New rules for affordable housing in the city of São Paulo

On May 28, 2025, a hot topic took on a new chapter as Decree No. 64.244/2025 was published, introducing changes to the rules for the private production of Social Interest Housing (“HIS”) and Popular Market Housing (“HMP”) units.

Key changes include transferring the responsibility for issuing the housing certificate to the unit’s developers or lessor. These agents, indicated by the generic term “developers”, which can refer to any of the different parties involved in housing production, will now be responsible for ensuring the accuracy of information and the safekeeping of documents, even when outsourcing the service.

In the event of an inspection, the developer or lessor must provide all documents and information justifying the unit’s income range certificate.

Now, in addition to the project’s developer and the owner, the possessor, the acquiror-lessor, the final acquiror and the lessee will also be accountable for the proper implementation and destination of the units.

The decree also requires that the unit’s “Habite-se” certificate only be issued once the annotation in the records of HIS and HMP units has been confirmed and proof of compliance with the family income bracket has been provided, or when the purchase and sale commitment or agreement is signed, upon submission of the income range certificate.

In addition, whenever a unit is intended for lease, an annotation in its records must be registered. The annotation must contain an explicit warning on the rules established in the Strategic Master Plan (Plano Diretor Estratégico, in Portuguese), reinforcing the commitment to the correct destination of the units.

The decree also prohibits short stays, on the grounds that this model does not fulfill the social function of housing. In addition, the free lease (comodato, in Portuguese) of units is prohibited, even for beneficiaries who fall within the specified income brackets.

The decree also sets maximum limits for the sale value of the units:

• HIS 1 units: up to BRL 266,000.00
• HIS 2 units: up to BRL 369,600.00
• HMP units: up to BRL 518,000.00

These values were set considering the purchasing power of the income brackets served by each housing category and will be adjusted annually by the National Civil Construction Index (“INCC”), published by the Getúlio Vargas Foundation (“FGV”). Surprisingly, the sectoral index was adopted in this case, although it is not designed to capture income variations, which raises yet another set of questions.

In addition to the maximum value per unit, the decree also established a maximum income commitment index, so that leases must respect the limit of up to 30% of the income ranges provided for each category. The income ranges are:

• HIS 1: up to 3 minimum wages of monthly family income or up to 0.5 (half) of the minimum monthly wage per capita.
• HIS 2: up to 6 minimum wages of monthly family income or up to 1 (one) minimum monthly wage per capita.
• HMP: up to 10 minimum wages of monthly family income or up to 1.5 (one and a half) monthly minimum wages per capita.

The new rules are a response to allegations that HIS and HMP units are being misused, which were widely publicized in the media after the Public Prosecution Office, through São Paulo’s Housing and Urban Planning Prosecution Office, filed a public civil suit against the city. This may be a step towards a solution to this critical matter.

Demarest’s Real Estate team is monitoring the topic and is available to provide any further clarifications that may be necessary.