An intense new year for urban planning in the city of São Paulo: partial revision of the LPUOS, regulation for the construction of social housing and the criteria for framing and eligibility of this type of housing, still pending regulation.

Several discussions that directly impact urban planning legislation and, consequently, real estate business in the city of São Paulo, were concluded in 2024. On January 19, 2024, the following laws were published: Law No. 18,081, containing the partial revision of the Land Parceling, Use and Occupation Law (LPUOS), and Law No. 16,402/2016, providing for corrections and adjustments, not only to adapt it to urban public policies, but also to address the changes introduced by the revision of Law No. 18,081.

An important part of this partial revision is based on the mid-term revision of the city’s master plan, enacted in June 2023 (Law No. 17,975/2023), and the Direct Action for the Declaration of Unconstitutionality No. 2304556-40.2020.8.26.0000, which led to the inapplicability of a few provisions of the Zoning Law.

The sanction vetoed 58 items, causing major discussions. One of these items concerns the increase in the maximum building heights in Mixed Zones (“ZM”) and Centrality Zones (“ZC”), which are more distant from the public transportation system, known as the “heart” of neighborhoods. The veto maintains the limits of 28 meters in the ZMs and 48 meters in the ZCs. Another item refers to the process of landmarking buildings, which determined that the final decision on the matter would be made by the City Council. As a result of the veto, the Municipal Council for the Preservation of the Historical, Cultural and Environmental Heritage of the City of São Paulo (“CONPRESP”) continues to have the final say on the landmarking of buildings. Another important veto concerns the permission to build social housing units in Preservation and Sustainable Development Zones (“ZPDS”) and Special Environmental Protection Zones (“ZEPAMs”), thus upholding the impediment to the implementation of these developments.

Therefore, new regulations are in force regarding the expansion of axial zones for structuring urban transformation – inducing the city’s growth through mechanisms for revitalizing buildings –, criteria for qualifying strictly residential zones, criteria for defining the category of non-residential use that does not constitute mixed use (for example, residential buildings alongside apartments or aparthotels in certain cases in order to obtain benefits), new criteria to calculate parking ratios per square meter and setbacks for lots and active facades, among others.

This includes the regulation of the private construction of social housing introduced by Decree No. 63,130 of January 19, 2024, and the criteria for classification and eligibility for this type of housing in Ordinance No. 29 of the Municipal Housing Secretariat of São Paulo (“SEHAB”), of February 19, 2024. The private initiative for producing this type of unit not only provides tax and urban planning benefits to the developer, but also a degree of uncertainty, which requires caution, especially towards meeting the demand for these units and ensuring that they are allocated to people who meet the requirements to be entitled to acquire them.

SEHAB Ordinance 19, published recently, regulates these criteria, but fails to do so in a conclusive manner, as it delegates to entities supervised by the Central Bank of Brazil the task of certifying that those interested in these units meet the requirements of the ordinance. The question remains as to how these entities will operate in this regard and whether the Brazilian Central Bank will enact a new regulation.

Important steps have been taken towards the necessary clarification of the topic, but a few doubts have yet to be elucidated, particularly concerning both the possibility of selling such social housing units and the developer’s liability for any misuse caused by people who do not fall into the category for which they are intended.

Demarest’s Real Estate team continues to monitor any changes to the main urban planning regulations and is available to provide any further clarifications that may be necessary.