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One year after the end of the Rental Law: the 7 key changes for tenants and the challenges that remain - Infobae
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www.infobae.com
December 28, 2024
Twelve months after Decree 70/2023, how the dynamics for renting have changed. The increase in supply compared to the previous year, the neighborhoods in Buenos Aires where there were no properties in pesos before and what are the factors that today define the agreements between owners and tenants
By Jose Luis Cieri
A couple walks through an apartment before renting it, thanks to the DNU the offer expanded to record levels in a short time, in contrast to what happened in 2023 when the few existing ones were rented without a face-to-face visit in the midst of the market crisis (Illustrative Image Infobae)
Tomorrow, Sunday, marks one year since the repeal of the Rental Law in Argentina. Days earlier, the newly sworn-in President of the Nation, Javier Milei , had announced on national television the measure, formalized through DNU 70/2023 , with the aim of “making the real estate market work again without problems and that renting is not an odyssey,” according to the president.
At that time, the situation was complex. In the City of Buenos Aires, neighborhoods such as Mataderos and Parque Patricios showed a low availability of two- and three-room apartments in pesos. The few that were offered started at very high initial prices for new contracts. Owners, unhappy with the current law, chose to withdraw their properties from the market or, in the best of cases, accepted an extension only if the tenant had correctly complied with the payments and maintained a good contractual relationship.
The main objection was directed at the mandatory three-year contracts and year-on-year adjustments through the Rental Contract Index (ICL), which were out of step with uncontrolled inflation, very different from the current situation, where inflation began to slow down significantly five months ago.
Below are the 7 keys to a market that was transformed after the implementation of DNU 70/2023, with an offer that, in the city of Buenos Aires alone, grew by up to 200%, according to various consulting firms and specialized platforms. These are the changes generated and how the repeal of the Rental Law favored free and direct agreements between owners and tenants that are now usually agreed upon for two years and based on the Civil and Commercial Code of the Nation.
Marta Liotto , former president of the Colegio Inmobiliario Porteño, highlighted that there was a 180-degree turn from the previous rigidity: “Owners and tenants agree and decide the conditions of the contract, adapting them to their own circumstances. There is no longer tension. Real estate agencies have between four and six properties on average to offer, although they still need to add more large units, with more than 4 rooms, which are still scarce.”
The sector agrees that the repeal of the law was key to injecting immediate dynamism into the market.
“The increase in supply generated a greater variety of options and enabled more flexible negotiation spaces. An important fact is that, although it is not prohibited to sign in dollars, 90% of the contracts are agreed in pesos, which favors the tenants,” said Iván Ginevra , president of the Argentine Real Estate Chamber (CIA).
Currently, it is estimated that there are 16,000 properties for rent in CABA, of which 70% are in pesos and the rest in dollars.
Today, most deals are made in pesos, while dollars prevail in private neighborhoods and in premium neighborhoods such as Puerto Madero, Recoleta, Belgrano or Palermo (Illustrative Image Infobae)
Enrique Abatti , a lawyer specializing in real estate law and president of the Argentine Chamber of Property Owners (CAPRA), highlighted that the rental offer has tripled in the last year: “This not only stabilized prices, but also eliminated waiting lists at real estate agencies. There are even real price reductions of up to 20%, depending on the location of the apartments.”
This allowed tenants to access more affordable contracts, especially in recent months, in a context where inflation reduced the pace of housing price increases compared to the first half of the year. Recent adjustments to the ICL or Consumer Price Index (CPI) are between 7% and 11% for quarterly or four-monthly agreements, which are the most frequent in new contracts after the DNU.
Abatti explained that, by prioritizing the principle of contractual freedom, dynamics that were previously impossible due to excessive regulations arose: price negotiation, personalized adjustments and choice of currency (pesos or dollars). “This contributed to strengthening both the offer and the possibilities of the tenants.”
Ginevra agreed: “Today’s market allows parties to determine deadlines, prices and adjustments without restrictions. This creates a fairer balance by reflecting individual needs in each contract.”
From a personal perspective, Germán Matienzo , a member of Propietarios Unidos de Argentina, said that he himself put his properties up for rent again thanks to this flexibility: “A perfect combination of free negotiation was created, eliminating the State as an unnecessary intermediary,” he said.
It is advisable that owners and tenants put everything in writing to avoid problems while the rental agreement lasts (Illustrative Image Infobae)
Abatti stressed that the return of properties initially intended for sale has been directed once again to rental: “The current legal security encourages the development of new housing, a fundamental basis for improving housing access in the long term.”
In Buenos Aires and several cities in Greater Buenos Aires, 4- and 5-room apartments are scarce because they have not been built in the last 15 years. Developers have prioritized 1- to 3-room units, considering them more profitable.
Enrique Abatti (h) , a specialized lawyer and director of Capra, stressed that this will facilitate investments in trusts and increase supply: “The activation of mortgages through the recent decree will allow for significant development of the housing market, something key in a country with a deficit of two million homes.”
