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New rules for renting: Everything you need to know when signing a contract - Infobae
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April 8, 2024
After the repeal of the 2020 Rental Law, the agreements were once again governed by the National Civil and Commercial Code. The changes that were implemented after DNU 70
By José Luis Cieri
The contracts used to have a duration of three years with semi-annual adjustments, but since January 2024, quarterly, four-monthly or semi-annual adjustments were introduced (among other options) (Illustrative Image Infobae)
DNU 70 introduced important changes in the way in which housing rental contracts are agreed. Three months after its entry into force, owners and tenants are beginning to familiarize themselves with the tools available to enter into free agreements that allow them to maintain a healthy contractual relationship until the end of the agreement.
After the repeal of the 2020 Rental Law, contracts were once again governed by the legislation of the National Civil and Commercial Code. Few elements of the previous regulations were preserved.
Previously, the contracts used to have a duration of three years with semiannual adjustments, but since January 2024, quarterly, quarterly or semiannual adjustments (among other options) were introduced, which must be agreed upon by the parties in the document to be signed.
Minimum term
Enrique Abatti (h.) , lawyer specialized in real estate law and director of the Chamber of Owners of the Argentine Republic, told Infobae that the elimination of the minimum term of contract duration stands out, which gives flexibility to the parties to agree according to its convenience, relieving pressure in inflationary contexts.“Freedom in determining the rental price and its updating should also be highlighted, as well as the possibility of entering into contracts in foreign currency. This freedom implies a notable change in the dynamics of rental contracts, allowing the parties to better adapt to market conditions,” added Abatti (h.).
Regarding the security deposit, it can now be agreed in foreign currency and for amounts agreed between the parties.
Mariano Esper , a lawyer specialized in real estate and business issues, told this medium that “now the parties have the freedom to agree on the duration of the contract according to their convenience, without limitations regarding the destination of use or location of the property, except in the case of rural contracts
The possibility of stipulating the price in the currency they consider appropriate, whether national or foreign legal tender, was established (Getty Images)
In addition, the possibility of stipulating the price in the currency they consider appropriate was established, whether national or foreign legal tender, applicable to any destination of the property.
“Regarding the price adjustment, both the owner and the tenant can agree on the rate and frequency of the price update, providing greater flexibility in the contractual conditions,” Esper explained.
Types of guarantees enabled
Regarding guarantees, the contracting parties are free to agree to any type of guarantee to ensure compliance with contractual obligations.These guarantees can be personal, backed by a property, a salary receipt or income billing, provided by companies dedicated to granting guarantees, banking entities or through surety insurance.
Esper added: “In addition, the possibility of setting more than one guarantee per contract is allowed, regardless of the purpose of the property. In relation to the deposit, the freedom of the contracting parties is also guaranteed, and it may be agreed upon in a sum of national or foreign money, updated or not during the contract, attributed to different concepts such as rent, services or expenses, and returned as stipulated by the contracting parties.”
Early termination
Now early termination can be made by the tenant at any time during the contract, and the landlord must pay compensation equivalent to 10% of future rents until the end of the contract.
Now early termination can be carried out by the tenant at any time during the contract, with compensation equivalent to 10% of future rents having to be paid to the landlord (Reuters)
“Previously, you had to wait for the first 6 months to pass to be able to terminate the contract and then pay compensation of 1 and a half months if the termination occurred before the year of the contract, and 1 month if it was after the year of the contract. Furthermore, in housing rentals, if the tenant gave 3 months' notice, he did not pay compensation. The latter can be agreed upon in the contracts,” Abatti (h.) specified.
Reference values
Today in the city of Buenos Aires a two-room apartment ranges between $350,000 and $450,000 per month for those who start an agreement these days. As inflationary inertia continues, costs remain high although there is more supply post DNU, it is estimated that it increased by 250% year-on-year.“If inflation decreases and stabilizes at 7% per month in the coming months, it is likely that the starting point values and updates in rental contracts will be considerably lower than at present. This situation would generate an auspicious scenario for both parties, since lower inflation would provide greater financial stability and would allow price escalation month after month to be avoided, benefiting both landlords and tenants,” observed Rodolfo Martín Barbieri , lawyer and advisor at real estate law of the Argentine Real Estate Chamber.
