The new rental subsidy scheme, which was made public in May 2015, was the eagerly awaited part of the housing policy that will be implemented in early 2016. While waiting to see its results, let’s get back to this measure that is intended for lowest income households.

Compensating for soaring rents

The concept of subsidizing rentals was created from two observations. The first concerns the acute shortage of social housing units, which forces many households and low-income families to move towards private housing rental stocks. The second concerns the steady and very significant increase in rents, which is almost 36% between 2005 and 2014 according to the Housing Observatory. The situation created by these two phenomena has become really problematic. While waiting to see the completion of the already voted social housing construction projects, the State Secretariat for Housing has chosen to help lowest income families by subsidizing their rent.

Who is eligible for the rental subsidy?

According to the information provided by the State Secretary for Housing, rental subsidies will concern the tenants of private housing stocks, residing in the Grand Duchy. The two main conditions needed to be eligible for it are: already being a tenant and being able to justify that the income is below the low-income cutoff (less than € 3,713 per month for a family with two children, less than € 3,183 for a family with one child and less than € 1,768 for a single person). The household must also spend more than 33% of its revenue to pay the rent. Moreover, the scheme will be quickly extended to people falling under the GMI - guaranteed minimum income - or the income for seriously disabled people. According to the forecasts, about 19,000 households could benefit from this measure of housing assistance, which is nearly 7% of tenants in private housing stocks.

How is the rental subsidy calculated?

In order to propose the fairest possible application, the rental subsidy will be calculated according to a rental benchmark that corresponds to a national level average rental based on theoretical needs of the households. Thus, for a family with two children, monthly rental reference amounts to € 1,249. Moreover, the subsidy will be capped. Without ever exceeding the actual amount of the rent, it will amount to a maximum of € 124 per month for a single person, € 149 for a household with one child and € 174 for a family of four. To finance this new social housing assistance project, the State Secretary has been granted an annual budget of nearly 29 million euros.

The rental subsidy, which is a part of a social housing policy, is a key measure to people with lowest incomes. This should especially encourage families with a steady employment situation but low incomes and who wish to reside in Luxembourg. To find housing rental units available in the Grand Duchy, see IMMOTOP.LU!