on notarial deeds, will be increased from €40,000 to €45,000 per person. The interest subsidy will no longer be calculated on a loan of €200,000, but up to €300,000, for first-time buyers under 35. The threshold may increase slightly depending on the number of children. Accelerated depreciation at 6% over six years will be reintroduced, capped at €600,000. Registration duty on off-plan home purchases (VEFA) will be reduced to 0% until the property is 80% complete.[1]

€300 million will be dedicated to the state purchase of off-plan homes. Meisch said the state had so far committed €470 million and would now be able to take advantage of further purchasing opportunities. The main measures are expected to cost the state around €35 million in lost tax revenue. Finance Minister Roth noted that increased activity in the housing market could, in turn, generate additional revenue.[1]

€5,000 or €33,600

The ministers presented graphs showing that someone purchasing a home worth €1 million could pay, depending on conditions and measures, €5,000, €19,500, or up to €33,600 less. The range is wide. The savings depend on which measures apply, which bracket the buyer falls into, whether they are under 35, whether it is off-plan, how many children they have. The headline is "seven measures". The fine print is "your mileage may vary".[1]

Not a package for developers

Roth said in the question-and-answer session that it was "not a package to support developers who bought land at too high a price", but to get construction back on track. Before the pandemic, there were not enough projects on the market. People wished to buy before they were authorised. Now, it is the opposite: many projects being authorised, but without coming to fruition. Roth and Meisch asked developers to meet them halfway, without asking for prices that are too high. Roth warned that abuses could be subjected to further measures.[1]

The risk

Measures aimed at boosting demand are understandable. There is a risk that they could drive prices even higher if supply fails to keep pace. How much housing is built ultimately depends largely on decisions taken by municipalities. Meisch said the government would closely monitor and evaluate the tax measures and report back to Parliament, allowing intervention if necessary. The new measures would not operate in isolation, he stressed, but would be accompanied by provisions designed to prevent them from pushing up prices. Meisch also pledged to continue discussions with municipalities.[1]

€35 million in lost tax revenue. €300 million in state purchases. €470 million already committed. Seven measures. One risk: demand goes up, supply does not follow, prices go up. The government says it will monitor. The government says it will intervene if necessary. The government says it will continue discussions with municipalities. The municipalities, who decide how much housing gets built, are not in the press conference. They are in the discussions. The discussions are ongoing.[1]