By: Gabriela Mello | Ana Mano
SAO PAULO: Brazil’s government and homebuilders are expected to agree on new industry rules as early as Tuesday giving companies the right to keep a defined share of the value of the home in the event of a canceled purchase, according to a person with direct knowledge of the talks.
Under the proposal most likely to be adopted, homebuilders may be allowed to retain an average of 9 % to 15 % of the value of units if buyers cancel a purchase, the source said on condition of anonymity because the agreement was not finalized.
The plan is to give “more transparency” to relations between consumers and construction companies, an industry source said on the eve of a meeting in Brasilia that will involve industry, consumer groups and government representatives.
The talks underscore attempts to define clearer rules, and mitigate the impact of sales cancellations on construction and real estate companies amid Brazil’s harshest recession on record.
“Sales cancellations battered the companies and made the government worried,” another industry source said.
Through October, sales cancellations reached 37,702 units, according to real estate developers group Abrainc.
Aside from the liabilities arising from contradicting court rulings, when cancellations occur companies miss their sales target and there is a risk banks will cut financing for a project, the industry source said.
Another proposal under consideration would give builders the right to retain 10 percent of the value of the contract depending on the size of the payments buyers already made, the industry source said.
Once the companies and the relevant government agencies agree on the new set of rules, a decree or bill will have to be approved in Congress before they can be enforced, one of the industry sources said.
( Editing by Chris Reese)
Source: Reuters