Social Housing in Brazil
Comment: UK companies who supply to the affordable homes market can make a new home for themselves in Brazil.
Brazil experiences a great disparity in incomes and it’s a sad fact that many of its citizens live substandard accommodation. Brazil’s economic growth has created a new class of workers with incomes above subsistence level, but not able to afford the highest standards, creating a rapidly expanding market for affordable homes.
Brazil has a population of 190 million inhabitants and a housing deficit of 8 million homes with the vast majority being houses for low-income families. By 2023 this shortfall will be 12.5 million homes.
In March, 2009, the Brazilian government launched the National Housing Plan “Minha Casa Minha Vida” (“My House My Life”) program which outlined the structure of their investment of 34 Billion Reals (US $18 Billion.) to provide low-income Brazilian families with a place to live. A secondary, but equally important aim is to boost the construction sector and increase the employment rate amongst low income citizens. The Brazilian government wants to see growth in the affordable housing supply to keep up with the high demand created by this program.
Brazil is unique in the sense that only 10% of real estate is currently mortgaged. This programme represents the first time low income Brazilians can obtain mortgages, which were previously only accessible to the richest. Loans will be between 5%-6% depending on income.
Construction companies have been given special tax concessions for real estate projects (RET). Under these new rules, construction companies are granted a reduction to calculate the payment of federal taxes on their monthly revenue. Additionally, the new legislation has established a special rate applied on the construction of buildings below the ceiling price of R$ 60,000.00, (£19,000 approx) provided that they are included in the current National Housing Plan.
This is a popular programme. Within a week over 25,000 families had signed up in the first target city of Natal, Rio Grande do Norte, recognized as the region of Brazil with the largest natural demand for the ‘My House My Life program’. Currently there is a 70,000 waiting list waiting list and only 2,000 approved homes completed.