1,719
1,719

Portugal Launches its Largest Program to Incentivize Building Renovation

30 May 2018

The program is the IFRRU 2020, which is unveiled this week, on Thursday and Friday at the International Real Estate Exhibition in Madrid (SIMA).

Portugal launched the IFRRU 2020 (the Urban Rehabilitation and Revitalisation Financial Instrument), the country’s largest ever program of incentives to support the complete renovation of buildings and the energy efficiency measures. The program will support, among other measures, tourism investment, since the renovated properties could potentially be transformed into hotels. IFRRU 2020 has a financing capacity of 1.4 billion euros, with which it is intended to provide financial support to the million properties that need to be repaired in cities throughout the territory.

Its objective is to support any interested parties who intend to invest and who cannot otherwise find financing for their projects. The IFRRU 2020 will be presented in Madrid this week during the International Real Estate Exhibition of Madrid (SIMA), which is being held at the Ifema fairgrounds.

The program will be presented on Thursday, May 31, at 1.20 pm, at the ‘Iberian Second Home Summit’, and on Friday, June 1, from 9.30 am to 1.30 pm at Inmonext 2018, by the President of IFRRU 2020’s executive board, Abel Mascarenhas, and Maria Albuquerque, together with the Portuguese Association of Real Estate Developers and Investors (APPII).

Financing

  • The program establishes that all necessary expenses associated with rehabilitation can be financed, including the acquisition of the property to be rehabilitated and energy efficiency measures.
  • The use of the properties may be for rent, sale, direct operation of economic activities, and own housing.
  • Maximum investment of 20 million euros per operation.

Who can benefit?

The beneficiaries will be companies, public institutions, corporations, non-profits and individuals.

Loans

  • Loans maturities of up to 20 years, depending on the project’s potential profitability, with grace periods equivalent to the period of the investment plus six months (maximum four years).
  • Interest rates below market rates for similar investments.
  • No requirement for the use of the applicant’s capital.
  • Collateral negotiable with the bank, with a mortgage of the property to be rehabilitated the norm.
  • Loans are available at selected banks that offer the best financing conditions: Banco Santander Totta, Millenium BCP and the BPI.

The main goal

The initiative is aimed at revitalising Portugal’s urban centres, through the development of housing, the anchoring of local inhabitants and the attraction of new national and international residents who see Portugal as an ideal place to live or have a second home.

After the renovation, the buildings or houses can be rented, put up for sale, used as a home or used for any economic activity, such as the purchase and rehabilitation of buildings for further tourist exploitation.

Nearly one million buildings in Portugal need to be rehabilitated due to the insufficient level of investment in urban renewal.

The program is intended to completely rehabilitate buildings that are 30 years old or older and that are in a poor state of conservation, as well as abandoned industrial spaces and degraded social housing.

The properties must be located in Urban Rehabilitation Areas (ARU) or within the Urban Regeneration Action Plan (PARU) of Portugal’s urban centres (including the autonomous regions); or in the case of social housing, buildings included in the Comprehensive Action Plan for Disadvantaged Communities (PAICD).

Applications

Any entity, physical or collective, public or private, with sufficient capacity that confers powers to perform the intervention may apply. There is no predefined period for submitting applications, nor any restrictions on the number of requests.

First, the location and age of the property must be demonstrated to be within the program’s parameters, and any associated tax benefits must be disclosed.

Second, the property’s energy certification must be submitted to determine the current level of energy performance and that expected after the intervention.

Finally, financing is to be requested from the participating banks.

IFRRU 2020’s financial aid combines public funds from Portugal 2020’s operational programs, loans from the European Investment Bank (EIB) and the Council of the European Development Bank (CEB) and a similar am0unt of resources from participating banks.

Original Story: Hosteltur

Translation: Richard Turner