Buying Off-Plan: Invaluable Assistance

New for 2024: A Significant Reduction in Registration Fees

Good news! A new measure to reduce the cost of buying property was announced by Finance Minister Gilles Roth at the recent "Semaine du Logement" fair. This initiative—valid from 1 October 2024 to 30 June 2025—will support prospective homeowners in the current high-price environment. The halving of registration fees (“frais d'enregistrement”) from 7% to 3.5% will encourage many to take the plunge. Additionally, the maximum tax credit of €20,000 per person equates to a substantial saving for buyers, particularly young people and other first-time buyers.

For example, a couple looking to buy a €600,000 flat in Luxembourg would have had to pay €42,000 in registration fees at the previous 7% rate. Now, with the fee reduced to 3.5%, this cost drops to €21,000. The substantial savings can then be reinvested in renovation work, furnishings, or mortgage repayments.

The “Bëllegen Akt”: A Substantial Cut for Acquisition Costs

To receive the “Bëllegen Akt” home buyers' bonus, the property must be intended as the principal residence, and the application must be submitted after the signature of the notarial deed. This important assistance can significantly reduce the cost of buying a property, particularly for first-time buyers.

Interest Subsidy: A Helping Hand for Housing Loans

One of the most costly aspects of buying a property is paying loan interest. A Luxembourg government subsidy is designed to ease these costs and is calculated based on the income and number of dependents in a household. By covering part of the interest cost, it helps reduce monthly repayments, particularly in the early years of a mortgage when the interest component is often at its highest. This subsidy is especially useful for young households and families, as it helps prevent the first few years of repayment from weighing too heavily on their budget.

Reduced-Rate Loans for Low-Income Households

Lower-income households receive special support, particularly in the form of loans with advantageous conditions, featuring a preferential interest rate that can finance at least part of a new property purchase. The amount granted depends on the household's income and the property’s characteristics, and this assistance can make a real difference for those struggling to secure a conventional loan.

Reduced VAT: Ideal for New Builds

If you are buying a new property that you intend to use as your principal residence, you can also benefit from a VAT reduction from 17% to 3%. This reduction applies up to a maximum of €50,000, which would represent substantial savings on up-front costs.

What's more, the reduced VAT rate can be combined with other forms of assistance, such as the Bëllegen Akt. This means people buying yet-to-be-competed (“off-plan”) homes can significantly reduce the overall cost of their purchase.

A Vital Step to Maximize Support

There are many forms of government assistance, each with specific criteria that often require rigorous administrative procedures. It is strongly recommended to consult a notary ("notaire") or specialist adviser to ensure that all conditions are met, enabling you to take full advantage of every available aid. These schemes (which can be combined with others under certain conditions) represent a real opportunity for future buyers to cut costs and make their property plans a reality in an increasingly complex market.

What Does This Mean in Practice?

To conclude, let’s consider the example of a young couple planning to purchase a €1,200,000 apartment off-plan as their principal residence. Thanks to the recently announced measures, registration fees, which would normally have been 7% (or €84,000), are now reduced to 3.5%, or €42,000. This reduction saves the couple a substantial €42,000. Additionally, they can benefit from the Bëllegen Akt, which could offer them up to a further €80,000 in savings on acquisition costs. By combining these grants with the reduced VAT rate of 3% (instead of 17%), they can save up to €50,000 more.

If they are eligible for an interest subsidy, this will also reduce monthly mortgage payments, particularly during the first few years when interest costs are highest. Finally, depending on their income, they could be granted a reduced-rate loan, giving them access to even more advantageous financial conditions. By maximizing state support, this couple can not only realize their dream of becoming homeowners but also considerably reduce the total cost of their property purchase.