Brasíia, March 2, 2004 (Agência Brasil - ABr) - On Wednesday (3) the government will submit a bill to the National Congress to provide incentives to the construction sector. The goal is to stimulate the real estate market and promote the generation of jobs. The measures were announced yesterday (1) by the Ministers of Finance, Antônio Palocci, and of the Cities, Olívio Dutra. By stimulating private sources of construction finance, the government hopes, as well, to be able to make more resources available in the future for public investment on behalf of needy segments of the population.
One of the measures is the institution of "affected property," in which the accounts of a project are kept separate from the assets of the contractor. The accounts will be controlled by a commission of buyers or the creditor bank. For this arrangement the purchaser will have to opt in favor of a special tax scheme, which envisages payment of 7% of the federal taxes (income tax, social integration tax, and social security tax) owed according to the value of the property.
With this, the government intends to provide greater security to buyers, in case the contractor goes into bankrupcy, as was the case with the Encol corporation. Through "affected property," the buyer will not be held responsible for the contractor's failure to pay its debts and thus will be able to give continuity to the project.
Another measure has to do with the "undisputed value," by which stop orders that contest the value of home installment payments do not suspend payment of the entire installment but only the part that is being questioned in the courts.
The government also proposes a change in the Civil Code to allow for fiduciary conveyance for private homes. Purchasers who fail to pay installments for more than three months will be liable to lose their property.
Changes are foreseen in the redirection of resources from savings into the system of home finance. The measure, which still needs to be approved by the National Monetary Council, will add R$ 1.6 billion to the sector.
In detailing the bill, which will be presented to Congress under the regime of urgency, Palocci argued that studies done in recent months show a drastic decline in construction, which, unlike other sectors, is suffering not only the consequences of the country's economic situation but a structural problem as well. "The behavior of the real estate sector is not just dependent upon macroeconomic conditions; it is undergoing a significant, structural, and long-term decline ," the Minister said.
The objective is to offer greater security to home buyers and sellers. "Over the decades the sector has been unable to set up a system in which individuals or families that acquire homes can feel safe with their contracts, regardless of the enterprise, and in which there is security for the credit that was extended. The result of this contractual insecurity can be seen in the figures we have observed in the drastic decline in the real estate sector," he commented.
Housing loans through the Housing Finance System dropped from 627 thousand units in 1980 to 161 thousand in 2002. With resources from savings accounts, the reduction was from 266 thousand in 1981 to 29 thousand in 2002, and with resources from the Workers' Compensation Fund, from 366 thousand in 1980 to 133 thousand.
Palocci also said that he expects a reduction in interest rates on housing loans as a result of activating the sector. (DAS)
