Who pays rent and who has a loan: How to use the (new) supports

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The government has approved support for renters and people with mortgages. Find out how they work – and who can benefit.

The government on Thursday approved two new measures to help families cope with housing-related costs. According to Prime Minister António Costa, these two supports will have an impact of 460 million euros.

“At this moment, the estimate we have for this package of support is about 460 million euros,” said the Prime Minister at a press conference, a figure that already includes some of the adjustments that have been made to these measures compared to the version approved a month ago.

Support to pay the rent: how does it work and who can benefit?

The rent support is a “temporary measure” that will be in force for the next five years, with the government committed 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 by March 15, 2023 – 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, decreasing to 40% between 13 and 36 months, and 45% between 37 and 60 months.

Interest subsidy on loans: For whom?

The interest subsidy “is a measure that will be in force until the end of the year and may be renewed if interest rates are 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%, being eligible credits for the acquisition, construction or works for own and permanent housing.

It covers credits up to a maximum value of 250 thousand euros and the support will be 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.

Families with incomes up to and including the 4th income bracket of the IRS will receive 75% support, and families in the 5th and 6th brackets will receive 50% support.

These percentages take into account the difference between the contracted Euribor rate and the current rate.

“This support exists whenever there has been an increase of more than 3% in relation to the value of the indexer existing on the date the contract was signed,” and the support (of 50% or 75% depending on the case) will be applied over this differential, explained the Prime Minister.

Examples:

According to examples given by António Costa, a family that is in the 3rd IRS bracket and has contracted a home loan with the Euribor at 0.25 and is currently with the rate at 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 the Euribor at zero rate and is now at 4.5, then the support will be 88 euros per month, he said.

According to the prime minister, the measure will cover “the loans contracted until yesterday [March 15].

Banks are required to offer fixed rates

According to António Costa, it has been established, as planned, “that all banks that offer mortgages must also have a commercial offer at a fixed rate, so that those who want to take out loans can do so at a fixed rate or those who have done so at a variable rate can change to a fixed rate.

The measure had already been announced by the government on February 16 at the Council of Ministers dedicated to housing.

Further measures in the pipeline

On March 24, the public consultation on the rest of the program (which includes measures that the government has to send to Parliament) will end, which will go to the Council of Ministers on the 30th of this month and then to Parliament.

At stake are, among other things, diplomas related to local housing, “gold” visas, or forced rentals of vacant houses.

The overall package of measures was approved by the Council of Ministers on February 16 and submitted for public consultation on February 20.

The measures of the “More Housing” program will cost about 900 million euros, which the government says will be mobilized from the state budget.

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