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Rental Law: Answers to 6 Key Questions Landlords and Tenants Ask - La Nación
Source:
www.lanacion.com.ar
August 23, 2023
After more than a year, the two opinions for the possible modification of the rental law were dealt with in Congress, the opposition won and now the Senate still needs to vote
Mercedes Soriano
The session in Congress in which the changes to the law sanctioned in 2020 were debated
In a special session that began after 12:30 p.m. and ended before 4 PM, the Chamber of Congress approved the minority opinion proposed by the opposition to modify the rental law, which has punished the real estate market for three years.
1. What does the proposal that achieved the reforms propose?
The opposition proposal consists of four points, among which are the most controversial of the current norm :
Reduction of the legal term. That the legal minimum term of the contracts is two years, as it was before the rental law enacted in 2020 that increased them to three years.
The periodicity of updating the value of the contracts. That in the case of properties intended for residential use, the rental price is fixed as a single value and for monthly periods, on which adjustments could be made with the periodicity agreed by the parties, for intervals of between four and 12 months.
The adjustment methodology. That the adjustment is freely agreed between the parties -as happens in commercial lease contracts- based on the Consumer Price Index (IPC), the Wholesale Price Index (IPM) and/or the Wage Index (IS) prepared by the National Institute of Statistics and Censuses (Indec) or a combination of said indices.
Fiscal benefits. Exempt from the payment of the Personal Assets Tax to the owners who declare the rental contracts before the Federal Administration of Public Revenues of the Nation (AFIP). It also proposes reforming the single tax so that this type of taxpayer with more than three operating units does not become taxed in the general regime.
Federico González Rouco, an economist specializing in housing issues, recognized the half sanction as great news and summarized the changes in "two years and freedom for increases." The specialist celebrated that with the half sanction it is approved to allow the staggering.
In other words, fix the increases from the beginning, as it was until 2020. But, in addition, indexing remains enabled, although not only by ICL, but by other indices, the universe of temporary rental destinations is expanded and the obligation to register with AFIP is maintained (it already existed before 2020), but the wording is improved. And among the tax changes, he highlighted that it orders how to pay tax when the owner has three or less homes and the owners are exempted from Personal Assets, in some cases, and from debits and credits.
The project that achieved the reform was voted after the opinion of the majority, supported by the ruling party, which was ruled out with 131 negative votes and 109 affirmative votes . He defended the terms of the law sanctioned in 2020, whose most controversial points are the three-year contracts and the annual update according to the index prepared by the Central Bank.
In turn, the approved opinion proposes the generation of tax incentives for owners. "We have the obligation to defend the weakest, which is the tenant," said the president of the ruling block, Germán Martínez in the special session, to argue the negative vote of his party.
After so much waiting, the progress of the issue in Congress excites the chambers of the sector. “Now that the lower house has approved the modifications, we request that the Senate deal with it and urgently convert it into law. In particular, we urge the senators of the ruling party to participate in the debate, with the aim of providing a definitive solution to the current housing crisis, ending the suffering that tenants and owners experience today," said Marta Liotto, president of the Unique College of Real Estate Brokers of the City of Buenos Aires.
The real estate benchmark assured that the changes approved to the current standard, referring to the term of the contracts and the way of updating the values, are aligned with what the institution and the rest of the real estate sector entities have publicly raised and the legislators of all forces as the necessary provisions to solve the terrible reality that brought to the sector.
“The half sanction was achieved with the agreement of Together for Change and the two federal interblocks. In return, those who voted against were the Frente de Todos, La Libertad Avanza (by Javier Milei), who did not accompany the rest of the opposition because they were going for the complete repeal of the law, and the left , ”said Lorena Zapata, Director of the Public Sphere Agency. and she highlighted as encouraging data that libertarians raised their position instead of abstaining or absenting.
2. What is the next step?
Today's session added one more figure to the album of discussions generated by the law. Last year, for example, the conditions of the standard were discussed in more than 14 meetings of special commissions that brought together a hundred specialists from different areas of the real estate sector, between April and May. The result was the two opinions voted -finally- today in the venue and now the eyes are on the Upper House.
"This is nothing more than half a sanction, the Senate is more complicated because the ruling party has the majority," observed Enrique Abatti, president of the Argentine Chamber of Owners. Likewise, he made an optimistic reading about today's results: "it was a great triumph of rationality."
