Affordable Rental Market: 17 Sub-funds Created to Recover 49 Properties Under FNRE

13 November 2018

This Monday (November 12, 2018) in Tomar, five municipalities, three universities, two polytechnical institutes and one charity signed an agreement to join the National Fund for Building Rehabilitation (FNRE), bringing the number of sub-funds created to 17, thereby seeking to rehabilitate 49 properties for the affordable rental market. Nine are for housing and seven for student residences.

According to the Minister for the Environment and Energy Transition, João Pedro Matos Fernandes, the 11 new sub-funds, along with the five previously created – two of them already approved by the Securities Market Commission (CMVM) – will create the first rent-controlled homes and student residences by the end of 2019. The seventeenth sub-fund includes a building belonging to the central administration (National Institute of Nature and Forest Conservation) in Aveiro, Lusa reported.

The FNRE, managed by Fundiestamo with the involvement of the Institute for the Management of Social Security Capitalisation Funds, is “complementary to the affordable rental program,” said Matos Fernandes. The minister emphasised that the FNRE is designed to increase of the supply of homes for families who, while not in need, have difficulty finding suitable housing at the affordable prices, and for students of higher education.

Of the 17 sub-funds, nine are for housing, seven are student residences, and one has two components, the minister said.

The rehabilitation of the 49 properties will provide 219 homes and about 1,000 beds for students. Matos Fernandes said he believed that about a fourth of the beds “will become available during the last quarter” of 2019.

Total investment of €37.7 million

According to the president of Fundiestamo, Alberto Souto Miranda, the 49 properties under rehabilitation represent a total investment of 19 million euros, plus 18 million euros for construction, for a total investment of 37.7 million euros.

Matos Fernandes said that the number of buildings covered by 2021 could reach almost 7,000 beds and more than 1,350 dwellings, with Portugal aiming to increase public housing from its current level of 2% of the total housing stock (one of the lowest in the European Union) to 5%, a “positive and relevant contribution to the market.”

“The lack of housing is a serious issue,” he said, stating that the financial and technical capacity and available assets all exist.

According to Matos Fernandes, the availability of affordable rentals, below market price, is just as valid for families in need as it is for those who, “are not in need, and thus do not have the right to social housing, can still not find the housing they are seeking.” At the same time, a “quick response” regarding affordable housing for students of higher education is required, he said.

“A powerful instrument.”

Alberto Souto Miranda stated that the FNRE is a “powerful public housing policy instrument” since it can “provide residential leasing in urban centres and student housing at affordable prices” through the rehabilitation of properties owned by the Portuguese state, municipalities and third sector entities.

The executive at Fundiestamo stressed that the FNRE does not use funds from the State Budget, does not oblige entities to borrow or to consume equity capital, while exempting them from “personnel and construction charges”, allowing them to contract faster, while “paying a significantly higher return than what the banks pay.”

Original Story: Idealista

Translation: Richard Turner