Last Thursday, the Government presented two new measures to support housing, one of which is intended for rents while the other for those who have loans to banks. In both cases, there are some eligibility conditions for you to benefit from the measures. The diplomas will be sent to the Presidency of the Republic to be promulgated, but they will have retroactive effects.
I live in a rented house. Can I benefit from any subsidy to pay the rent?
Yes. One of the decree-laws approved by the Council of Ministers on 16 March establishes access to an income support subsidy worth between 20 and 200 euros per month for five years. This measure covers all leasing or subleasing contracts entered into until March 15, 2023 by households belonging to the sixth income tax bracket (earning up to 38,632 euros annually) and presenting an effort rate greater than 35%.
How is the Income Support Allowance calculated?
This measure, which has the official name of “new extraordinary income support”, corresponds to the difference between the actual effort rate and the maximum effort rate. In practice, it means that a household with a monthly income of 2,000 euros that is paying a rent of 900 euros is incurring an effort tax of 45%. As the income corresponding to a maximum effort rate of 35% is 700 euros, you will receive a subsidy of 200 euros (900 euros – 700 euros).
Is there any type and area limit for the properties?
No. The only elements considered for the calculation of the rent subsidy are the household income and the effort rate.
And is there any conditioning in relation to the geographical location of the house?
Neither. All individuals with lease contracts registered with the Tax Authority can benefit from Government support, provided they meet the required financial requirements. The Government estimates that this support could cover around 150,000 contracts.
When will the rent subsidy begin to be paid?
Only after the decree-law was published in Diário da República. However, the Government guaranteed that this support will have retroactive effects to January 1, 2023 and that the amounts “in debt” will be paid in the first month of the support. In addition, it guaranteed that this support will remain until December 31, 2028.
How will the payment of this subsidy be processed?
Support for paying rent is calculated by the Institute for Housing and Urban Rehabilitation (IHRU) and paid automatically by Social Security by bank transfer.
I bought a house with access to housing credit. Can I benefit from any interest subsidy on the contract?
Yes. The Government also approved a decree-law that aims to grant a subsidy on part of the interest on mortgage loans for all contracts aimed at the acquisition or construction of permanent own housing concluded at a variable interest rate until March 15, 2023 up to a value of 250 thousand euros. In addition, it is essential that all installments are regularized.
Can any family access the interest subsidy?
No. This support only covers families with incomes up to the sixth scale (38,632 euros of annual taxable income), or which, being above the sixth scale in the last IRS declaration, have an income drop of more than 20% of income that puts them in an equal or lower than the sixth step. In addition, they cannot hold a financial asset greater than 62 IAS (Social Support Index).
Is this support also conditional on the current effort rate?
Yes. The housing loan interest subsidy will also only be granted if the household currently has a stress rate with a significant increase or presents a significant stress rate.
- Exertion rate with significant aggravation: presents an effort rate equal to or greater than 35% and the current index (Euribor) is equal to or greater than 3 percentage points of the Euribor rate at the time of signing the home loan agreement.
- Significant effort rate: have an effort rate equal to or greater than 50%.
What is the amount of the interest subsidy?
The interest subsidy has a maximum annual value of 720.65 euros per year (60 euros per month), equivalent to 1.5 Social Support Index (IAS).
How is this value calculated?
The interest subsidy is calculated by the difference between the current index and the 3% threshold. If this difference exceeds 3%, and only in the case of effort rates between 35% and 50%, it corresponds to the index at the time of contracting the credit plus 3 percentage points. In addition, it is necessary to take into account the household income: for families included up to the fourth IRS scale, the subsidy corresponds to 75% of the additional amount of interest paid; and for families in the fifth and sixth tier, the bonus corresponds to 50% of this amount.
How will the receipt of the interest subsidy be processed?
The interest subsidy is operated directly by the banks. In addition, the Government guaranteed that its payment will be retroactive to January 1, 2023 and will be in force until December 31 of this year.
And how can I apply for this support?
To benefit from State support for the payment of the mortgage loan installment, families must submit, by physical or electronic means, the request for access to the subsidy to the bank and, within ten working days of receipt of the complete application, the banks communicate whether the contract borrowers meet the eligibility requirements for access to the subsidy.
When will these two decree-laws be in force?
Both diplomas will be sent to the Presidency of the Republic to be promulgated by Marcelo Rebelo de Sousa, who already promised “urgency” in this dossier. They will later be published in Diário da República. Only then will they come into effect. However, both support will be retroactive to January 1 of this year.
