The government wants to provide more households with rent relief

With a partial revision of the Housing Promotion Act, the Zug government aims to advance its housing strategy. In the future, more people will be eligible for rent subsidies, while, at the same time, incentives will be created for the construction of affordable housing.
 

High housing costs are among the most pressing problems for people in the canton of Zug. The government intends to address this with its Housing Policy Strategy 2030. It is implementing this strategy, among other things, through a partial revision of the Housing Promotion Act (WFG: Wohnraumförderungsgesetz), as recently announced by Director of Construction Florian Weber (FDP party) at a press conference. The corresponding draft legislation is currently undergoing the public consultation stage (Vernehmlassung).

The goal of the revision is to facilitate access to affordable housing and to expand existing subsidies in a more targeted manner. This is intended to benefit both low- and middle-income households and housing developers who build or offer affordable housing.

No longer a fixed upper limit
One of the most important changes concerns rent subsidies (Mietzinszuschüsse). Until now, a fixed income and asset limit was used to determine whether a household received government support. In the future, however, greater consideration will be given to the actual rent burden in relation to income.

Specifically, rent subsidies could be granted if housing costs exceed a certain percentage of income – for example, 35%. This is intended to support more households who are under financial pressure, despite being employed.

In addition, the new model aims to prevent additional work from being financially unprofitable. At the moment, people who take on a higher workload can suffer a complete loss of the rent subsidies, leaving the individual worse off, despite working more hours.

The requirement that applicants must have been residents of the canton of Zug for at least three years remains unchanged.

More incentives for the construction of affordable housing
With the Housing Promotion Act (WFG), the canton also supports the construction, renovation, acquisition, and maintenance of affordable housing for low- and middle-income households in Zug (project-based subsidies). The cantonal government is also planning adjustments here. In the future, all developers who voluntarily offer affordable housing in accordance with the Housing Promotion Act will be able to benefit from interest-free or low-interest loans.

View of the village of Menzingen: The Zug government wants to ensure that Zug residents can still live in their hometown.         Photo: Stefan Kaiser
 

These loans will cover up to 8% of the total investment costs – i.e., land price and construction costs. At the same time, the repayment period will be extended from the current ten years to twenty years. The government hopes this will provide additional incentives for developers to create more affordable housing in the future.

An existing subsidy program for non-profit developers will be eliminated, however. The cantonal government explains that it has not proven effective in practice, and has never been used.

Promotion of home ownership eliminated
With this revision, the canton is also abandoning the promotion of home ownership, with this part of the existing law being repealed without replacement. In the future, the cantonal housing promotion programme will focus entirely on affordable rental apartments.

The revised ordinance on the Housing Promotion Act is not yet part of the consultation process, although a draft version is already included with the documents. Among other things, this draft is intended to address the technical issues concerning rent calculation, the cost-rent model, building rights, and occupancy regulations for publicly subsidised housing. The specific details of the new rent subsidies will also be defined at the ordinance level.

As Director of Construction Florian Weber concluded, the Zug government is implementing a key step in its 2030 housing strategy with this partial revision. Whether the planned adjustments will be sufficient to noticeably ease the strained housing market will likely only become clear in the coming years.