Provisional Measure amends Minha Casa Minha Vida Program of the Federal Government

On February 15, 2023, Provisional Measure No. 1,162 (“MP 1,162”) was published, which reinstated the Minha Casa Minha Vida Program (“PMCMV”) and discontinued the Casa Verde Amarela Program, previously governed by Law No. 14,118/2021.

MP 1,162 expands the scope of PMCMV through the following measures:

• increases the wage bracket for different modalities of the program, in urban and rural areas;
• introduces new rules on the availability of housing units;
• includes in the PMCMV the possibilities of renting, leasing or donating, in addition to selling:
  • with or without financing;
  • under subsidized or unsubsidized agreements;
  • totally or partially, as provided for in the applicable regulations, without prejudice to other compatible legal businesses.
• addresses the reclassification of urban real estate.

In addition to this expansion, we highlight that MP 1,162 also amends:

(i) The list of registrable titles, by upholding private agreements entered into with intervention of financial institutions, but waiving the certification of signatures and witnesses.

(ii) The base value of the transfer tax, to establish that if the property value agreed upon by the parties is lower than what is used by the competent agency as the basis for calculation of the Real Estate Transfer Tax (“ITBI”) , the higher amount will be considered the minimum amount for the purposes of selling the property at the first auction. As such, the debtor will be required to pay the Urban Real Estate Tax (IPTU) levied on the property and any existing condominium fees.

(iii) PMCMV rules, to allow the construction of units intended for commercial activities linked to housing developments in multifamily projects, constructed with subsidized resources or resources provided under the PMCMV, including in the case of urban real estate reclassification, without, however, specifying whether any subsidy for construction will also benefit such units for commercial activities.

(iv) the rules to allow electronic statements related to real estate generated by financial institutions that operate with real estate credit – and are authorized to execute private agreements with the characteristics of public deeds – to be submitted to the electronic real estate registry and that, in turn, such financial institutions keep the agreement in their own specific records, applying the rules of the electronic registry, which are also very recent, published in 2022.

Accordingly, the wording of MP 1,162 is promising for investments in the real estate sector, and leads to high expectations regarding this regulation and its corresponding details. The potential benefits of the MP to indirect social and economic aspects are also significant.

Finally, despite being a provisional measure (which is valid for 60 days, extendable for an equal period), which may or may not be converted into law by June 15, 2023, it is important to point out that the rules established by the MP are already in force and effective regarding matters that do not depend on regulation.

Demarest’s Real Estate team is monitoring new developments within the sector and is available to provide any further clarifications that may be necessary.