Homebuilders seek Sector Legislation

Brazil’s construction sector can’t catch a break. The country’s political turmoil could delay efforts to prop up homebuilders struggling with sales cancellations even as officials and industry leaders are close to reaching an agreement on a basic set of rules.

Policymakers and industry executives are expected to meet in Brasilia today to decide on a final version of a bill proposal before sending it for congressional approval. They must agree on a deadline for homebuyer refunds and fines on cancellations of low-income homes.

José Carlos Martins, president of Brazilian building lobby group CBIC, termed the current draft as “the closest that both the government and homebuilders have been in terms of an accord on this, but the hurdle to it remains the ongoing political crisis.”

Homebuilders have suffered from soaring cancellations during Brazil’s current recession and its worse economic downturn on record. Without specific legislation, courts have sometimes ruled in favor of giving buyers a refund of all or part of the down payment if they cancel a purchase.

Details

Under preliminary terms, the federal government would back a 20 percent fine on cancellations plus broker fees for homes worth up to BRL 300,000 (USD 92,000), groups said. Builders want a lower threshold, of BRL 235,000. For homes worth above that threshold, a 50 percent fine plus fees could be imposed, Martins said.

CBIC and fellow groups want a 180-day period to refund home cancellations, twice as long the government’s proposal.

Source:

Reuters – Market News

July 11, 2017

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Emerging Markets Insights

a blog by Frontier Strategy Group

longandvariable

A blog on macroeconomics and public policy by Tony Yates.

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