Notice No. 09/2023 of August 3 on Housing Credit

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CONTINUATION OF NOTICE NO. 09/2023 Page 1 of 15 PUBLISHED IN THE OFFICIAL GAZETTE, FIRST SERIES, NO. 144 OF AUGUST 3 NOTICE NO. 09/2023 SUBJECT: FINANCIAL SYSTEM - Housing Credit Considering the importance for the economy and society of promoting the construction of housing properties and creating conditions for banking clients to enter into housing credit agreements compatible with their average income levels, it is urgent to adapt the criteria for granting credit, interest rates, and other conditions for accessing housing and construction credit, in order to achieve the aforementioned purposes; In accordance with the combined provisions of Article 26 of Law No. 14/21, dated May 19 - General Regime for Financial Institutions Law, and Articles 30 and 54 of Law No. 24/21, dated October 18 - National Bank of Angola Law. I DETERMINE:

Chapter I
General Provisions
Article 1.
(Subject Matter)
The present Notice establishes special regimes for housing credit and construction credit, defines the eligibility requirements, terms, conditions, and costs applicable to such credits, as well as their treatment in the calculation of mandatory reserves.

Article 2.
(Scope)

1. The provisions of this Notice are mandatory for Systemically Important Banking Financial Institutions in the national market, and optional for other Banking Financial Institutions.
2. The obligation applies to the granting of credit that meets the eligibility criteria established in this Notice for clients with credit risk consistent with each Banking Financial Institution's risk appetite.
3. The aforementioned Banking Financial Institutions, hereinafter referred to as Commercial Banks, may additionally offer other housing and construction credit products for residential projects to serve clients who do not meet the requirements of this Notice but fall within their risk appetite and target market.

Article 3.
(Definitions)
For the purposes of this Notice, it is considered:
a) Self-construction - the case where an individual client who is the owner or conditional buyer of a plot contracts a construction company to build their permanent primary residence. b) Housing Credit - the credit granted to an individual client for acquiring a permanent primary residence:
(i) Already constructed (new or used), or,
(ii) Under construction or to be constructed in the immediate future, through self-construction or as part of an ongoing residential project; c) Construction Credit - the credit granted to the promoter of a residential project, where the promoter may be:
(i) The owner or conditional buyer of the plot and simultaneously the builder of the project; or, (ii) The owner or conditional buyer of the plot and the seller of the properties, who enters into a construction contract with an independent builder for the project's development. d) Infrastructure-equipped Plot - a plot located in an area with basic infrastructure installed, namely sanitation, power lines, water supply, street paving, and public lighting.

Article 4.
(Credit Risk Assessment and Management)

1. The granting of credit under this Notice is subject to compliance with each Commercial Bank's internal regulations and the following National Bank of Angola regulations, insofar as they do not contradict the provisions according to the attached model, which is an integral part of this Notice:
   a) Notice No. 14/2016, dated September 7, regarding information duties in credit contracts; b) Instruction No. 4/2019, dated April 26, regarding credit granting, insofar as it does not contradict this Notice; c) Instruction No. 7/2020, dated April 20, regarding analysis periods, communication of final decisions, formalization, and disbursement of credit.
2. In assessing and mitigating credit risk, Commercial Banks must:
   a) Before granting the credit:
   i. Conduct a rigorous assessment of clients' financial capacity to fulfill their obligations under credit contracts;
   ii. Assess risks related to the property, builder, and promoter, as applicable.
   b) During the credit term, regularly monitor the following:
   i. Construction of the property or project, as applicable;
   ii. Their clients, to timely detect financial difficulties or other circumstances that may increase default risk and take appropriate measures to prevent or resolve the situation.

