The Legal and Regulatory Behind-the-Scenes Set to Redefine Brazilian Real Estate by 2028

The Brazilian real estate market closed 2024 with record sales — a 20.9% increase over 2023, according to data from CBIC and Brain Inteligência Estratégica. The numbers reflect a robust expansion cycle. However, behind the commercial euphoria, three regulatory vectors are advancing at their own pace and promise to redraw the rules of the game for developers, fund managers, and institutional investors over the next three years. The Tax Reform, already regulated by Complementary Law No. 214/2025, the Legal Framework for Guarantees (Law No. 14.711/2023), and the jurisprudential instability surrounding the Distrato Law (Law No. 13.786/2018) form a tripod that demands an integrated — not fragmented — reading by decision-makers.

This is the kind of analysis that transcends the cyclical. It is not about tracking Selic rate fluctuations or net absorption of corporate office spaces. It is about understanding how structural changes in the legal-tax framework redefine project feasibility, investment vehicle structuring, and exit strategies. It is, in essence, the terrain where long-term value is built — or destroyed.

How does the Tax Reform impact real estate development and REITs from 2025 onward?

Complementary Law No. 214/2025, which regulates the replacement of PIS and COFINS with IBS (Tax on Goods and Services) and CBS (Contribution on Goods and Services), delivered a better outcome for the real estate sector than the feared scenario. The legislation established significant rate reducers: 50% for property sales and 70% for leasing operations, according to data from the Federal Senate and the Tax Reform Portal. These reducers acknowledge the sector's specificity and preserve, at least partially, the tax competitiveness of real estate operations during the transition to the new system.

The most significant victory, however, came in June 2025: the National Congress overturned the presidential veto that threatened to subject Real Estate Investment Funds (FIIs) and Fiagros to IBS and CBS taxation, according to information from the Federal Senate and Agência FPA. With the veto overturned, FIIs and Fiagros remain as "non-taxpayers" under the new taxes — a decision that preserves the structural attractiveness of the vehicle that has established itself as the primary channel for individual investors to access the real estate market.

Maintaining the non-taxpayer regime for FIIs was not a technical detail; it was a decision that preserved the capital-raising architecture for the Brazilian real estate sector.

For developers, the impact requires careful modeling. The transition between tax regimes — which will extend over years — creates a phase of coexistence between the current and new systems, requiring dual compliance and potentially raising administrative costs. The provision that individuals will be subject to IBS/CBS taxation when they earn annual rental income exceeding R$ 240,000 from more than three properties, as established by Complementary Law 214/2025 itself and analyses by Secovi-SP, introduces a taxation threshold that will affect larger individual investors and may accelerate the migration of assets into formal vehicles such as FIIs.

In discussions held within the GRI Institute community, sector leaders have pointed out that the regulatory clarity brought by Complementary Law 214/2025, despite its imperfections, already represents progress compared to the uncertainty that prevailed during the legislative process. Predictability, even if imperfect, enables pricing.

Is the Legal Framework for Guarantees already changing credit and enforcement dynamics — but at what cost?

Law No. 14.711/2023, known as the Legal Framework for Guarantees, came into effect with the promise of modernizing the real estate credit environment. Its effects are already measurable. According to a survey by Superbid Exchange, published by Veja Negócios, the volume of real estate auctions — both judicial and extrajudicial — grew 86% in 2024, driven directly by the streamlined enforcement procedures introduced by the new legislation.

This figure requires interpretation on two levels. On the first, positive level, the agility in enforcing guarantees strengthens creditor security, reduces risk costs, and, in theory, may contribute to reducing real estate credit spreads over time. Banks and institutional investors now operate with greater predictability regarding asset recovery in cases of default.

The 86% growth in real estate auction volume in 2024 is the first tangible sign that the Legal Framework for Guarantees has already altered the risk-return equation of real estate credit in Brazil.

