The Urban Rehabilitation Fund Is Already in Operation
19 December 2017
It will be the first Portuguese fund to be made up of other funds, and this alone would make the National Building Rehabilitation Fund (FNRE) a pioneering instrument. But it is its complexity and also the importance of the role it can play in housing policy that makes it a priority for the Portuguese government. The FNRE is one of the programs that comprise the New Generation of Housing Policies, whose constitution is advancing at a rapid clip.
The objective is to rehabilitate real estate located in the city centres and place them in the rental market with more affordable rents than those practised on average. The profitability of the institutions and individuals that subscribe to the fund will also always be guaranteed.
One of the institutions that will invest in the FNRE is the Social Security Financial Stabilization Fund (FEFSS) – which had already planned to invest 50 million euros in 2017.
The indicative targets that have been put forward by the Portuguese government for the next ten years involve an investment of up to 1.4 billion euros to rehabilitate more than one million square meters (800,000 square meters for housing and 200,000 for commercial purposes).
According to information collected from Parpública, Fundestamo – which will manage the funds – has identified the properties which have the potential to be incorporated into the sub-funds, in collaboration with public entities, municipalities and Private Social Solidarity Institutions. “In addition, it has already selected real estate appraisers as well as companies that will draw up business plans and a pool of technicians who will care for the quality of the rehabilitation projects. Likewise, the auditor and the custodian bank have also been chosen,” the same official source stated.
The specific institution of each sub-fund – which may or may not aggregate several municipalities and, within each municipality or sub-fund, several properties – depends on the prior approval of the Management Regulation common to all. It is essential that most of the properties be employed in permanent housing in urban centres. The FNRE will seek to contribute to creating a pool of more affordable housing in the central areas, based on market reference prices for the respective area and without neglecting an adequate return on investment.
The process of choosing the properties depends on the results of the evaluation, the business plan and their compatibility with the objectives of the FNRE. Only once the interest has been confirmed, and the financing secured will the first sub-fund be established.
When everything is operational, it will be possible discover which properties will be incorporated into the FNRE, as the respective listings for the sub-funds will be published. Regarding the financing to be used to carry out the rehabilitation works, Parpública did not exclude the possibility of submitting applications to IFRRU 2020, the specific financing line to support rehabilitation works. “Depending on the state of maturity of the real estate/projects selected, the first works could begin shortly, immediately after their respective approvals,” the same source at Parpública concluded.
Original Story: Público – Luísa Pinto
Photo: Diogo Baptista
Translation: Richard Turner