Article 5.
(Cost of Credit)

1. The interest rates and commissions established in this article correspond to global maximums, which Commercial Banks may apply at lower levels, considering their assessment of the credit risk associated with each client as well as their commercial strategy.
2. Commissions charged at the time of credit granting cannot exceed 1% (one percent) of the total credit amount to be granted.
3. During the credit term, no other commissions may be charged, except in cases of credit restructuring or term extension, with each limited to 0.5% (zero point five percent).
4. No commissions may be charged for the early, partial, or total repayment of the credit.
5. The following costs must be separately charged to credit applicants or, after granting, to borrowers, and are not covered by the commissions referred to in paragraphs 2 and 3 of this article:
   a) Property assessments, including plots, works, and projects, as applicable, at the initial credit risk assessment stage, as well as when necessary for credit restructuring or as defined in National Bank of Angola regulations; b) Fees for the construction/project supervisor contracted by the Commercial Bank to monitor its progress; c) Taxes and fees related to notarial and registration acts upon credit granting; d) Insurance policy costs, and; e) Any taxes payable on the credit, commissions, and interest.
6. The maximum applicable nominal interest rate for housing credit is as follows:
   a) Until May 31, 2032, it is 7% (seven percent) per year; b) From June 1, 2032 onwards, it is the interbank market reference rate for a 30 (thirty) day term, which may be increased by a margin not exceeding 1% (one percent).
7. The maximum applicable nominal interest rate for construction credit is as follows:
   a) Until May 31, 2027, it is 10% (ten percent) per year; b) From June 1, 2027 onwards, it is the interbank market reference rate for a 30 (thirty) day term, which may be increased by a margin not exceeding 1% (one percent).

Article 6.
(Public Disclosure of Availability of Current Regimes) Systemically important Commercial Banks and others wishing to offer credit to their clients under this Notice must visibly disclose on their official websites the availability of the defined credit modalities, as well as the access requirements.

Chapter II
Housing Credit
Article 7.
(Eligibility Criteria)

1. The maximum financeable value per property under this Notice is determined by the financial capacity of borrowers and guarantors, as applicable, and cannot exceed Kz 100,000,000.00 (one hundred million Kwanzas).
2. The special housing credit regime established in this Notice covers the following credits:
   a) Granted after the entry into force of the Notice; b) For acquiring permanent primary residence, namely through:
   i. Purchase of an infrastructure-equipped plot and/or self-construction;
   ii. Purchase of properties constructed after 2012, under construction or to be built, acquired from the promoter of a residential project;
   c) Restructured after the entry into force of the Notice, for proven financial difficulties of the client in fulfilling their obligations, provided that the remaining value at restructuring is equal to or less than the value referred to in paragraph 1 of this article and the requirement in letter b) of this paragraph is met.
3. New properties held by Commercial Banks that are part of a residential project and were received as payment or fulfillment of construction credit, with sale values equal to or less than the value established in paragraph 1 of this article, may be sold to their clients and financed under this Notice, provided all its requirements are met.
4. Properties allocated by the State to citizens under the Regime for Access to Housing Constructed with Public Funds may also be financed under this Notice, provided the conditions of this article are met.
5. The special housing credit regime established in this Notice does not cover credit granted:
   a) Under a housing credit regime exclusively for employees of the Commercial Bank itself; b) To a client who is a borrower under another active housing credit, regardless of whether that credit was granted by another Commercial Bank or guaranteed by another property; c) When the property seller is a spouse, de facto union partner, descendant, or ascendant up to the second degree in direct line of the client, or companies managed by them; d) For acquiring a plot that is not infrastructure-equipped, and/or for self-construction or acquisition of a property from an ongoing residential project or constructed on such land; e) For carrying out improvement works or increasing the built area of an existing residence.

Article 8.
(Terms and Conditions Applicable to Credits)

1. The maximum term for credit granted under this Notice is 30 (thirty) years, and Commercial Banks must also ensure that in credit restructuring, the total term does not exceed 30 (thirty) years, as established in Presidential Decree No. 259/11, dated September 30, Regulation on Housing Credit.
2. The ratio between the credit amount granted under this Notice and the lower of the acquisition price or the property's assessed value given as collateral for the credit at the time of granting cannot exceed 100% (one hundred percent).
3. Commercial Banks must evaluate the best option for the client between progressive and constant installments, considering each characteristic, including potential income increases during the credit term.
4. Regardless of the property value, the credit granted under this Notice must be the only credit secured by that property; other banking credits for its financing are not permitted under any circumstances, even on different terms and conditions as set out in this Notice, and/or contracted with other Commercial Banks.
5. Commercial Banks may stipulate as additional conditions for credit granting the involvement of guarantors in operations when the client's credit risk level justifies it.

