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Freedom in rental agreements: Keys to the Milei DNU, current contracts and the conditions for new ones - La Nacion Propiedades
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Libertad en los acuerdos de alquiler: claves del DNU de Milei, los contratos vigentes y las condiciones para los nuevos
La ley de alquileres ya está derogada pero hay inquilinos y propietarios que seguirán teniendo contratos bajo la ley hasta su vencimiento y para los nuevos las partes deberán hacer acuerdos en los puntos más importantes
www.lanacion.com.ar
December 31, 2023
The rental law has already been repealed but there are tenants and owners who will continue to have contracts under the law until their expiration and for new ones the parties must make agreements on the most important points.
By Veronica Ruby
The keys to the contracts signed in the last three years and what the new ones should be like from the DNU of Javier Milei
The DNU of President Javier Milei has already come into force. It includes a package of measures that no one has ever dared to take before. Among them, the repeal of the “disastrous” rental law (as described in the decree), something that had been talked about and speculated about so much in the previous Government but no one had ever made progress in its finalization.
In July 2020, rental law 27,551 was passed, which received changes to some of its points in October 2023 through law 27,737, in force since October 18 of this year. Now with the DNU in force, the rental law is already repealed and freedom between the parties prevails to make agreements on the most important points of a rental contract:
- Rental duration
- Type of currency in which payment will be made
- How it will be indexed and how often the adjustments will be made
- Who pays for the repairs?
- Who pays the extraordinary expenses and the ABL
- What type of guarantees will be accepted
- If a deposit will be paid and how it will be returned at the end of the contract
- Who can terminate and in what way
- How the property should be delivered at the end of the contract
- If the tenant can have a pet
The key is for owners and tenants to agree and put in writing these points and all those they consider necessary to avoid problems between the parties .
Milei repealed the rental law with a DNU that has already come into force.
Since the decree became official, rental contracts are once again under the Civil and Commercial Code with some modifications introduced in the aforementioned DNU.
This implies that tenants and owners will be divided for a long time between those who have contracts under the 2020 law, those who have contracts under the law with changes in 2023, and those who sign contracts from now on under the new conditions of the Civil and Commercial Code.
What are the contracts signed from July 2020 to October 2023 like?
The rental law that came into force in July 2020 introduced the following points regarding rental contracts:
- The minimum contract term went from two years to three years with this law.
- The adjustment must be made annually (not every six or three months) under the Lease Contract Index (ICL) published by the Central Bank, made up in equal parts of the monthly variations of the consumer price index (CPI) and the taxable remuneration. average of stable workers (RIPTE) which is a salary index.
- The guarantees to be presented by the tenant were expanded, with a range of possible guarantees being possible: the title of ownership of a property, a bank guarantee, surety insurance, a surety bond or joint guarantor or a personal guarantee of the tenant, which is documented with salary receipt, income certificate or any other reliable means.
- The tenant did not have to pay extraordinary expenses but only those that derive from habitual expenses, understood as those that are linked to the normal and permanent services available to the tenant. The extraordinary amount must be paid by the owner.
- Nor should the tenant pay those taxes that are levied on the property - such as real estate tax.
- The guarantee deposit cannot be for an amount greater than the amount equivalent to the first month's rent and, at the end of the contract, the owner must return the deposit "by delivering a sum equivalent to the price of the last month of the rental, or the proportional part if a deposit of less than one month's rent has been made.
- To terminate a contract, the law says that it can be terminated by the tenant when notification to the owner is made three months or more in advance, after at least six months of the contract. And no compensation is payable for this concept. If six months have passed into the contract, the tenant must notify the owner of his decision at least one month in advance. If you terminate within the first year of the contract, you must pay the owner a sum equivalent to one and a half months' rent at the time of vacating the property and one month if the decision is made after the first year.
- In the case of an emergency repair, if the tenant informs the landlord and receives a refusal or failure on their part to fix the problem, they can take action to pay for the repair themselves after 24 hours of notification and, in in the case of non-urgent repairs, after 10 calendar days have elapsed. In such cases, the tenant may deduct the value of the arrangements from the rental price.
- The owner has the obligation to declare the lease contract before the Federal Administration of Public Revenues of the Nation (AFIP).
The rental law that came into force in July 2020 influences contracts signed until October 2023.
What are the contracts signed from October to December 2023 like?
Under norm 27,737, on October 18 of this year, changes were introduced to some of its points through law 27,551, which is the one that governs from that moment until now that Javier Milei's DNU is in force:
- Adjustments can be made at least semiannually (not just annually).
- The adjustment must be made under the Casa Propia index (no longer under the ICL)
- Owners will not be able to request payment of months in advance from the tenant.
- The requirement that rental advertisements be made in national currency (pesos).
- Owners will be exempt from paying Personal Property for the properties they use for rent.
- Exemption from paying the monotax for income from the rental of up to two properties.
- The possibility for both parties to deduct 10% of the annual amount of the rental contract from Income Tax.
- They will not pay the tax on the check in the bank accounts intended to collect those contracts that are duly registered with the AFIP.
- The obligation to register contracts with the AFIP is maintained, in accordance with the provisions of current law.
What are the new contracts like from now on?