In addition to adjustments, methods and deadlines, greater freedom has been observed in the drafting of contracts, allowing personalization and adaptation to the specific needs of each situation.
Barbieri advised: “It is now possible to freely set the term of the contract, the currency and the adjustment mode, as well as authorize the tenant to be responsible for taxes such as real estate tax. It is essential to use this freedom responsibly and express all relevant clauses in the wording of the contract.”
The possibility of early termination by the tenant at any time during the contract is highlighted, with an established compensation of 10% of future rents until the end of the contract (Getty Images)
In recent days, when celebrating new contracts, specialists have noticed greater foresight on the part of landlords and tenants. Both parties have predetermined concepts about the contract term, currency and adjustment index, as well as responsibilities and penalties.
It is highlighted that it is essential to pay special attention to the clauses related to notice periods, responsibilities for damages and maintenance of the property, to avoid future problems during the term of the contract.
Regarding the predominant agreements, most contracts are concluded in pesos, with a duration of two years and quarterly adjustments by the Consumer Price Index (CPI). In the interior, updates by the Lease Contract Index prevail and in CABA there are neighborhoods such as Palermo or Puerto Madero where the agreements were dollarized for agreements with a maximum term of two years.
“There is flexibility to adjust the price or change the index during the term of the contract, as long as both parties agree. In this sense, it is advisable to establish clauses that allow price negotiation or adjustment formulas for unexpired periods, with the possibility of using a real estate broker to determine the current market value,” said Rodolfo Barbieri.
"It is advisable to establish clauses that allow price negotiation or adjustment formulas for unexpired periods," said Rodolfo Barbieri (Europa Press)
“However, the initial value of rentals is influenced by two main variables: inflation and, even more decisively, supply and demand in the market. Since 2020, rentals have experienced a sharp increase in value due to the shortage of real estate. “This lack of supply, exacerbated by legislation in force since mid-2020 (Law 27,551 and its predecessor, Law 27,737), led many owners to withdraw their properties from the rental market, resulting in a considerable increase in prices,” said Enrique Abatti (h.).
Clauses that must be clear
Mariano Esper emphasized that “in housing rental contracts, it is crucial to establish clauses that address several important aspects for both parties,” such as:- Distribution of expenses : It must be specified how the expenses of the property are distributed, including services, taxes, fees and expenses, determining which contracting party is responsible for paying each item.
- Responsibility for damages and repairs : It must be clearly defined who assumes responsibility for broken objects and who must be responsible for repairing any damage that occurs in the property, whether due to humidity, leaks, abrasions or other minor damage.
- Fire insurance : It must be stipulated whether it is necessary to contract coverage, the minimum insurable amount, the insurance company and the mechanisms to verify its validity throughout the contract.
- Other aspects : Clauses on the possibility of having pets must be included; the early termination regime for both the tenant and the owner; the delivery conditions of the rented property at the end of the contract and the fines for non-compliance, among others.
The case of the offices
For office contracts there is no term, although they are usually for 36 months. Most of the contracts are for this term, although recently the corporate real estate market confirmed that they sealed some for 60 months.
In coveted areas such as Palermo and Núñez, in the northern corridor of CABA, rental values vary by building categories A and AAA whose prices range between USD 22 and 26 per m2
Mariana Stange , CEO of Mariana Stange Real Estate, told Infobae that "regarding the currency, they are being signed indistinctly, in dollars (official quote, Banco Nación dollar) or in pesos with quarterly adjustment by CPI."
Regarding termination, although there are tenant companies that can terminate the contract after the sixth month due to usage and customs (although since the DNU came into force this clause is similar to the housing contracts that have been made since last January).
“If this resolution were made between the 6th and 12th month, the fine to pay is 1 and a half months of the current contract. If it were exercised after that period, the fine drops to only one month,” Stange concluded.
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