The new Luxembourg government has made the housing crisis a top priority, enacting a comprehensive package of measures to give the real estate market a much-needed boost. The new measures will benefit both private individuals and investors. A strong political signal that also helps to restore confidence in real estate.
New policies must enable more people to fulfil their dream of home ownership, despite increased house prices and interest rates.
A 40,000-euro tax break. To encourage the purchase of owner-occupied homes, the tax break will be increased from EUR 30,000 to EUR 40,000 per person. “This means you don’t pay registration fees when buying a property of up to 571,000 euros,” says Stevan Stojkovic, CCO of Antonissen Lux. “If you buy a home together with your partner, you both stand to benefit from this tax break, meaning you don’t pay registration fees for a 1,142,000-euro home. This benefit can be used for life and the unused share can even be transferred to any property that is subsequently purchased.”
Interest deduction. Another new support measure is the increased deduction of interest. “From this year, new owner-occupiers will benefit from an annual deduction of 4,000 euros per person, instead of 3,000 euros. The higher interest you pay each month can thus be reclaimed on your tax return. Another signal that the government is mindful of the evolving property market.”
Prioritising affordable housing. High housing prices are making it harder for some people to access the property market in Luxembourg. “Support measures such as the subsidising of interest charges will therefore be extended to a wider target group. The government will also invest 480 million in real estate over the next three years. This should also drive the revival of the construction industry and make housing more affordable. For some types of property, it will be possible to buy just the structure - without the land - which will bring prices down. All this should increase the available housing and create a more inclusive market, for tenants and buyers.”
The Luxembourg government has also enacted measures to facilitate real estate investment and eliminate any reluctance to invest.
A 20,000-euro tax break. Investors who rent out their properties can benefit from a tax break of 20,000 euros per person. For a couple, the tax break rises to 40,000 euros. “This is an interesting measure because, until recently, investors paid registration fees to the amount of 7% of the purchase price for investment properties.”
Accelerated depreciation. Also interesting: the annual percentage charge rate has increased from 5% to 6%. “The depreciation period has also been increased from five to six years. This allows property investors to write off more costs over a longer period of time, easing their tax burden.”
Reduction in capital gains tax. Anyone who sells an investment property owes the taxman capital gains tax. “Usually, this tax amounts to around 20% or half the general rate. This year, the government intends to reduce this to a quarter of the normal rate. The measure is designed to encourage investors with older property portfolios to shift their capital to newbuild properties. This is a support measure for the construction and real estate sectors and helps make the housing market more sustainable.”
Faster and bigger construction projects. Land for development is scarce in Luxembourg. “The population is growing by about 10,000 every year, adding to the pressure on the housing market. Bigger, faster construction projects are needed to provide housing for everyone. The government has already promised to accelerate building permit procedures and encourage densification of residential areas.”
Instead of rapid growth, Antonissen Luxembourg is prioritising stability and organic growth. “This rather traditional approach is the driver of our success. Antonissen is a family-owned business that is backed by stable financial stakeholders. We pride ourselves on more than 15 years of experience in the Belgian property market. We established our Luxembourg subsidiary 5 years ago. Our extensive experience and secure financial approach is paying off and means we can launch a large development such as Widderhall-Dudelange despite more limited pre-sales. Prospective buyers can visit the site, see how the works are progressing, etc. Our approach inspires trust, which is more crucial than ever given the challenging times that the real estate market is facing.
The former Arcelor Mittal site in the centre of Belval is making way for B-Hive, a newbuild development that was inspired by a beehive, where residential units are combined with business and commercial spaces. The development consists of 6 apartments, a penthouse, 3 commercial spaces, and 12 office spaces that are ideally suited for SMEs. Work on B-hive is ongoing and the development is gradually taking shape. This marks an important step in the transformation of this historic site into a vibrant, multifaceted hub for living, working and doing business.
Four years after its establishment, Antonissen Lux's reputation is growing steadily. "Although we work closely with our Belgian colleagues, we value the development and consolidation of a local, Luxembourg identity": says Loïc Sevin, COO of Antonissen Lux. Thanks to our approach and our clear vision on the company's development strategy, Antonissen Lux is able to continue growing despite the current challenging market conditions.
Discover the dynamics of the Luxembourg real estate market with our latest InFocus. Together with Sven Potvin, CEO of Antonissen Development Group, we delve into the latest developments, trends, and forecasts that impact investors and homeowners in Luxembourg.