Along the same lines, Germán Gómez Picasso, co-founder of Real Estate Report, maintained that “the half sanction is a positive step but nothing ensures that the modification will be approved later in the Senate. Unfortunately, the ruling party today opposed the repeal of the current law, a fact that would have caused false expectations not to be generated with what may or may not happen in the Senate.
Regarding the possibilities of the issue advancing in Senators in the halls of Congress, they affirmed that it was "very unlikely" , mainly because there are no channels of dialogue between the ruling party and the opposition to advance even with agreed issues.
Another key point that casts doubt on today's progress is the inactivity that has characterized the Upper House in recent times. “It is difficult for it to be discussed in the Senate because it has not been in session for months because it does not achieve a quorum. The opposition's strategy there is different from that of the Deputies: in the Upper House if there are projects that have an agreement or the bloc manages to gather the number, it meets, but not in the Senate; The opposition's strategy is not to meet and block the issue until the end of the year, for which it will never give the necessary number , ”said Zapata.
The only shortcut, although unusual, is for the ruling party to put the project under treatment, but since it does not agree with changing the law and the media blocks tend to associate with the ruling party, it is unfeasible. “ The only window of opportunity that I see for it to be discussed in the Senate is that Together for Change change its strategy in that chamber and make an agreement with those of Federal Unity, which is the middle bloc, and there they promote it as time in a package of projects that have to do with housing issues ”, analyzed Zapata.
In terms of deadlines, he maintained that "if it does not manage to be dealt with in the remainder of this year, the new composition of the post-election Senate would have to deal with it and they have the option of modifying or approving the half sanction that they were sent." However, he stressed that the project "did not come out with full consensus because many of those who voted positively were more in favor of the repeal than of the modification , so I think that the new composition is going to have to analyze everything again." and see what new agreements are reached”.
In short, Zapata defined that we must wait for the social repercussion that the issue has "on tenants and owners, if a new agenda is set with the electoral results or something happens that changes the current scenario, it could suddenly be treated."
3. How long would it take to implement?
If the opinion is approved in the Senate, the project will be sanctioned and published in the Official Gazette. "If the market confirms this, in four or five months the market will be recomposed, no more than that because people want contractual freedom," said Abatti.
Gómez Picasso affirmed that it will be after the elections, they affirm. “We will have to wait and we don't know how long. The truth is that today we are the same as yesterday, ”he warned.
4. What will happen to existing contracts?
"The law does not apply retroactively, unless expressly provided," said Abatti, explaining that like the current rental law, it would apply to contracts that are signed as of the possible new law, so "the contracts in progress will remain in force”, he indicates.
The same thing happened when the current rental law was enacted in 2020. The contracts that were still active with the previous conditions maintained their terms until their expiration and even maintain them to this day through extensions . “Mostly extensions are being made to the contracts for six months. This is the most advisable in this inflationary context because when a contract is extended, a new price can be set according to the market and a free agreement between the parties, not based on the increase in the Leasing Contracts Index (ICL) of the Central Bank . that it is out of date with inflation”, indicated Enrique Abatti
Javier Milei made a fleeting passage through Congress and when the possibility of repealing the law was ruled out, he withdrew
5. How does the novelty affect the market?
The objective of the special session that took place today in the Chamber of Deputies was to revive a bankrupt and damaged market for both owners and tenants. The sanction of the norm in 2020 caused the massive withdrawal of rental properties, the exorbitant rise in prices and the reign of temporary rentals. The devaluation effect of the PASO also shot up the value of rentals by 25% in a matter of days and strengthened the tendency to zero supply. “The drop in rental housing in the CABA began in 2021, after implementing rental law 27,551 and deepened this year, with the increase in inflation and the exchange rate gap. According to data from the Argenprop platform, in July there were less than 600 rental properties, when the average for the last seven years was 2,400," the Argentina en Datos account published on Twitter.
From the Chamber of Real Estate Services Companies (CAMESI), for its part, it was requested through a statement that the members of the Honorable Senate of the Argentine Nation carry out an urgent treatment and approval of the reforms established. In numbers, they detailed that more than five million Argentine citizens need a housing solutionAnd this legislative change, although it will not provide an immediate recomposition in the supply of permanent rental properties, could generate interest from the owners so that they can once again enter the permanent residential rental market. "It is necessary that legislators become aware of the social drama that many families are going through throughout the country and that they act immediately based on the representation that the people have granted them," said Mariano García Malbrán, president of the Chamber of Companies of Real Estate Services (CAMESI).
