Peso long-term rental prices set to drastically increase with inflation index!

[Handy Andy]

My friend was very happy with a long-term lease she had with a property owner for several years that she got locked into during Covid. She had a great deal where her rental contract was in pesos and was for 3 years and only could get adjusted once a year. With Milei's new law, it got more favorable for the owner and there was an inflation adjustment in it. She just found out that next week in August, her peso rent is going to skyrocket upwards.

She tried to lock the lease in with dollars as she would have rather just known what she will pay but she was surprised the owner wanted to do it in pesos. Will the jump up be that significant?

 

[Vince]

I always recommend to lock it in with US dollars each time. Usually the owners also prefer to lock in with dollars but last year was kind of strange where people didn't know how the blue dollar would be at. You can see it jumped around as low as 1,000 pesos all the way up to 1,500 to the $1 US. My friends also have some big jumps coming up.

You can calculate what the difference will be on this online calculator.

Calculadora Alquiler | Instituto de Vivienda de la Ciudad

vivienda.buenosaires.gob.ar

 

[Spend Thrift]

I signed a two-year lease last year with a property I originally found on Airbnb. It is working out perfectly so far. The monthly HOA bill has significantly gone up but fortunately, I negotiated for her to pay that each month. She pays for everything except my gas and electricity bills which are very reasonable. I locked the price in dollars. There was some talk about the peso option with inflation adjustment but we both decided dollars were easier.

We do have an inflation adjustment for the 2nd year. I have to pay 15% more for Year 2. I had to pay one year in advance which I thought would be more of a hassle but worked out well. For the 2nd year I have to pay that ahead of time also about 3 months before the lease renews. She has been great. Neither of us hassle one another. She had some old TV's and I bought new bigger TV's and she was kind enough to remove the old ones and store them for me. I bought a new desk that is more comfortable. But problems at all and perfect for me.

 

[Betsy Ross]

I always recommend to lock it in with US dollars each time. Usually the owners also prefer to lock in with dollars but last year was kind of strange where people didn't know how the blue dollar would be at. You can see it jumped around as low as 1,000 pesos all the way up to 1,500 to the $1 US. My friends also have some big jumps coming up.

You can calculate what the difference will be on this online calculator.

Calculadora Alquiler | Instituto de Vivienda de la Ciudad

vivienda.buenosaires.gob.ar

Here is a good article about the increased rents for August. They are very steep. Difficult for people who are on peso incomes. I am very thankful that I own my apartment and not stuck renting and worrying about that mess.

Record Rent Hikes in August

July 26, 2024

buysellba.com

 

[Bob]

You would have to be nuts to take on these inflation adjust long term rentals or buy real estate with an inflation adjusted loan where you have no idea what the inflation would be. That sounds like a recipe for disaster not knowing how much it will end up costing you to buy your house. Very old fashioned but the tried and true method of just paying cash has worked well here forever.

 

[Betsy Ross]

You would have to be nuts to take on these inflation adjust long term rentals or buy real estate with an inflation adjusted loan where you have no idea what the inflation would be. That sounds like a recipe for disaster not knowing how much it will end up costing you to buy your house. Very old fashioned but the tried and true method of just paying cash has worked well here forever.

That is probably why the number of people getting mortgages is very low. Many wonder if inflation will really stay low over the long term. Many friends are stuck on the inflation adjusted rents because they had no other option and they are stuck paying higher rates.

 

[Swowbird]

The change in the rental law was a very good thing for increasing the number of long term rentals. Prior to the change in the law, there were almost no long term rentals because of the crazy restrictions in place by the government. The law change drastically opened up volume of listings but allowing the owners to raise their rates more is really hurting. Locals that don't own a place have no choice in these inflation increases.

 

[Tango]

It is VERY frustrating looking for long-term rental apartments here. I would think that people would be happy to have an American in their property paying cash each month but many are asking to pay up front! I read a few posts this is normal but I tried looking to maybe furnish an empty property but furniture stores here don't have many things in stock. Some say it will take a month to deliver furniture.

Another rental we saw we will willing to pay a realtor a commission but she wants 1 month rent. Is that normal? The owner agreed if we paid 6 months in advance. I agreed. Then a day later they say they want 12 months. How can they change terms so quickly after agreeing? Is this normal here? Everyone wants guarantee to rent. This is the most bizarre thing I thing I have encountered.

