How the plan that plans to build 4,500 homes will be financed and will work

The minister of the portfolio Irene Moreira announced that she is targeting the creation of more than 4,500 homes in the remainder of this period. It is a novel instrument designed by the MVOT, which applies not only for the construction of new housing but also for renovation, recycling, expansion and completion.

“We worked with great perseverance seeking to resolve all the aspects involved in this type of project in order to allow the population to access their housing at more reasonable costs and encourage construction,” explained the legal advisor of the Entre Todos program of the MVOT, Jean Jacques Bragard.

The lawyer indicated that what is “novel” about the initiative is that it introduces the co-investment of the Ministry of Housing together with the private in the projects, which It can materialize in contributions of money or real estate.

Trust and a special SIGA

The co-investment must have the approval of the Technical Evaluation and Advisory Commission (CETA), which will be in charge of analyzing and approving the different investment projects that are presented within the framework of the Entre Todos plan and then will be channeled through an investment trust. These are not loans but participation in the capital.

The project presented by the private party must be approved by the CETA, which will cover architectural, economic, financial, commercial and other aspects provided by the regulations. Received the approval, the must set up a specific purpose company for each project.

Additionally, the investment project will be able to access bank financing backed by a SIGA (National Guarantee System) specially designed for this housing program. This new FOLLOW —supported by the MVOT— It allows guaranteeing amounts much higher than the existing ones. (50 million IU—about $6.7 million—) with longer terms and grace periods, and will be aligned with the size of the projects that will make up the program. To access this special SIGA, the project must be approved by CETA.

The program maintains 100% of the tax benefits that the current Promoted Housing regime has and it will be possible to develop the projects in any part of the territory of Uruguay.

On the side of the interested families in acquiring your home under this program, pmay request a non-refundable economic contribution of up to 30% of their capital quota for 25 years, irrevocably, as established by the regulation regulations approved in February.

For these purposes Certain average monthly income of the last 24 months is required from all the contributors of the family nucleus, and covers those who cohabit or have to cohabit in the same roof even if they do not maintain ties of kinship. The form of acquisition may be sale, promises, real estate leasing and lease with option to purchase.

The objective is to boost access to housing in different locations in the interior.

The maximum sales price of the houses in each project that is promoted will be determined by CETA according to the typology. In this way, it is ensured that it is within the range that allows it to reach the target population, and also to reach small towns in the interior of the country where large real estate construction companies do not usually develop initiatives.

For constructions of two bedrooms, price caps range from 420 thousand indexed units (IU) which are equivalent to about US$ 55,183 to values ​​up to 660 thousand UI (US$ 86,715). In the case of four bedrooms, van from 770 thousand IU (US$ 101,168) to 850 thousand IU (US$ 111,679).

“The idea is to target that middle strip that is a bit neglected and that is a strip that today rents but has no prior savings capacity. Two bedrooms at a base price of US$78,000 would remain —with the subsidy— at a fee of around $14,000 or $15,000, which is what they would pay today for rent,” explained the CETA president. Edward Gonzalez.

Regarding the conditions of the applicant, he must be able to pay with 25% of his liquid income 70% of the fee since there is a maximum of 30% subsidy.

The investment of the MVOT

The MVOT will co-invest in real estate development through an investment trust of its property, with an amount that may reach up to 80% of the total cost of the project including land, in projects with up to 8 homes and up to 66% of the total cost of the project, including land for projects with more than 8 homes. In the latter case, initially, it is expected that the co-investment —which accompanies the investment trust— will be around 10% of the total cost of the project.

Meanwhile, in order to facilitate marketing to the private sector, the MVOT plans to provide a list of interested parties according to the area and the private sector can bring its own list of applicants, explained Bragard. The legal adviser of the Entre Todos program stressed that the creation of the CIR (Certificate of Incorporation into the Registry) was “important” in order to enable the registration of non-traditional construction systems in 90 days, a relevant factor in this type of program.

In the case that the lease with option to buy for up to 5 yearsit was anticipated that the beneficiary may capitalize part of the amount paid and go for the purchase using the non-refundable economic contribution scheme. In this way, the person interested in housing will be able to defer their purchase decision without losing the rent paid.

The economic contribution of the MVOT to the purchaser can be applied to the first installment (up to 10% of the non-refundable contribution) that is usually required in real estate purchases, becoming a key help for those who do not have enough savings.

The developer will be solely responsible for the preparation, management and execution of the project, as well as the pathologies of the project. Meanwhile, the Ministry of Housing will have a facilitating role to achieve the objectives in accordance with the regulatory framework and in cases where it so resolves, it may co-invest with a contribution of money, controlling the progress of the work.

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