Government has 30 days to set maximum prices – The Economic Journal


The decree-law that sets the creation of the Affordable Rent Program was published this Wednesday, May 22, in the Diário da República, giving the Government a thirty-day deadline to define maximum rent prices, the maximum income of tenants who to apply for this program and the minimum conditions of accommodation. This decree-law serves to regulate a lease program with values ​​below what is practiced in the market. On July 1, the program will take effect.

The general body of the regulation of this program is defined, but it is only necessary to define the criteria that will indicate who can be covered by this affordable rental program. "Within 30 days of the publication of this decree-law, regulatory diplomas are approved," read in Decree-Law 68/2019.

The document published in Diário da República already predicts that families will be subject to a maximum income limit, as well as an effort rate – defined as the ratio between family income and paid income – which places between 15% and 35%.

As for the contracts concluded, it is expected that landlords who establish new leases whose monthly income is 20% lower than what is practiced in the market will be exempt from the payment of IRS or IRC on property income.

The rents, in turn, will be subject to a "general limit" by type of houses – yet to be defined. These incomes will also have to comply with a "specific limit" that must correspond to 80% of the reference value of the rent price of this dwelling, taking into account the figures released by the National Institute of Statistics (INE).

The decree-law also stipulates that houses must comply with minimum conditions of safety, health and comfort.

But there is more: affordable leases will be the subject of compulsory insurance, and later rules will be laid down for rent limits, tenant income limits and housing conditions.

As for insurance, landlords and renters will have to underwrite income insurance to cover three different situations: lack of income payment; involuntary loss of income of one of the tenants; (in this case, the insurance can be replaced by the provision of a security to the landlord, and the value of the deposit can not exceed the amount corresponding to the limit that would be provided in the insurance).

The Affordable Rental Program is managed by the Institute of Housing and Urban Rehabilitation (IHRU).

This program had been approved in Parliament in 2018, and the now published decree-law was approved by the Council of Ministers in February and was endorsed in May by Prime Minister António Costa.

The moment that António Costa signed the referendum deserved, even, a publication in the official social networks of the prime minister.

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