If we do a long term 2 year contract what is reasonable to expect to pay for increase for year 2? I read your post @Spend Thrift for 15% more in year 2 but some owners want 25% more. How is this calculated? Just decided ahead of time?

 

[Wally]

It is VERY frustrating looking for long-term rental apartments here. I would think that people would be happy to have an American in their property paying cash each month but many are asking to pay up front! I read a few posts this is normal but I tried looking to maybe furnish an empty property but furniture stores here don't have many things in stock. Some say it will take a month to deliver furniture.

Another rental we saw we will willing to pay a realtor a commission but she wants 1 month rent. Is that normal? The owner agreed if we paid 6 months in advance. I agreed. Then a day later they say they want 12 months. How can they change terms so quickly after agreeing? Is this normal here? Everyone wants guarantee to rent. This is the most bizarre thing I thing I have encountered.

If we do a long term 2 year contract what is reasonable to expect to pay for increase for year 2? I read your post @Spend Thrift for 15% more in year 2 but some owners want 25% more. How is this calculated? Just decided ahead of time?

Argentina is one of the more difficult places to rent a long-term rental. @Tango the reason why it is so difficult is our squatting laws here are one-sided and it is difficult to legally evict a tenant once they stop paying. You must go through the legal process and it is not quick or efficient! Because of this, most owners renting out on a long-term contract ask for someone to co-sign for them. That isn't easy because the co-signer must own a property in CABA and if they stop paying the person is on the hook. Not many people want to do this. There are also insurance policies you can buy but expats can't buy these policies.

This is why owners ask to pay up front. If they have to initiate a lawsuit, at least several months will be covered. Some owners might not ask for full payment up front but most do if you don't have a co-signer. 25% more for year 2 is steep if you're paying in dollars. The reason why peso adjustments are with inflation is because in Argentina there is always inflation. Even in dollars there is inflation. HOA bills are getting more expensive each month. No set % increase for year 2. It is negotiated ahead of time. Just make sure you have a contract that has all the details.

Negotiate in for the owner to pay the monthly condo fee. Realtor's do normally charge a commission so try to book direct with an owner. You deal with knit wit owners all the time in Buenos Aires so that is more the norm vs. sensible people. I had to deal with that mess before I purchased my apartment.

 

[Tango]

Argentina is one of the more difficult places to rent a long-term rental. @Tango the reason why it is so difficult is our squatting laws here are one-sided and it is difficult to legally evict a tenant once they stop paying. You must go through the legal process and it is not quick or efficient! Because of this, most owners renting out on a long-term contract ask for someone to co-sign for them. That isn't easy because the co-signer must own a property in CABA and if they stop paying the person is on the hook. Not many people want to do this. There are also insurance policies you can buy but expats can't buy these policies.

This is why owners ask to pay up front. If they have to initiate a lawsuit, at least several months will be covered. Some owners might not ask for full payment up front but most do if you don't have a co-signer. 25% more for year 2 is steep if you're paying in dollars. The reason why peso adjustments are with inflation is because in Argentina there is always inflation. Even in dollars there is inflation. HOA bills are getting more expensive each month. No set % increase for year 2. It is negotiated ahead of time. Just make sure you have a contract that has all the details.

Negotiate in for the owner to pay the monthly condo fee. Realtor's do normally charge a commission so try to book direct with an owner. You deal with knit wit owners all the time in Buenos Aires so that is more the norm vs. sensible people. I had to deal with that mess before I purchased my apartment.

Thank you for all those details! Ok that explains why it is so difficult. Now we understand. That makes more sense now. I will try to find a listing without a realtor but on the search engines all of them seem to be with a realtor.

 

[Betsy Ross]

Thank you for all those details! Ok that explains why it is so difficult. Now we understand. That makes more sense now. I will try to find a listing without a realtor but on the search engines all of them seem to be with a realtor.

Also use the search function on this website and there are a few good posts about long term rentals. You can search for the other threads.

 

[Tango]

Also use the search function on this website and there are a few good posts about long term rentals. You can search for the other threads.

Thank you Betsy! I didn't think to do that. I will check them out. Many thanks.

 

[Uncle Wong]

Here is an article that talks about the record increase in rental prices.

Record Rent Hikes in August

July 26, 2024

buysellba.com