Chapter III
Construction Credit
Article 9.
(Eligibility Criteria)

1. Promoters of construction projects for residential properties with a maximum sale value per unit equal to Kz 100,000,000.00 (one hundred million Kwanzas) are eligible for financing under this Notice, and Commercial Banks must prioritize projects that include units of various typologies and sale values, provided they are below the maximum value.
2. The promoters of the aforementioned projects must meet the following requirements:
   a) Be an entity established under the Commercial Companies Law, Single-Person Companies Law, or Cooperatives Law; b) Have organized accounting and accounts certified by a chartered accountant or certified public accountant registered with the Angolan Order of Chartered Accountants and Certified Public Accountants; c) Have regular tax and social security status; d) Have proven experience in executing construction projects of a nature similar to the project for which financing is requested under this Notice. e) Have no ongoing legal proceedings and have not been convicted for contractual default; f) Be registered with the National Housing Institute as a real estate promoter, where applicable; g) Possess a valid contractor's license, when the promoter is also the builder.
3. Financing for acquiring non-infrastructure-equipped plots and residential projects to be built on such plots is excluded from the scope of this Notice.

Article 10.
(Terms and Conditions Applicable to Credits)
Construction projects financed under this Notice must be sized to allow completion of construction within a period not exceeding 3 (three) years.

Chapter IV
Mandatory Reserves
Article 11.
(Deduction of Mandatory Reserves)

1. Credits disbursed under Notice No. 09/2022, dated April 6, and this Notice, which remain outstanding until June 6, 2027, are deductible from the mandatory reserves to be established by each Commercial Bank, regardless of whether they are in regular status or default, at the following percentages:
   a) Housing credit – 100% (one hundred percent); b) Construction credit – 50% (fifty percent), with a deduction of 75% (seventy-five percent) for Housing Cooperatives.
2. Construction credits extended due to the project's construction period exceeding 3 (three) years cease to be deductible from mandatory reserves.
3. Commercial Banks may perform the deduction of mandatory reserves in the week immediately following each disbursement of credits granted under this Notice.
4. Upon completion of the period referred to in paragraph 1 of this article, the National Bank of Angola determines:
   a) The percentage of outstanding values deductible from mandatory reserves based on the difference between the interbank market interest rate for a 30 (thirty) day term and the interest rates applied to credits granted under this Notice; b) The suspension of deductibility of outstanding values from mandatory reserves once the market interest rate converges with the interest rates established in this Notice.

Article 12.
(Information Reporting)
Commercial Banks must submit monthly to the National Bank of Angola a list of disbursed and restructured contracts in force, in the format and with information to be defined in specific regulations.

Final Provisions
Article 13.
(Notice Term)

1. This Notice shall remain in force for granting new credits or restructuring existing credits as defined herein until June 6, 2027, which period may be extended by the National Bank of Angola.
2. The conditions applicable to credits granted or restructured under this Notice, per its Article 5, remain in force for the term of each credit, regardless of any eventual revocation of this Notice.

Article 14.
(Sanctions)
Non-compliance with the provisions of this Notice constitutes a regulatory offense provided for and punishable under Law No. 14/21, dated May 19 - General Regime for Financial Institutions Law.

Article 15.
(Doubts and Omissions)
Doubts and omissions resulting from the interpretation and application of this Notice are resolved by the National Bank of Angola.

Article 16.
(Revocation)
Notice No. 09/2022, dated April 6, and all regulations contradicting the provisions of this Notice are hereby revoked.

