Brazil turmoil may delay homebuilders rescue plan

Brazil turmoil may delay homebuilders rescue plan
13/07/2017 , by , in INTERNATIONAL

Brazil‘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.

Government policymakers and industry executives will meet on Tuesday in Brasilia to decide on a final version 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 worse recession on record. Without 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.

The meeting, scheduled for 11:00 a.m. local time (1400 GMT), comes as a Brazilian lower house committee is examining a corruption charge against President Michel Temer and could vote this week to put him on trial. A full house vote would follow.

The office of Temer’s chief of staff did not comment.

The charge, the first leveled against a sitting president in Brazil, marked another twist in a three-year probe that has revealed massive corruption in Latin America‘s largest economy. Temer, a third of his cabinet, two past presidents and dozens of lawmakers are either on trial or face charges for corruption.

Under preliminary terms, the government would back a 20 percent fine on cancellations plus broker fees for homes worth up to 300,000 reais ($92,000), groups said. Builders want a lower threshold, of 235,000 reais. The fines cannot top 5 percent of the value of the contract.

For homes worth above that threshold, a 50 percent fine plus fees could be imposed, Martins said. Fines cannot surpass 10 percent of the value of a contract.

Commercial property purchase cancellations would lead to a 50 percent fine plus fees, as long as it does not top 12 percent of the value of the contract.

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