Prime Minister announced approved measures to combat the housing crisis.
Banks will be required to have a fixed rate on mortgages
The interest subsidy “is a measure that, for now, will be in effect until the end of the year and can be renewed if interest rates have not normalized by then,” said António Costa.
The Prime Minister explained that the measure covers families with incomes up to and including the sixth income bracket of the IRS and with an effort rate of 35%.
It covers credits up to a maximum value of 250,000 euros, with support paid retroactively to January of this year, with a limit of 720 euros per year (60 euros per month).
The support will vary according to the income of the families, said António Costa.
Families with incomes up to and including the 4th income tax bracket will receive 75% support, and families in the 5th and 6th brackets will receive 50% support.
This percentage will take into account the difference between the contracted Euribor rate and the current rate.
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“This support will be provided whenever there is an increase of more than 3% in the value of the indexation factor existing on the date of the contract” and the support (of 50% or 75%, depending on the case) will be applied over this difference, explained the Prime Minister.
According to the examples given by António Costa, a family in the 3rd income tax bracket that took out a mortgage with Euribor at 0.25 and currently has a rate of 3.7, will be entitled to a monthly support of 61 euros.
If it is a family in the 6th income bracket that has contracted Euribor at zero rate and is now at 4.5, then the support will be 88 euros per month, he indicated.
According to the Prime Minister, the measure covers “loans contracted until yesterday.
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Automatic income support covers 150 thousand contracts
The automatic income support, approved this Thursday, currently covers 150 thousand contracts, said the Prime Minister, appealing to tenants to confirm that landlords have declared what they owe to the tax authority.
In statements to journalists, António Costa once again explained that the new extraordinary income support, in the maximum amount of 200 euros per month, is destined to tenants with effort rates (monthly income allocated to paying the rent) higher than 35% and income up to the 6th income tax bracket (included).
The rent support – he stressed – is “a temporary measure” that will be in force for the next five years, with the government committing itself to “work so that the public housing supply allows the normalization of the rental market” during this period.
The support – which applies to contracts signed until December 31, 2022 – is monthly, non-refundable and corresponds to a percentage of the monthly rent for up to 60 months, and will correspond to 35% of the effort rate in the first 12 months, dropping to 40% between 13 months and 36 months, and 45% between 37 months and 60 months.
This is “a very unbureaucratic measure” and tenants do not have to request this support, which is automatically granted by the tax office.
“To be automatic, we can only work with the contracts we know about,” which are currently around 150,000, António Costa stressed.
The estimate is based on officially registered leases, the Prime Minister recalled, stressing the importance for tenants to confirm that their landlords have registered them with the tax authorities.
Although the Decree-Law creating the extraordinary income support also foresees the extension of Porta 65, a rental support program for young people, the Prime Minister did not give further details, as this is “related to the rental regime that will be designed” and approved by the Council of Ministers on the 30th.
The diploma foresees the extension of the Porta 65 program to single-parent families and to situations where there is a drop in income of more than 20% in relation to the income of the previous month or the same period of the previous year.
Support for rent and interest amounts to 460 million euros
“At this moment, the estimate that we have for this support package is around 460 million euros”, said the Prime Minister, a value that already includes some of the adjustments that have been made to these measures compared to the version approved a month ago.
At stake is a support to families whose effort rate with the rent exceeds 35% and also a support to those who have a loan to buy or build a house to compensate the effort with the payment of loans due to the increase in interest rates.
In the case of interest, loan agreements are covered up to 250,000 euros, while the original version was 200,000.
In the version of the More Housing Program approved on February 16, the government estimated that the value of the set of measures would amount to 900 million euros – including in this value all the measures with tax benefits that will be approved by the government only on March 30. This total should now be adjusted.
Government to present new measures to support the economy next week
The Prime Minister also announced that next week the Council of Ministers will adopt measures to support families and the economy, which will be presented on Friday and “calibrated according to the final data of the 2022 budget execution.
“Regarding other support outside the housing universe, next week the Council of Ministers will adopt measures that will be presented on Friday and that will be calibrated according to the final data of the 2022 budget execution,” said António Costa, at the press conference after the Council of Ministers meeting in Lisbon.
The Prime Minister stressed that the “final design” of these measures “depends” on the 2022 budget execution data, which will be known next week.
António Costa was also asked about the PSD’s housing proposals, approved on Wednesday with the abstention of the PS (four bills and one resolution), which include measures such as more flexible licensing, support for rentals, state guarantees to help younger people buy and general tax relief for the sector.
Costa said he was “very pleased” to see the Socialist Party’s parliamentary group “abstain, making these initiatives viable” so that they could move on to the specific phase.