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Rental Law: The Government anticipated that it will change it
December 14, 2023
The presidential spokesperson announced that there will be news very soon about the rental law that “has done a lot of damage to the real estate market.”
By Veronica Ruby
Rental Law: the presidential spokesperson, Manuel Adorni, announced today that the Government will have news soon to improve the situation of the real estate markeT
What you have to know
- The presidential spokesperson, Manuel Adorni, announced that the Government will discuss a reform of the Rental Law, with possible new developments.
- President Javier Milei promised to repeal the law upon taking office; it was reformed in October 2023.
- Rental prices in CABA have increased almost 900% since the law was passed for the first time in 2020.
In a press conference the presidential spokesperson, Manuel Adorni, made reference to some of the measures announced on Tuesday by the Minister of Economy, Luis Caputo, and mentioned that they will discuss a reform in the Rental Law.
In the midst of the housing crisis that the country is going through that has been pronounced since mid-2020 with the new rental law that caused unstoppable increases month after month due to inflation, prices dollarized and low supply of real estate, Adorni mentioned that it is possible that “there will be news” in this regard.
"The Rental Law has done a lot of damage to the real estate market, and everything that we understand that hurts people will be corrected and corrected."
Manuel Adorni, presidential spokesperson
Press conference by Manuel Adorni this morning in which he assured that there will be news on the rental law
“What we have seen so far is a package of necessary and urgent economic measures for what is to come. Within what is coming we always promote the freedom of the parties in private contracts, therefore it is likely that there will be news in what is coming regarding that (the rental law) in Argentina”, was Adorni's forceful statement this morning in his now usual daily press conference. And he added: “We are focused on monitoring and following up and applying the measures that were taken to, by virtue of that, continue with the mother plan of the coming Argentina”.
What the spokesperson said is in line with what the president Javier Milei declared a few hours after being elected .the libertarian stated that this rule must be “repealed and understood that it is a contract between parties”. Something that he maintained throughout his campaign and his mandate as a deputy. In those first statements after winning the runoff, his position is to repeal the rental lawwhen in an interview with Eduardo Feinmann on radio Miter he stated that.
“The only thing the rental law has done is cause damage. “He ended up harming those he intended to protect,” Milei stated the day after being elected. Same words used this morning by his spokesperson.
A story that has been going on for more than three years
In July 2020, the rental law was passed, which received changes to some of its points in October 2023. After having gone through extensive debates in committees in May 2022 without achieving anything, finally this year Congress returned to the issue of repealing or modifying the rule in force between August and October, both in the Chamber of Deputies and in the Chamber of Senators.However, the current president and leader of La Libertad Avanza was always in favor of the repeal because for him the changes are a “waste of time” since it considers that the law as it stands is not going to advance or solve the underlying problem in the real estate market between tenants and owners.
Javier Milei was always in favor of repealing the current rental law and letting the parties agree privately and freely.
During his term as deputy, Milei was always consistent with his thoughts and voted in favor of a repeal in the August and October elections past. His statements at that time were: "A new rental law is not needed. We must eliminate it and stop interfering in private contracts by destroying property rights. The only thing they will do is harm the most vulnerable with fewer properties, of lower quality and at more expensive prices.”
Something that the market has demonstrated in recent times with real numbers: the increase in published rental prices since the law was passed in 2020 was almost 900% and the number of properties on offer on real estate platforms was drastically reduced.
When the law was passed in 2020 there were 9,700 apartments for rent in CABA, and 10 months after, that number dropped to 8,500, even though the historical average is 15,000. Currently Zonaprop publishes only around 5,200 apartments for rent. In the real estate market there has been talk for months that the immediate future will be “zero supply” and there are already neighborhoods in the city where that prophecy is being fulfilled. fulfilling.
Information that emerged after Adorni's conference is that the Government would be preparing a decree that would allow the prices of rental properties to be published and agreed upon again in dollars between the parties.
Also in that first radio interview as president-elect, Milei stressed that contracts must be agreed “in any currency”. “Monetary freedom is part of the things we want to advance,” concluded the president-elect.
His statements refer to one of the points that were changed in October regarding the currency in which rental announcements should only be published and contracts agreed upon: in pesos
The reality of a hit market
“The market is paralyzed because no one wants to sign a contract until they know what the Government will do and even less a three-year contract ”, Soledad Balayan, owner of Maure Inmobiliaria, summarizes the current situation. And this handbrake that is evident in the market is the same one that is applied with every announcement of a possible change in the law from the end of 2021 until now. Rentals, tenants and owners “dance” to the rhythm of the music of politics, advancing or slowing down contracts with each announcement of a change or repeal of the law.That is why the real estate market expects President Javier Milei to fulfill his promise to repeal the rental law, a measure that according to the latest survey carried out by Reporte Inmobliario celebrates 86.4% of the participants.
With each announcement of change or repeal, rental contracts come to a standstill.
However, when analyzing the fine print, the process would not be as simple as Milei wants. The first point to keep in mind is that the repeal does not imply that contracts can be freely negotiated between the parties, the idea that libertarians advocate. “If the current norm is repealed, what happens is that the one that was previously in force comes back into force, with two-year contracts and gradual increases in line with inflation. Basically the same thing proposed in the bill presented by the PRO in October”, clarifies Federico González Rouco, an economist specialized in the real estate market, who for one month he is part of the small table of Empiria, Hernán Lacunza's economic consulting firm.
And to advance in a regulatory framework that, for example, once again accepts prices in dollars as Milei proposes, a new law must be generated that organizes the market.
González Rouco considers that “it is key to change the law now to one that does not make the offer disappear because without offer there are no tenants and In this context there is no time to waste.”
As for current prices, renting a 40 m² studio apartment costs $238,542 per month, a 50 m² two-room apartment costs $282,389 per month, and a 70 m² three-room apartment has a price of $391,261 per month, according to Zonaprop.
The same survey indicated that the values increased by 10.4% in November and there have been eight consecutive months with increases above 10 %. So far this year there has been an increase of 204%, well above inflation (146%). New contracts have accumulated an increase of 220.4% in the last 12 months.
Palermo is the most expensive neighborhood in the city of Buenos Aires to rent, with a value of $426,861 per month. They are followed by Belgrano ($426,028 per month) and Núñez ($416,735 per month). On the other hand, Barracas is the most affordable neighborhood for $217,496 per month, followed by Constitución and Floresta, $240,545 per month and 262,614 per month, respectively.
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