Luxembourg is introducing a retail housing bond, projected to be between €150 million and €250 million, slated for issuance in late 2026 or early 2027. This bond will offer a short maturity of three to five years, an attractive interest rate based on market conditions, and tax exemption on interest, mirroring the structure of its highly successful defense bond. The aim is to allow residents to invest in financing affordable housing projects and indirectly participate in state-owned rental housing initiatives.
This housing bond is part of a broader €300 million government initiative to support the struggling construction sector and boost housing supply. The government plans to use these funds to purchase homes off-plan from private developments, supplementing an initial €480 million allocation that has already secured 830 homes. The additional funds are expected to facilitate the construction of approximately 500 more homes over several years.
Financial Minister Gilles Roth noted that the housing bond is based on the positive reception of the defense bond, which saw 2,380 subscribers invest, with an average investment of €65,000 and 96.7% benefiting from tax exemptions. The government estimates that a similar retail bond could achieve a subscription volume up to three times larger under similar attractive conditions. The housing package also includes other measures such as reintroducing accelerated depreciation for properties capped at €600,000, increasing the 'Bëllegen Akt' tax credit to €45,000 per person, and expanding interest subsidies for home loans, particularly for first-time buyers.
The overall financial implication for the state from these measures, including accelerated depreciation, increased 'Bëllegen Akt' credit, and registration tax relief, is estimated at €35 million in lost tax revenue. However, officials anticipate that renewed construction activity will generate additional revenue, protect jobs, and increase transactions. The first legislative steps for these measures are expected to reach the cabinet by the end of July.
These efforts come as Luxembourg's housing market has experienced a downturn, with prices falling 9.1% in 2023 and 5.2% in 2024, though a slight rebound was noted in 2025. The government's comprehensive package aims to address the construction slowdown, where projects often face difficulties securing enough buyers or bank financing to commence building.