While some are cautious, the new scenario raises the expectations of specialists in the sector. “I think that from now on, with this positive signal, the market will like it very much (the half penalty), especially the owners. This should start to take a different path”, commented Alejandro Bennazar, president of the Argentine Real Estate Chamber (CIA).
However, there are those who take a more measured reading and recognize that when there is news, the market puts a handbrake. “Everything that is done to make rental contracts more flexible and allow adjustments that accompany inflation will be good news, but the problem is that this must be approved in the Senate and there it is more difficult to reach an agreement. The problem is the transition... who is going to want to sign a three-year contract now? This somehow paralyzes the market even more , ”said Soledad Balayan, owner of Maure Inmobiliaria.
6. Are there any advantages for not repealing?
At the beginning of the session, the repeal was a card that was put on the table . The idea promoted by members of Juntos por el Cambio and the La Libertad Avanza bloc appeared among the 12 files listed at the beginning of the session that were projects presented outside of the two opinions. However, at the time of voting, the 124 positive votes compared to the 110 negative votes did not reach the two-thirds necessary to include the files in the session and the option of a repeal was ruled out.
Some specialists rescue a positive aspect of not repealing the law . Abatti, affirmed that: “ the total repeal of the law is nonsense because it has very good issues such as, for example, the elimination of the legal prohibition of indexing from the convertibility law; that is to say that the indices could no longer be used. That is an anachronism, legal and economic nonsense, because how can they prohibit you from reflecting the inflationary phenomenon in a contract? I do not agree with repealing but with changing the conflicting points that broke the current market and the links between owners and tenants”, questioned the lawyer.
Daniel Bryn, creator of the real estate monitor Invertire, agrees with him. “ The rental law has very positive things, such as the definition of who has to pay extraordinary expenses, who is responsible for the arrangements, the fact that electronic communications can be considered valid, how a contract has to be renewed and in How long before you have to start the talk about the negotiation. What did not seem right to me because it generated many impediments for owners to rent in pesos was that in a scenario of 120% inflation, that the term of the contracts was three years and that the adjustment was annual, aspects that they would be resolved with this modification”, he analyzed.
Mercedes Soriano
www.buysellba.com
Source:
Ley de alquileres: las respuestas a seis preguntas clave que se hacen propietarios e inquilinos sobre los cambios aprobados
Luego de más de un año, los dos dictámenes por la posible modificación de la ley de alquileres fueron tratados en Diputados, el de la oposición logró media sanción y ahora falta que se expida el Senado
www.lanacion.com.ar
August 23, 2023
After more than a year, the two opinions for the possible modification of the rental law were dealt with in Congress, the opposition won and now the Senate still needs to vote
Mercedes Soriano
The session in Congress in which the changes to the law sanctioned in 2020 were debated
In a special session that began after 12:30 p.m. and ended before 4 PM, the Chamber of Congress approved the minority opinion proposed by the opposition to modify the rental law, which has punished the real estate market for three years.
1. What does the proposal that achieved the reforms propose?
The opposition proposal consists of four points, among which are the most controversial of the current norm :
Reduction of the legal term. That the legal minimum term of the contracts is two years, as it was before the rental law enacted in 2020 that increased them to three years.
The periodicity of updating the value of the contracts. That in the case of properties intended for residential use, the rental price is fixed as a single value and for monthly periods, on which adjustments could be made with the periodicity agreed by the parties, for intervals of between four and 12 months.
The adjustment methodology. That the adjustment is freely agreed between the parties -as happens in commercial lease contracts- based on the Consumer Price Index (IPC), the Wholesale Price Index (IPM) and/or the Wage Index (IS) prepared by the National Institute of Statistics and Censuses (Indec) or a combination of said indices.
Fiscal benefits. Exempt from the payment of the Personal Assets Tax to the owners who declare the rental contracts before the Federal Administration of Public Revenues of the Nation (AFIP). It also proposes reforming the single tax so that this type of taxpayer with more than three operating units does not become taxed in the general regime.
Federico González Rouco, an economist specializing in housing issues, recognized the half sanction as great news and summarized the changes in "two years and freedom for increases." The specialist celebrated that with the half sanction it is approved to allow the staggering.
In other words, fix the increases from the beginning, as it was until 2020. But, in addition, indexing remains enabled, although not only by ICL, but by other indices, the universe of temporary rental destinations is expanded and the obligation to register with AFIP is maintained (it already existed before 2020), but the wording is improved. And among the tax changes, he highlighted that it orders how to pay tax when the owner has three or less homes and the owners are exempted from Personal Assets, in some cases, and from debits and credits.
