Social housing boom shakes the Uruguayan real estate market

It is estimated that the increase in the number of social housing will push the price of rents downward.

Since the Uruguayan Government passed the law of social interest housing 18.795, do not stop to reach the desk of the President of the National Agency for dwellings (ANV), Cristina Fynn projects.

In the 16 months that takes existing it standard, the ANV received 149 projects, implying date 4.460 houses. “But this number changes all the time,” acknowledged Fynn.

This option has become very interesting for private investors, who tempted by tax benefits that the new law grants the possibility of making a good business and in the short term.

Dwellings are aimed at the middle class, a public facing difficulties to access to home ownership. Fynn said that it also envisions the class lower middle, from a gross revenue of $24,500 (US$ 1.251,3) the person is able to access a bank loan and realize some of the proposals.

Impact on construction. This kind of boom that is being logged to the influence of the social housing Act already is reflected in construction, and can see how growing construction of this type of housing to the so-called middle class, to the detriment of Sumptuary constructions.

This was the President of the Chamber of construction, Ignacio Otegui confirmed it. “For 2013 and 2014 the impression is that the social housing will replace the slowing of investment in the most characteristic areas of Montevideo, as the Strip going the Rivera Avenue to la rambla” where there is already one sufficient housing stock, said the businessman.

“That current investors, which has multiple origins, is that is now going to invest in other areas of the capital” which are being promoted by the Government, completed.

Rents down. It is estimated that the increase in the number of social housing will push the price of rents downward.

The real estate consultant Julio Villamide said that part of those thousands of homes will be bought by investors and placed on the rental market, while others will be purchased by end users who are currently tenants to become owners.

This will surely push rents down. However, he clarified that although it may have some “decline in the projected profitability”, if the situation is handled in advance for the investor, the social housing “remains a very attractive business”.

Decentralization. 149 Projects received by the ANV, 101 are for Montevideo and 40 for the interior. There are currently 1,400 homes under construction.

Fynn warned that one of the advantages of the initiative is that although investors are still building classic Montevideo neighborhoods cord, Central and Southern District, also is being achieved “decentralize” and get to places like stronghold, la Aguada, Belvedere, East arm, Union, Sayago, figurine and Aires Puros.

The hierarch, who is surprised by the good response from investors, said that 80% of laws units will be sold to individuals, and only 20% will be for rent, according to declare the investors, since one of the objectives of the Government is to increase the stock of homes for rent.

Accessible. Funding for access to one of these units is one of the most important points of the new law. The Mortgage Bank (BHU) is the main actor. The person must be doing a delivery that can range from 10% to 30% of the final cost of the building and the rest is financed in installments to 20 or 25 years, depending on the case.

Of that funding, 75% of the money lends it the mortgage and 25% a private bank, which, according to the agreement signed by the State Bank, may be the new commercial bank, Santander, BBVA or Itaú.

Manager of the commercial area of BHU, Laura Morixe, said Cafe & business which has so far received some 100 loan applications, which are evaluated according to the profile of the applicant.

He clarified that the fee to take the owner “not exceed 30 % of your salary”. When you buy a single headline, minimum gross income to receive the loan is $19 billion and in the case of two holders is $24,500.

Diaz put some examples. In the case of a U.S.$ 75 billion housing – is the least that is costing a unit in the interior of Uruguay–you can access a loan of $60 thousand to 25 years with a fee of $7,500 per month.

In Montevideo, the prices are higher. A one bedroom apartment around US $ 85 thousand and the monthly fee is about $ 10 billion.

In terms of the purchasing process, Diaz said that once the person knows the unit you are interested, the BHU rate the project and study the profile of the applicant as the subject of credit.

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