Now and forever - Housing

(Yet another) birth has been announced, of a European housing promotion programme. As usual, it is promised to be a painless and quick birth, a good time as they say here. As always, the unit is the million, or several, many. Each one, in their own way, is thinking about how to get part of this heavenly manna. As we know, it is not (only) with money that problems are solved, just look at health, where people spend more and have less. An idea is important, a certain idea as De Gaulle would say about housing, or more precisely a right idea.

People need housing tomorrow. A public “programme” guarantees us housing in 4 to 7 years (one year to decide where, another year to develop the projects, another year for the public tenders for the construction and another for the construction itself, in other words, 4 years in an optimistic perspective. It is important not to rush, hasty bitches, people say, give birth to blind children. In this case, this is what happens with projects whenever they are done “in a hurry” and with poorly thought-out programmes. In addition, if the site has to be subject to archaeological surveys, we can consider another year, if some contractor or designer, in the rush, files an injunction, we may also have to consider a few more years. But, continuing, assuming that the State will only use its own land and buildings, how many homes will it be able to produce in that space of time? And for whom will they be?

I say that there are people (many) who need a house tomorrow, or even yesterday. But I don't know, and worse, the State doesn't know either, who they are, how many there are, where they want to live, the size of the household, their income, their cultural background, their age group and their employment status. Without this basic data, it is not possible to develop a housing policy. There are many vacant houses in Beira-Bbaixa, or in Alto Alentejo, but there is no demand there.

It is unrealistic to think of housing policy solely from the public side. It is important to enlist all potential “players”. The “private” ones, small and large, charities, or equivalent. For all, the profitability of the business must be guaranteed, without dogmas.

ALs were not, in their genesis, to remove houses from the rental market, ALs were in fact responsible for recovering city centers, the “historic neighborhoods”, with investments that would never be profitable with traditional rentals.

In these lines I understand that I am only focusing on the problem of the (lack of) housing for rent, since there will be another logic for the response to purchase and I do not believe that it makes sense for the State to enter the real estate market for sale.

I could say that I don't know if the rents being asked for are high, but I do know that a large portion of the population cannot afford them. In another article I argued that the rent should not exceed 20% of the tenants' net income. This amount may increase as the income bracket of the tenants increases.

The share of candidates with lower incomes should be covered by the State, by houses produced for rent by local authorities or by funds developed for this purpose. Also without dogmas, with more economical construction solutions, with more spartan areas, as well as finishings. The funds are not elastic, all factors that allow savings in the process are welcome.

For intermediate income, the investment must be made interesting. The investment is interesting for returns between 4 and 8%, below 4% it is not profitable today, above 8% we begin to enter the speculative sector. Within this range, tax benefits should be considered, from VAT on execution to IRS or IRC rates.

But it is also important to ensure that the “product” has the minimum quality, for which there are already optimized matrices in European countries, where points are awarded based on various descriptors (age, area, existence of elevator, bathroom and equipped kitchens, energy label and, I would add, location). Indicators, indicators are needed.

Let's imagine that a property with a good credit rating was put on the market within the 4-8% range, there would have to be a tax benefit with a long term – let's think of a rent of €1,000, to simplify, with a rate of 20%, that is, €2,400 in annual tax for the State's coffers. To build a 100m2 home it would take... 83 years of taxes. In other words, the State (all of us) only profit from the entry of private parties into the process. In addition, just by existing, in addition to the IMI, a property generates countless indirect revenues for the public coffers.

With the instability that has become the new normal, the wars in Europe and the Middle East, and the relocation of decision-making centers away from Europe, markets are looking for a safe place to park their money, even if temporarily. This capital can be allocated to investment in this area as long as the basic safety rules are followed. If the lease agreement is breached, eviction will be swift, there will be no legislative changes for a good few years, and there will be no persecution.

Public procurement is complex and slow, too slow to respond to urgent needs such as this one. Once again, it is urgent to define indicators. For example, contracting a project, for execution, for 3% of the construction value is a great “deal”. Contracting the construction of housing for less than €1,500/m2 is also a great deal. These indicators are more important than all the complex multifactor formulas defined in the Public Contracts Code.