The project that achieved the reform was voted after the opinion of the majority, supported by the ruling party, which was ruled out with 131 negative votes and 109 affirmative votes . He defended the terms of the law sanctioned in 2020, whose most controversial points are the three-year contracts and the annual update according to the index prepared by the Central Bank.
In turn, the approved opinion proposes the generation of tax incentives for owners. "We have the obligation to defend the weakest, which is the tenant," said the president of the ruling block, Germán Martínez in the special session, to argue the negative vote of his party.
After so much waiting, the progress of the issue in Congress excites the chambers of the sector. “Now that the lower house has approved the modifications, we request that the Senate deal with it and urgently convert it into law. In particular, we urge the senators of the ruling party to participate in the debate, with the aim of providing a definitive solution to the current housing crisis, ending the suffering that tenants and owners experience today," said Marta Liotto, president of the Unique College of Real Estate Brokers of the City of Buenos Aires.
The real estate benchmark assured that the changes approved to the current standard, referring to the term of the contracts and the way of updating the values, are aligned with what the institution and the rest of the real estate sector entities have publicly raised and the legislators of all forces as the necessary provisions to solve the terrible reality that brought to the sector.
“The half sanction was achieved with the agreement of Together for Change and the two federal interblocks. In return, those who voted against were the Frente de Todos, La Libertad Avanza (by Javier Milei), who did not accompany the rest of the opposition because they were going for the complete repeal of the law, and the left , ”said Lorena Zapata, Director of the Public Sphere Agency. and she highlighted as encouraging data that libertarians raised their position instead of abstaining or absenting.
2. What is the next step?
Today's session added one more figure to the album of discussions generated by the law. Last year, for example, the conditions of the standard were discussed in more than 14 meetings of special commissions that brought together a hundred specialists from different areas of the real estate sector, between April and May. The result was the two opinions voted -finally- today in the venue and now the eyes are on the Upper House.
"This is nothing more than half a sanction, the Senate is more complicated because the ruling party has the majority," observed Enrique Abatti, president of the Argentine Chamber of Owners. Likewise, he made an optimistic reading about today's results: "it was a great triumph of rationality."
Along the same lines, Germán Gómez Picasso, co-founder of Real Estate Report, maintained that “the half sanction is a positive step but nothing ensures that the modification will be approved later in the Senate. Unfortunately, the ruling party today opposed the repeal of the current law, a fact that would have caused false expectations not to be generated with what may or may not happen in the Senate.
Regarding the possibilities of the issue advancing in Senators in the halls of Congress, they affirmed that it was "very unlikely" , mainly because there are no channels of dialogue between the ruling party and the opposition to advance even with agreed issues.
Another key point that casts doubt on today's progress is the inactivity that has characterized the Upper House in recent times. “It is difficult for it to be discussed in the Senate because it has not been in session for months because it does not achieve a quorum. The opposition's strategy there is different from that of the Deputies: in the Upper House if there are projects that have an agreement or the bloc manages to gather the number, it meets, but not in the Senate; The opposition's strategy is not to meet and block the issue until the end of the year, for which it will never give the necessary number , ”said Zapata.
The only shortcut, although unusual, is for the ruling party to put the project under treatment, but since it does not agree with changing the law and the media blocks tend to associate with the ruling party, it is unfeasible. “ The only window of opportunity that I see for it to be discussed in the Senate is that Together for Change change its strategy in that chamber and make an agreement with those of Federal Unity, which is the middle bloc, and there they promote it as time in a package of projects that have to do with housing issues ”, analyzed Zapata.
In terms of deadlines, he maintained that "if it does not manage to be dealt with in the remainder of this year, the new composition of the post-election Senate would have to deal with it and they have the option of modifying or approving the half sanction that they were sent." However, he stressed that the project "did not come out with full consensus because many of those who voted positively were more in favor of the repeal than of the modification , so I think that the new composition is going to have to analyze everything again." and see what new agreements are reached”.
In short, Zapata defined that we must wait for the social repercussion that the issue has "on tenants and owners, if a new agenda is set with the electoral results or something happens that changes the current scenario, it could suddenly be treated."
3. How long would it take to implement?
If the opinion is approved in the Senate, the project will be sanctioned and published in the Official Gazette. "If the market confirms this, in four or five months the market will be recomposed, no more than that because people want contractual freedom," said Abatti.
