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UPDATE 1-Brazil turmoil delays accord over homebuilder rescue plan
July 11, 2017 / 5:28 PM / 2 months ago

UPDATE 1-Brazil turmoil delays accord over homebuilder rescue plan

(Recasts to add results of a meeting in paragraphs 1-5)

By Gabriela Mello

SAO PAULO, July 11 (Reuters) - Brazilian government officials and construction industry lobbies failed to agree on terms of a plan to prop up homebuilders struggling with sales cancellations, underscoring the impact of growing political turmoil in Latin America’s largest economy.

Policymakers and industry executives ended a Tuesday meeting in Brasilia without agreement on details such as a deadline for homebuyer refunds and fines on cancellations of low-income homes, participants told Reuters.

There was no set date for a further meeting, they said.

Homebuilders have suffered from soaring cancellations during Brazil’s worst recession on record. Without legislation, courts have sometimes ruled in favor of giving buyers a refund of all or part of a downpayment if they cancelled a purchase.

José Carlos Martins, president of Brazilian building lobby group CBIC, had warned that the likelihood of a Tuesday accord was low given the political impasse afflicting President Michel Temer’s government during a sweeping corruption probe.

The meeting took place as a Brazilian lower house committee examined a corruption charge against Temer and could vote this week to put him on trial.

The charge, the first against a sitting president in Brazil, marked another twist in the three-year probe that has revealed massive corruption in Latin America’s largest economy. Temer, a third of his cabinet, two past presidents and dozens of lawmakers are either on trial or face charges for corruption.

Still, an index grouping homebuilding and property shares trading in the São Paulo Stock Exchange extended gains for a third day on Tuesday in line with wider gains and hopes an agreement would eventually be reached. The index is up 15 percent since news of an accord first arose in January.

Under preliminary terms of the agreement, the government would back a 20 percent fine on cancellations plus broker fees for homes worth up to 300,000 reais ($92,000), groups said. Builders want a lower threshold, of 235,000 reais. The fines cannot top 5 percent of the value of the contract.

For homes worth above that threshold, a 50 percent fine plus fees could be imposed, Martins said. Fines cannot surpass 10 percent of the value of a contract.

Commercial property purchase cancellations would lead to a 50 percent fine plus fees, as long as they did not top 12 percent of the value of the contract.

CBIC and fellow groups want a 180-day period to refund home cancellations, twice as long the government’s proposal.

$1 = 3.2561 reais Writing by Guillermo Parra-Bernal; Editing by Lisa Von Ahn and Andrew Hay

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