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Few rentals and postponements for after December 10: Milei's statements slowed down the real estate market
https://buysellba.com/news-/-media/f/few-rentals-and-postponements-for-after-december-10November 23, 2023
The signature suspensions intensified at a time when the residential rental market faces an unprecedented crisis. The sectoral chambers support the possibility of repealing the current regulations.
By José Luis Cieri
Accessing the key to a home to rent is not easy in Argentina since the regulations that regulate them come into force and were sanctioned in 2020 and recently reformed (Illustrative image Infobae)
Three days have passed since Javier Milei, president-elect of La Libertad Avanza (LLA), expressed the need to “repeal” the Rental Law and “understand that it is a contract between parties.” In a sector that is going through very complex times, these statements generated the immediate suspension of contract signings that were about to be sealed in real estate companies at least until after December 10.
The market situation is unprecedented, with historic levels of decline in supply and record price increases. In most of the country, a signed contract can cost more than 200% what it did a year ago. In that context, sectoral chambers and groups viewed the libertarian's announcement favorably, and the tenants rejected it.
Laura M. , a tenant who had been searching since August and had reserved a 3-room apartment in Paternal, is now unable to continue with the contract. The real estate agency informed him today that the owner prefers to wait a few weeks. “My contract for a duplex in Villa Crespo ends at the end of the month. “I had reserved the home, but today they informed me that the signing of the contract was suspended,” she told Infobae.
The elected president of Argentina, Javier Milei (EFE/ Juan Ignacio Roncoroni)
“Since Milei's announcement, we have received several inquiries from owners to know if the current law can be repealed. They also ask us about the suspension of contracts that were about to be finalized,” he told Diego Frangella, president of the Buenos Aires Real Estate Professional Association (CPI).
The different actors in the real estate sector issued a statement in which they congratulate the president-elect and make themselves available to collaborate with their teams in pursuit of development. The statement, to which Infobae had access, highlights the celebration before Milei's statement, who a few hours after being elected expressed the need to repeal the current rule.
This position aligns with what the institutions of the sector have maintained, seeking to address the problems generated by current legislation.
The document was supported by the Chamber of Businessmen of Urban Developers (CEDU), Argentine Real Estate Chamber (CIA), Real Estate Federation of the Argentine Republic (FIRA), Business Chamber of Urban Developers of Córdoba (CEDUC), Association of Housing Businessmen (AEV), the Unique College of Real Estate Brokers of the Autonomous City of Buenos Aires (CUCICBA), the Center for Builders and Annexes of Mar del Plata (CCyA Mar del Plata), among other entities.
The opinion of the owners
The possible repeal of the regulations and the return to free contracts between parties through the National Civil and Commercial Code of 2015 generates controversies.
Several agreements that were about to be concluded now have been postponed until after December 10.
Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic, pointed out that although the current rental legislation has deficiencies with regard to residential locations, it is adequate for other destinations such as offices and commercial premises.
“I propose that Law 27,737, in force since 10/18/2023, and partially 27,551 of 07/01/2020 be completely repealed. The last establishes the repeal of certain articles of Law 23,928 on Convertibility and Deindexation of 1991, which prohibits indexing clauses in contracts, currently considered anachronistic,” suggested the real estate law expert.
Asks to maintain this provision, applying it to all contracts. He also advocates the modification of article 765 of the Civil and Commercial Code, which treats foreign currency as a “thing” and does not equate it to legal tender, “which prevents rent agreements in foreign currency.” Regarding law 27,737, it recommends preserving only the tax benefits for homeowners.
Tenants, against
For tenants, returning to two-year agreements represents a sharp setback. They consider that this longer period was perceived as a right acquired by law, providing certainty and avoiding the expenses associated with moving every 24 months, with all the implications that this entails.Magalí Zirulnikoff , co-founder of the Federal Tenant and Non-Owner Community, raises uncertainties regarding a possible return to agreements governed by the National Civil and Commercial Code. Specifically, she highlights the lack of clarity about who would bear the cost of ordinary or extraordinary expenses and how the issue of home improvements would be resolved, issues that were addressed by the 2020 law and that could now be nullified.
Furthermore, he questioned liberal theory suggesting that repealing the law would increase supply and therefore balance prices.
“Removing the law could result in deals with prices consistently higher than necessary. Instability would be caused, generating detrimental consequences for those who lack their own home. In this context we are against the repeal and we support the current regulations,” Zirulnicoff concluded.
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