Article 17.
(Entry into Force)
The present Notice enters into force on the day following its publication.
PUBLISHED.
Luanda, July 10, 2023.
THE GOVERNOR
MANUEL ANTÓNIO TIAGO DIAS

ANNEX
Risk Assessment
The granting of housing or construction credit determines the need to assess other risks beyond the client's financial capacity. In this regard, commercial banks must establish procedures to allow adequate identification and assessment of risks related to the property, builder, and promoter, as applicable, and for their mitigation, in line with the following:

1. In financing (i) acquisition of infrastructure-equipped plot and/or self-construction (housing credit), (ii) acquisition of a property that is part of an ongoing residential project (housing credit), (iii) acquisition of infrastructure-equipped plot and/or construction of a residential project (construction credit), Commercial Banks must ensure that:
   i. The requested credit value is consistent with the market value of the property or project to be financed upon completion:
   ii. Obtain an assessment performed by a certified appraiser registered with the CMC and indicated by the Commercial Bank, of the plot and/or construction, property, or residential project, according to the credit's purpose.
   iii. The plots are duly legalized with the Land Registry and Property Register and allow for the establishment of a mortgage in favor of the Commercial Bank:
   i. Obtain updated property register and land registry certificates;
   ii. Confirm the existence of the subdivision license, its validity, and respective detachment of plots;
   iii. Confirm the registration of horizontal property in the land registry office and property register, where applicable;
   iv. Verify plot ownership by the client requesting housing credit for self-construction or by the promoter of a residential project, as applicable, when the granted credit does not include land purchase;
   v. Confirm that the plot is free of encumbrances or charges, including pledges or mortgages in favor of third parties, except when:
   i. The client purchases a property that is part of an ongoing residential project, in which case the plot may be mortgaged to the bank financing the project, with the mortgage to be released upon full payment of the property;
   ii. The client purchases the land for self-construction, or for constructing a residential project under housing or construction credit, respectively, in which case the land must be free of encumbrances or charges at the time of the public deed of purchase and sale and disbursement of its value, allowing mortgage registration in favor of the Commercial Bank.
   iv. The work/project is duly licensed, budgeted, and scheduled:
   i. Confirm the existence of a valid construction license in the name of the plot owner;
   ii. Confirm the existence of an approved construction project by the competent authority;
   iii. Obtain a budget with the estimated value for construction and the planned schedule for the work and phased payments;
   iv. Obtain the draft construction contract in cases of self-construction or financing for residential project construction, except when the project's builder is also the owner and promoter;
   v. The builders or promoters, as applicable, meet the following requirements:
   i. Are an entity established under the Commercial Companies Law, Single-Person Companies Law, or Cooperatives Law;
   ii. Have organized accounting and accounts certified by a chartered accountant or certified public accountant registered with the Angolan Order of Chartered Accountants and Certified Public Accountants;
   iii. Have regular tax and social security status;
   iv. Have proven experience in executing construction projects of a nature similar to the project for which financing is requested under this Notice.
   v. Have no ongoing legal proceedings and have not been convicted for contractual default or fraud;
   vi. Are registered with the National Housing Institute as real estate promoters, where applicable;
   vii. Possess a valid contractor's license, where applicable.
2. In housing credit for purchasing a finished property, new or used, Commercial Banks must ensure that:
   a) The requested credit value is consistent with the market value of the property:
   i. Obtain an assessment performed by a certified appraiser registered with the CMC and indicated by the Commercial Bank, of the property to be financed.
   b) The properties are duly legalized with the Land Registry and Property Register and allow for the establishment of a mortgage in favor of the Commercial Bank:
   i. Obtain updated property register and land registry certificates confirming the property's registration in the Urban Land Matrix and the Land Registry Office, and verify that the property is free of encumbrances or charges, or will be in such condition at the time of credit disbursement and public deed of purchase and sale;
   ii. Confirm that the property, including any parcel of horizontal property, is duly legalized and allows for transfer of ownership to the credit applicant at the time of disbursement and public deed of purchase and sale, and simultaneously registration of the mortgage in favor of the Commercial Bank;
   iii. Obtain the occupancy/use license.
3. In cases where the signing of the promise of purchase and sale contract and/or construction contract depends on the Commercial Bank's approval of credit granting, they must ensure that the conditions forming the basis of their approval are replicated in the definitive contracts signed between their clients, sellers, builders, or promoters, as applicable, and that subdivision and construction licenses remain valid.