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How much money is needed to start a rental contract in the City of Buenos Aires - Infobae
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Cuánto dinero se necesita para comenzar un contrato de alquiler en la Ciudad de Buenos Aires
Cuáles son los aspectos claves a tener en cuenta para firmar un nuevo contrato entre propietarios e inquilinos. Los precios mensuales siguen siendo elevados para los bolsillos de los asalariados
www.infobae.com
February 7, 2024
What are the key aspects to take into account when signing a new contract between owners and tenants. Monthly prices remain high for employees' pockets
By José Luis Cieri
In their hands, a couple holds a house. It is increasingly more expensive to access a new rental contract, although the existing offer has now improved (Illustrative Image Infobae)
Despite the 62% increase in the supply of rental properties following the repeal of the Rental Law through the Government's DNU, access to new contracts remains a financial challenge for employees. To close an agreement of $300,000 per month, a disbursement that averages $1,300,000 is required, a significant investment necessary to secure the home agreed upon between tenant and owner.
Currently, new contracts register an increase of more than 200% compared to the value of 18 months ago. The difference with what happened before the repeal of the law is that now homes appeared in neighborhoods and towns that had zero supply, such as in Agronomía or Mataderos in the city of Buenos Aires, and in towns like Morón or Lomas de Zamora in the Greater Buenos Aires (GBA).
Daniel Bryn, Real Estate expert and creator of Real Estate Monitor, confirmed to Infobae that every day more owners are joining in offering their properties for residential rental. “Despite the notable growth since the repeal of the Rental Law, the main difficulty persists in obtaining guarantees for renting. The conditions, both before and after the DNU, remain unchanged in this regard, being the main barrier to accessing new rentals, as it was before.
The contract duration, which was previously a maximum of 36 months, has now been reduced to 24 months. This implies that concepts calculated based on the “amount of the contract”, such as the surety bond or the real estate commission in the case of the Province, result in a lower total amount.
Mariano García Malbrán , president of the Chamber of Real Estate Services Companies, said: “Let's assume a contract of $300,000 per month. For a rental in CABA, the tenant must pay no less than $900,000 upon arrival, this amount covers the month's advance, the deposit, the real estate broker's fees (only in the province of Buenos Aires), the stamp tax (also only in the province of Buenos Aires). residential locations), notarial certifications and, if surety insurance is contracted, another $300,000 or more would be added. These values are considered for a two-year contract.”
The following graph details how much money is needed to sign a new contract for $300,000 per month since the DNU came into force (the graph of what it was like before with the repealed law is published below):
Source: Real Estate Monitor and Invertire.com
The tenant in CABA does not pay a real estate commission and in the Province of Buenos Aires they pay 2%, which adds up to about 144,000 pesos. The owner pays the following:
-Expenses for fees in CABA of 4.15% of the total contract of $300,000 per month: you must pay 298,800 pesos.
-Expenses for fees in the Province: they are 2% of the total value of the contract, about 144,000 pesos.
Changes with the previous regulations
Experts highlighted changes in deposit practices in the rental market. With the repealed law, the deposit was limited to a maximum of 1 month for the entire contract, but currently, there are no minimum or maximum limits, and the trend indicates that instead of being 1 month of contract, the practice is being adopted to request 2 months.
Source: Real Estate Monitor and Invertire.com
“This is because it is an amount in pesos that has no update, and if you place a deposit of $300,000 today, within 2 years, that amount will not allow you to even paint a wall,” Bryn added.
Regarding expenses for the owner, stability is maintained before and after the DNU. The financial conditions for those who offer their properties for rent remain unchanged, with no variations in the costs associated with their responsibility.
With the new contracts, the opportunity arose for tenants to discuss the rental value, as well as the update period and the index to be used.
According to García Malbrán, “the owners recover a certain security lost with previous laws, by having the ability to establish contract terms and updates based on their needs, select indices that do not compromise profitability in the face of inflation, and, have the contractual possibility to terminate the agreement for justified reasons provided for in the rental contract.”
In the case of contracting surety insurance, the providers of this service usually grant payment plans by card or in installments. On average, bond insurance represents the total cost of one month's rent for each year bonded. Guarantee companies offer more affordable rates, approximately 70% of a rental for each year guaranteed.
Bryn provided an illustrative example: “For a $300,000 apartment, the current estimate for bond insurance is approximately $360,000, slightly exceeding the equivalent of 1 month's rent.”
What if they are in dollars?
There are no alterations at the beginning of the contract, only that now payment is made in dollar bills. This amount will remain unchanged throughout the contract, but the tenant must acquire the dollars necessary to meet the monthly payment, without certainty about the future price of this currency.
Bryn clarified: "It is more common today to make contracts in pesos adjustable by the Consumer Price Index or the Lease Contract Index."
The main barrier to long-term contracts in dollars is the reluctance of tenants to assume debts in a foreign currency, susceptible to large fluctuations in relation to the Argentine peso.
García Malbrán concluded: “The frequency of updating the rental value is also an obstacle, since in many cases salaries will not increase at the same rate. In contracts in dollars, the main change lies in the absence of updates or increases in said currency. Contractually, there are no major differences in the text of the contract, except in the update chapter and the amount of the deposit, which will also be established in dollars.”
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