As of the validity of Javier Milei's DNU, contracts are once again under the Civil and Commercial Code with absolute freedom between the parties in the most important points:
- The term of the housing rental contracts will be the one that the parties have established, there is no legal minimum term. If they do not clarify it in the contract, it will be two years (no longer three years).
- The parties may agree on the adjustment of the value of the rentals and the use of any index agreed upon by the parties, public or private, expressed in the same currency in which the rentals were agreed will be valid. That is to say, it is no longer mandatory to use the Rental Contract Index (ICL) used by contracts signed after July 2020 or the Own House index that is applied to the few contracts that were signed between last October 18 and today.
Contracts signed from today will not be governed by any law. They are again under the Civil and Commercial Code.
- Tenant and owner will also be able to agree on how often to update the contract (no longer a semi-annual minimum as stated in the change to the law that proposed an annual basis from 2020).
- Contracts may be made in legal tender (pesos) or in foreign currency (dollars, euros or another) decided by the parties. The tenant may not demand that payment be accepted in a currency other than that established in the contract. Housing rentals will be allowed to be published and signed in foreign currency (there is no longer the requirement that it be only in pesos) and judges will not be able to convert the price to pesos, unless the agreement says otherwise.
- Judges cannot modify the form of payment or the currency agreed upon by the parties nor do they have the power to modify the stipulations of the contracts, except at the request of one of the parties when authorized by law.
- The parties can freely determine the amounts and currency delivered as a deposit or guarantee deposit, and the way in which they will be returned at the end of the lease.
- The parties will freely agree on the frequency of payment, which may not be less than monthly.
- The tenant may, at any time, terminate the contract by paying the equivalent of 10% of the balance of the future rental fee, calculated from the date of notification to the end date agreed in the contract. The tenant may also terminate the contract if the owner does not comply with his obligation to maintain the unit in conditions suitable for use, except when the damage has been caused directly or indirectly by the tenant.
- Contracts should no longer be registered with the AFIP.
How you can terminate a current contract and what happens to the current ones
In this context, a question resonates between owners, tenants and real estate agents. What will happen to the rental contracts in force after the DNU? The question fortunately has a simple and linear answer: “The law is not applied retroactively unless expressly provided,” said Enrique Abatti, lawyer and president of the Chamber of Property Owners of Argentina. In other words, a change or repeal of the law does not affect ongoing contracts.
The expert explained that what is expressed in the DNU applies to contracts that are signed from now on. Therefore, “the contracts in place will remain in force ,” he clarified. The same thing happened when the rental law was passed in July 2020 and then in October there were changes, the contracts that were in force maintained their conditions until their end.
A change or repeal of the law does not affect ongoing contracts.
The new contracts that are signed are those that must be under the DNU guidelines. And those who are under the previous standard (27,551 or its modified 27,737) when they expire have two alternatives: extend or start a new contract. In the meantime, they are valid until completion.
The extension is a tool that allows the conditions of a contract to be maintained even if a new law is passed or, as in this case, the Civil and Commercial Code is applied. Extensions can extend an agreement up to 20 years. This can be used as long as the property and the parties are the same, so if the tenant or property changes, a new contract must be started with the guidelines of the decree.
Mostly, the owners decided to make extensions to the contracts to “dodge” the rental law and maintain the rules of the initial contract if it was signed before the sanction of rule 27,551, in order to maintain the previous two-year term, the agreement between time parts and adjustment modes, among others.
“But now, with the application of this DNU that poses new conditions of absolute freedom, it is highly probable that the owners will no longer resort to the extension tool but will choose to make a new contract under the new guidelines,” says Abatti.
Abatti says that since he learned of the repeal of the law, he received “questions from many people who want to terminate the current contract to make a new one with these guidelines.” To do so, the parties must simply agree. "But it is a matter of the owner convincing the tenant, because someone who recently signed a three-year contract with semi-annual updating for their Own House (since October) or annually for ICL (before October) is not going to want to move to "This new modality where there is absolute freedom to define deadlines, adjustment periods, index, among other freedoms that the DNU brings." Once again, everything will depend on the agreement of wills.
What does total freedom in contracts mean?
The decree allows absolute freedom between the parties in four key points: the term of the contracts, the period in which the adjustments will be made, the currency in which they will be paid and the index that will be used to define them.
Contracts may be made in pesos, dollars and other foreign currency decided by the parties.
Regarding these freedoms, Abatti considers that “put in these terms, the contract terms may be one year or less if the parties agree, the indexation can also be monthly if the owner wants it and the tenant accepts it, through an index that they also agree upon among themselves. It is key that, for example, if the payment is made in dollars or euros, the indexation can now be done according to the index or inflation of the country that has that currency. For example, in dollars it can be indexed with the inflation of the United States and in euros with that of a European country, according to the foreign currency determined for the contract."
Although “ excess freedom” worries some specialists, others trust that the market will self-regulate until it reaches a point of equilibrium. The role of real estate agents will be key to making the parties agree on the best conditions for both.
As a light of hope in this darkness in which the rental market has been plunged in the last three years, with little supply, sky-high prices, excessive increases, loss of profitability for owners, among other drawbacks, the real estate sector sees This repeal is very welcome, considering that the changes will be beneficial for tenants and will encourage those owners who took their properties out of rental to return them to the rental housing market , increasing the supply in a few months.
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