On the second level, however, there is a debate that deserves attention. The sharp increase in auctions also reflects a macroeconomic environment of high interest rates — the Selic rate is expected to remain between 13.25% and 15% throughout 2025, according to the Focus Bulletin — which raises funding costs for development and pressures buyers' payment capacity. The ease of enforcement, combined with restrictive interest rates, may intensify the flow of assets to auction, creating opportunities for opportunistic investors but simultaneously generating social and political tension that could result in pressure for further legislative changes.

The innovation of "guarantee reloading" — which allows the debtor to reuse the same collateral for new credit operations as the outstanding balance is amortized — is one of the most sophisticated bets of the Legal Framework. However, specific data on the financial volume of these operations remain scarce, preventing a quantitative assessment of market adoption.

What is the real risk of the STJ divergence on the Distrato Law for developers and funds?

If the Tax Reform and the Legal Framework for Guarantees represent modernization vectors — albeit with caveats — the situation with the Distrato Law (Law No. 13.786/2018) constitutes a classic case of active legal uncertainty. The current scenario at the Superior Court of Justice (STJ) exposes an interpretive fracture: the 3rd Panel has been applying the Consumer Protection Code in contract termination cases, limiting retention by the developer to 25% of amounts paid. The 4th Panel, on the other hand, applies Law 13.786/2018, which permits retention of up to 50% when the development operates under a ring-fenced asset regime.

This divergence is not academic. It directly impacts the financial modeling of residential developments. Developers who structure their cash flows based on the 50% retention provided by law may, in the event of an unfavorable court ruling, face significant financial mismatches. For development-focused real estate funds, the risk multiplies: the unpredictability in the treatment of contract terminations affects return projections and may increase the due diligence required for capital allocation.

The divergence between STJ panels on the Distrato Law currently represents the greatest source of operational legal uncertainty for residential developers in Brazil.

The market expectation is that the issue will be settled in the coming months, possibly through assignment to the repetitive appeals procedure or through a ruling by the Special Court. Until then, the uncertainty persists — and the cost of that uncertainty translates into higher spreads, greater guarantee requirements from lenders, and, ultimately, projects that never leave the drawing board.

The 2026-2028 horizon: tokenization, Drex, and the next regulatory cycle

Beyond the three immediate vectors, the regulatory horizon holds additional transformations. The Central Bank of Brazil, together with Febraban, projects that Drex — the digital version of the Real — will have public functionalities released between late 2025 and 2026, enabling smart contracts for real estate transactions. The tokenization of real estate assets, although still facing skepticism from the CVM regarding irregular public offerings, finds in Sandbox regulation and Drex infrastructure potential catalysts for scale.

For the real estate sector, the convergence of digitized records, smart contracts, and new property fractionation vehicles could represent a transformation comparable to what securitization brought to the market in previous decades. However, the maturation of this ecosystem depends on regulatory advances that are still in their embryonic stages.

The projection of more moderate growth for the construction industry in 2026 — approximately 2%, according to CBIC — following the vigorous expansion of 2024 and 2025, suggests the sector will enter an adjustment phase where the quality of the regulatory environment will be more decisive than demand momentum.

Integrated reading: the strategic imperative

The most frequent mistake in analyzing the regulatory environment is treating it in a segmented fashion. The Tax Reform alters the cost structure. The Legal Framework for Guarantees redefines credit and enforcement dynamics. The jurisprudence on contract termination modifies the risk profile of residential projects. In isolation, each vector would already demand strategic adjustments. Combined, they require a thorough overhaul of business models.

For GRI Institute members, an integrated understanding of these movements is not optional — it is a prerequisite for informed decision-making. Events, research, and discussions promoted by the GRI community have devoted increasing attention to the legal-regulatory dimension of the market, recognizing that, in contemporary Brazilian real estate, competitive advantage belongs to those who anticipate the rules, not those who react to them.

The period between 2025 and 2028 will be remembered as the moment when the regulatory framework of Brazilian real estate was rewritten. The remaining question is: who will be prepared to operate in the new environment — and who will be caught off guard?