According to Varela Guijarro, “legal security and economic stability are key to attracting national and international investments that guarantee housing accessibility.”
Although inflation began to fall sharply five months ago, the costs resulting from the economic situation remain high. Facing taxes and rents represents a major challenge for those who must support a household (Illustrative image Infobae)
Furthermore, on controversial issues such as express evictions, Ginevra argued that these would be beneficial for the most vulnerable sectors: “Fewer requirements to enter a rental facilitate access to those who are currently discriminated against due to their lower credit capacity.”
Legal security remains a relative issue in Argentina. In the face of a change of government, uncertainty persists over the possible reinstatement of restrictions on private agreements.
Although economic improvements benefit both owners and tenants, who benefit from greater price competition resulting from a broader supply, there are still challenges to overcome.
Matienzo pointed out that guaranteeing legal security is key to making progress in this area. “It would be essential to implement State policies that ensure the government does not interfere in agreements between private parties, even in the event of changes in administration,” he stressed.
However, prices remain high. A one-bedroom apartment in CABA costs no less than $350,000 per month, plus expenses, which have increased by more than 150% in the last year and are no less than $50,000 per month, represent challenging figures for tenants' pockets.
Reducing inflation to levels similar to those of developed countries is key to attracting foreign investment. This must be complemented by zero monetary emission, elimination of the exchange rate restriction and a reduction in public spending and tax rates, simplifying an excessive tax system.
Varela Guijarro concluded that ensuring the continuity of successful rental and real estate investment policies is essential: “Legislative stability will allow for the consolidation of legal security and facilitate access to decent housing, and will also balance the rental market.”
www.buysellba.com
Source:
A un año del fin de la Ley de Alquileres: los 7 cambios clave para los inquilinos y los desafíos pendientes
A doce meses del DNU 70/2023, cómo cambió la dinámica para alquilar. El aumento de la oferta en comparación interanual, los barrios porteños donde antes no había propiedades en pesos y cuáles son los factores que hoy definen los acuerdos entre propietarios e inquilinos
www.infobae.com
December 28, 2024
Twelve months after Decree 70/2023, how the dynamics for renting have changed. The increase in supply compared to the previous year, the neighborhoods in Buenos Aires where there were no properties in pesos before and what are the factors that today define the agreements between owners and tenants
By Jose Luis Cieri
A couple walks through an apartment before renting it, thanks to the DNU the offer expanded to record levels in a short time, in contrast to what happened in 2023 when the few existing ones were rented without a face-to-face visit in the midst of the market crisis (Illustrative Image Infobae)
Tomorrow, Sunday, marks one year since the repeal of the Rental Law in Argentina. Days earlier, the newly sworn-in President of the Nation, Javier Milei , had announced on national television the measure, formalized through DNU 70/2023 , with the aim of “making the real estate market work again without problems and that renting is not an odyssey,” according to the president.
At that time, the situation was complex. In the City of Buenos Aires, neighborhoods such as Mataderos and Parque Patricios showed a low availability of two- and three-room apartments in pesos. The few that were offered started at very high initial prices for new contracts. Owners, unhappy with the current law, chose to withdraw their properties from the market or, in the best of cases, accepted an extension only if the tenant had correctly complied with the payments and maintained a good contractual relationship.
The main objection was directed at the mandatory three-year contracts and year-on-year adjustments through the Rental Contract Index (ICL), which were out of step with uncontrolled inflation, very different from the current situation, where inflation began to slow down significantly five months ago.
Below are the 7 keys to a market that was transformed after the implementation of DNU 70/2023, with an offer that, in the city of Buenos Aires alone, grew by up to 200%, according to various consulting firms and specialized platforms. These are the changes generated and how the repeal of the Rental Law favored free and direct agreements between owners and tenants that are now usually agreed upon for two years and based on the Civil and Commercial Code of the Nation.
1 - Increase in supply and dynamism
Since the repeal of the Rental Law, the market has experienced a record increase in the supply of rental properties.Marta Liotto , former president of the Colegio Inmobiliario Porteño, highlighted that there was a 180-degree turn from the previous rigidity: “Owners and tenants agree and decide the conditions of the contract, adapting them to their own circumstances. There is no longer tension. Real estate agencies have between four and six properties on average to offer, although they still need to add more large units, with more than 4 rooms, which are still scarce.”
The sector agrees that the repeal of the law was key to injecting immediate dynamism into the market.
“The increase in supply generated a greater variety of options and enabled more flexible negotiation spaces. An important fact is that, although it is not prohibited to sign in dollars, 90% of the contracts are agreed in pesos, which favors the tenants,” said Iván Ginevra , president of the Argentine Real Estate Chamber (CIA).
Currently, it is estimated that there are 16,000 properties for rent in CABA, of which 70% are in pesos and the rest in dollars.
