Since 2014 the city of Luxembourg has had in place a “low cost housing” law. The idea is to allow selected buyers to buy a property without buying the surface of the land on which it rests. Aim: to reduce the acquisition cost.

Low cost housing, what is it?

Currently, every developer and/or builder who is committed to a management plan above one hectare must grant 10% of its housing for “low cost housing”. In the case of housing not being sold by the developer directly, Luxembourg City can purchase the housing and make it social housing or transfer it for a long lease agreement for example.

A first for Luxembourg City

For the first time since its implementation, a proposal for “low cost housing” has materialised at Les Jardins in Mühlenbach, and the town decided to pass this long lease agreement.

In concrete terms, this means that future apartment owners on the programme will own the walls, but they will have to pay an annual fee for “renting” the occupied land. In the case of the Les Jardins apartment, the long lease agreement provides a rent of the land for 50 years, always with the possibility of acquiring land from the thirteenth year onwards.

Low prices

If the measure provides “low cost housing”, it obviously has to offer prices close to average market price.
According to the VDL website, an apartment of 64m² in this residence at Les Jardins would cost €380,000, comprising of 1 room, a terrace, cellar, and indoor parking space.

If we compare this price with the rates of the Accommodation Observatory for the Ministry of Housing, the average price per square meter in Luxembourg City for new apartments is from €5841 (October 2016) This would fix the price of this apartment of 64m² at around €374,00. It is the accommodation services (terrace, cellar, parking space) which make the difference and which must modify this average price.

In any case, the rate proposal is well within the average (“low cost”), and is far from the price per square meter noted by the Accommodation Observatory at Luxembourg City which can go up to €7814 or around €500,000 for this apartment of 64m².
Additionally, this rate already includes a VAT of 17%, recoverable in part by homes already benefiting from state aid.

There are certain conditions to be able to place an application on this project. Discover all details on the Luxembourg City website here.

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