Gómez Picasso affirmed that it will be after the elections, they affirm. “We will have to wait and we don't know how long. The truth is that today we are the same as yesterday, ”he warned.
4. What will happen to existing contracts?
"The law does not apply retroactively, unless expressly provided," said Abatti, explaining that like the current rental law, it would apply to contracts that are signed as of the possible new law, so "the contracts in progress will remain in force”, he indicates.
The same thing happened when the current rental law was enacted in 2020. The contracts that were still active with the previous conditions maintained their terms until their expiration and even maintain them to this day through extensions . “Mostly extensions are being made to the contracts for six months. This is the most advisable in this inflationary context because when a contract is extended, a new price can be set according to the market and a free agreement between the parties, not based on the increase in the Leasing Contracts Index (ICL) of the Central Bank . that it is out of date with inflation”, indicated Enrique Abatti
Javier Milei made a fleeting passage through Congress and when the possibility of repealing the law was ruled out, he withdrew
5. How does the novelty affect the market?
The objective of the special session that took place today in the Chamber of Deputies was to revive a bankrupt and damaged market for both owners and tenants. The sanction of the norm in 2020 caused the massive withdrawal of rental properties, the exorbitant rise in prices and the reign of temporary rentals. The devaluation effect of the PASO also shot up the value of rentals by 25% in a matter of days and strengthened the tendency to zero supply. “The drop in rental housing in the CABA began in 2021, after implementing rental law 27,551 and deepened this year, with the increase in inflation and the exchange rate gap. According to data from the Argenprop platform, in July there were less than 600 rental properties, when the average for the last seven years was 2,400," the Argentina en Datos account published on Twitter.
From the Chamber of Real Estate Services Companies (CAMESI), for its part, it was requested through a statement that the members of the Honorable Senate of the Argentine Nation carry out an urgent treatment and approval of the reforms established. In numbers, they detailed that more than five million Argentine citizens need a housing solutionAnd this legislative change, although it will not provide an immediate recomposition in the supply of permanent rental properties, could generate interest from the owners so that they can once again enter the permanent residential rental market. "It is necessary that legislators become aware of the social drama that many families are going through throughout the country and that they act immediately based on the representation that the people have granted them," said Mariano García Malbrán, president of the Chamber of Companies of Real Estate Services (CAMESI).
While some are cautious, the new scenario raises the expectations of specialists in the sector. “I think that from now on, with this positive signal, the market will like it very much (the half penalty), especially the owners. This should start to take a different path”, commented Alejandro Bennazar, president of the Argentine Real Estate Chamber (CIA).
However, there are those who take a more measured reading and recognize that when there is news, the market puts a handbrake. “Everything that is done to make rental contracts more flexible and allow adjustments that accompany inflation will be good news, but the problem is that this must be approved in the Senate and there it is more difficult to reach an agreement. The problem is the transition... who is going to want to sign a three-year contract now? This somehow paralyzes the market even more , ”said Soledad Balayan, owner of Maure Inmobiliaria.
6. Are there any advantages for not repealing?
At the beginning of the session, the repeal was a card that was put on the table . The idea promoted by members of Juntos por el Cambio and the La Libertad Avanza bloc appeared among the 12 files listed at the beginning of the session that were projects presented outside of the two opinions. However, at the time of voting, the 124 positive votes compared to the 110 negative votes did not reach the two-thirds necessary to include the files in the session and the option of a repeal was ruled out.
Some specialists rescue a positive aspect of not repealing the law . Abatti, affirmed that: “ the total repeal of the law is nonsense because it has very good issues such as, for example, the elimination of the legal prohibition of indexing from the convertibility law; that is to say that the indices could no longer be used. That is an anachronism, legal and economic nonsense, because how can they prohibit you from reflecting the inflationary phenomenon in a contract? I do not agree with repealing but with changing the conflicting points that broke the current market and the links between owners and tenants”, questioned the lawyer.
Daniel Bryn, creator of the real estate monitor Invertire, agrees with him. “ The rental law has very positive things, such as the definition of who has to pay extraordinary expenses, who is responsible for the arrangements, the fact that electronic communications can be considered valid, how a contract has to be renewed and in How long before you have to start the talk about the negotiation. What did not seem right to me because it generated many impediments for owners to rent in pesos was that in a scenario of 120% inflation, that the term of the contracts was three years and that the adjustment was annual, aspects that they would be resolved with this modification”, he analyzed.
Mercedes Soriano
www.buysellba.com