Today, most deals are made in pesos, while dollars prevail in private neighborhoods and in premium neighborhoods such as Puerto Madero, Recoleta, Belgrano or Palermo (Illustrative Image Infobae)
Enrique Abatti , a lawyer specializing in real estate law and president of the Argentine Chamber of Property Owners (CAPRA), highlighted that the rental offer has tripled in the last year: “This not only stabilized prices, but also eliminated waiting lists at real estate agencies. There are even real price reductions of up to 20%, depending on the location of the apartments.”
2 - Reduction in prices
Rental prices showed a decline in real terms. Liotto noted that “prices fell by an average of 36% compared to inflation.”This allowed tenants to access more affordable contracts, especially in recent months, in a context where inflation reduced the pace of housing price increases compared to the first half of the year. Recent adjustments to the ICL or Consumer Price Index (CPI) are between 7% and 11% for quarterly or four-monthly agreements, which are the most frequent in new contracts after the DNU.
Abatti explained that, by prioritizing the principle of contractual freedom, dynamics that were previously impossible due to excessive regulations arose: price negotiation, personalized adjustments and choice of currency (pesos or dollars). “This contributed to strengthening both the offer and the possibilities of the tenants.”
3 - Freedom of contract
The elimination of the regulation promoted contractual freedom between the parties. Each contract responds to specific needs: “The owners and tenants agree on adjustments according to the economic characteristics of each one,” said Liotto.Ginevra agreed: “Today’s market allows parties to determine deadlines, prices and adjustments without restrictions. This creates a fairer balance by reflecting individual needs in each contract.”
From a personal perspective, Germán Matienzo , a member of Propietarios Unidos de Argentina, said that he himself put his properties up for rent again thanks to this flexibility: “A perfect combination of free negotiation was created, eliminating the State as an unnecessary intermediary,” he said.
4 - Better conditions for the parties
The greater economic predictability of the past year has benefited both owners and tenants. According to Ginevra, “with greater stability in the dollar, a drop in inflation and fairer prices, confidence in the system has been restored on both sides.”
It is advisable that owners and tenants put everything in writing to avoid problems while the rental agreement lasts (Illustrative Image Infobae)
Abatti stressed that the return of properties initially intended for sale has been directed once again to rental: “The current legal security encourages the development of new housing, a fundamental basis for improving housing access in the long term.”
5 - Challenges in diversifying the offer
Although supply has increased considerably, problems persist in certain segments. Liotto mentioned the shortage of four-room units: “There are still not enough homes in that range, although there is a possibility that the situation will improve if new developments are encouraged.”In Buenos Aires and several cities in Greater Buenos Aires, 4- and 5-room apartments are scarce because they have not been built in the last 15 years. Developers have prioritized 1- to 3-room units, considering them more profitable.
6 - Promotion of development and money laundering
Decree 1017/2024 (which will allow the purchase of houses in a pit) and incentives for money laundering are seen as catalysts for housing projects in the near future.Enrique Abatti (h) , a specialized lawyer and director of Capra, stressed that this will facilitate investments in trusts and increase supply: “The activation of mortgages through the recent decree will allow for significant development of the housing market, something key in a country with a deficit of two million homes.”
7 - What is missing to balance the market?
Among the measures necessary to strengthen the system, Abatti (h) and Bibiana Varela Guijarro , director of Capra and real estate agent, agreed on the importance of reducing the tax burden, guaranteeing inflationary stability and continuing the deregulation policy.According to Varela Guijarro, “legal security and economic stability are key to attracting national and international investments that guarantee housing accessibility.”
Although inflation began to fall sharply five months ago, the costs resulting from the economic situation remain high. Facing taxes and rents represents a major challenge for those who must support a household (Illustrative image Infobae)
Furthermore, on controversial issues such as express evictions, Ginevra argued that these would be beneficial for the most vulnerable sectors: “Fewer requirements to enter a rental facilitate access to those who are currently discriminated against due to their lower credit capacity.”
Legal security remains a relative issue in Argentina. In the face of a change of government, uncertainty persists over the possible reinstatement of restrictions on private agreements.
Although economic improvements benefit both owners and tenants, who benefit from greater price competition resulting from a broader supply, there are still challenges to overcome.
Matienzo pointed out that guaranteeing legal security is key to making progress in this area. “It would be essential to implement State policies that ensure the government does not interfere in agreements between private parties, even in the event of changes in administration,” he stressed.
Greater opportunities
The rental market has regained flexibility and dynamism one year after the repeal of the Rental Law, according to reports from the real estate market.However, prices remain high. A one-bedroom apartment in CABA costs no less than $350,000 per month, plus expenses, which have increased by more than 150% in the last year and are no less than $50,000 per month, represent challenging figures for tenants' pockets.
Reducing inflation to levels similar to those of developed countries is key to attracting foreign investment. This must be complemented by zero monetary emission, elimination of the exchange rate restriction and a reduction in public spending and tax rates, simplifying an excessive tax system.
Varela Guijarro concluded that ensuring the continuity of successful rental and real estate investment policies is essential: “Legislative stability will allow for the consolidation of legal security and facilitate access to decent housing, and will also balance the rental market.”
www.buysellba.com
