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Rental Law: what are the changes of the reform approved by the Senate - infobae
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www.infobae.com
September 29, 2023
The officialism achieved its ruling that reforms two articles of the initiative: the maintenance of contracts with a duration of three years and the adjustment of prices through the Casa Propia formula, which is used in the Procrear programs.
By José Luis Cieri
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The session of the national Senate today was opened by the vice president of the nation, Cristina Fernández de Kirchner
The Chamber of Senators of the Nation approved this morning the modifications to the Rental Law promoted by Kirchnerism. With 37 votes in favor and 29 against, progress was made with the initiative that returns to Deputies in second review.
The project received some changes proposed by the Frente de Todos interbloc, so now it will be in the Lower House where it will have to be decided whether to insist on the original sanction or accept the modifications.
Kirchnerism had the support of the senators who make up the Federal Unity bloc. For its part, Together for Change voted against because it intended to approve the initiative that came from the Deputies and sanction the reform today. In this way, the modification of a law is stretched even further in the midst of the paralysis that the real estate sector is going through.
The FdT senator from Mendoza, Anabel Fernández Sagasti , was the last speaker before the vote. In her speech she crossed the opposition by accusing them of “not wanting to sign anything until October 22 with the Frente de Todos.” In this way, she defended the official proposals on the issue. “The opinion tries to balance between two opposing points,” she highlighted.
“We know that the issue of tenants is an issue that affects 10 million people, that the tenancy of housing is a global phenomenon, that it must be worked on holistically,” he added. After that, he questioned the project that has half a sanction in Deputies for “producing uncertainty and a paralysis of rental contracts.”
Regarding the current legislation, Fernández Sagasti recalled that, at the time of its approval, “it came to solve many problems that were presented to tenants.” “Clearly, we must debate a law that has to do with turning housing back into a right and not a financial asset,” he said.
Minutes before it was the turn of the radical senator Martín Lousteau, who pointed out against the officialism. Although he stated that “it is clear that in a contractual relationship the weakest is the one who does not have the property,” he stated that “by taking care of the weakest, he is harmed.” In this way, he explained that, from his point of view, “intervening in a relationship between two parties” causes “a problem to be generated” due to the inflationary context that the country is experiencing. In this context, he indicated: “They do not renew your rent or they renew it at a value that cannot be accessed.”
For this reason, he pointed out against the index that governs the price of rentals by saying that “it causes prices to rise,” while projecting that “it would generate a problem when Argentina begins to reduce inflation. ”
In a context where the supply of apartments for rent in the city of Buenos Aires has been drastically reduced to less than 450 units and prices have reached high levels (for example, a one-bedroom apartment rose 238.5% year-on-year), the Reform of the Rental Law gained high relevance in the Senate.
Two proposals were proposed that seek to address the problem of the rental market, but that move in opposite directions. On the one hand, the proposal promoted by the political opposition, which has already received approval from the Chamber of Deputies, is based on the principle of free agreement between the parties and two-year contracts (as it was before the regulations that came into effect in 2020). This approach would allow the parties to choose an adjustment index of their free choice, which could be through the Consumer Price Index (CPI).
On the other hand, the officialism has rejected this proposal in committee and has introduced changes to the opinion that was discussed today in the Senate, where it has a majority. This initiative proposes that rental contracts be adjusted every six months according to the Casa Propia index and that the duration of the contracts be maintained at three years.
Casa Propia is published by the Ministry of Territorial Development and Habitat of the Nation, and takes into account the lowest index between the average salary variation of the last year and the average inflation of the same period.
The objective of reforming some articles of the law that governs housing rentals is twofold: to encourage the supply of rental properties and to allow prices to adjust according to the dynamics of market demand.
What the official project says
The key points of the project promoted by the ruling party include:
On the other hand, the majority opinion in the Senate eliminates this option and maintains the regulations as they are in the current law.
The proposal will now go to the Chamber of Deputies. The proposed changes do not structurally alter how rental contracts will be carried out in Argentina, and there is skepticism among experts about their effectiveness in a market with limited supply.
Marta Liotto, president of the Real Estate Professional Association of Buenos Aires, told Infobae that the project “is disastrous for the sector and could deepen the current crisis, reducing the formal offer to zero and increasing prices.”
The entity also issued a statement in which it points out that the majority opinion does not respect the positions of the representative entities of the sector presented in previous presentations before the legislative commissions.
What does the Deputies project say?
What was approved in the Senate differs from the initiative sanctioned by Deputies, which returned to the two-year period for rentals, with updates every four months and freedom to choose the index between the parties. That project was harshly questioned by tenant organizations, and in the Senate the officialism reached an agreement to modify it.
In the case of residential housing, the approved project provides that the tenant cannot be required to pay advance rent or security deposits exceeding one month. The latter must also be returned to the value of the last month's rent or the proportional part if the guarantee is less than one month. Neither may a payment of “goodwill or equivalent” nor the signing of promissory notes “or any other document that is not part of the original contract” be required.
The minimum term of the contract will be two years and will be considered that term if its duration is not stipulated, but the tenant or tenant may waive that term, in case of prior notice, under certain conditions.
The minimum period of two years will not be valid for certain types of rentals, such as leasing for diplomatic contracts and, in particular, rental of furnished units “for tourism, rest or similar purposes and for any other temporary purpose in the interest of the tenant.”
For now, the Rental Law passed in June 2020 is still in force and nothing has changed. Contracts already signed or those signed these days are not altered. The agreements made could only be modified once the national Congress sanctions the definitive changes.
Regarding repairs to the rental unit, something that usually generates friction in the contracts, it is established that the owner must take care of urgent repairs in no more than 24 hours from the notification of the tenant or tenant and in no more than 10 calendar days in case of non-urgent repairs. If there is no response after these deadlines, the tenant can take charge of the repairs, charging the costs to the owner. Article 4 specifies: “Any repair of those services that, due to their severity, prevent or hinder the agreed use and enjoyment of the leased property, will be understood as urgent.”
In the city of Buenos Aires in two years there was a reduction in supply, according to the Real Estate Report, which ranges from 63%, and is greater when compared to pre-pandemic times: in December 2019 there were close to 10,000 properties in traditional location per month, between August and today, less than 450 apartments.
Emilio Caravaca Pazos, president of the Real Estate Federation of the Argentine Republic (FIRA), told Infobae that “all sectors agree on the diagnosis whose main points are the lack of supply of rental housing, as well as conditions that have deteriorating over time.”
They understand that any modification, whether in the indices, the type of updates, or the duration of the contracts, that favors one party to the detriment of the other, could further aggravate the current adverse scenario.
“In short, any provision that deviates from economic reality, such as indices that are below the inflationary and real wage update parameters, as occurs with 12-month update periods in a context of spiraling inflation, could deepen the adverse conditions currently experienced by owners and tenants,” concluded Caravaca Pazos.”
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Source:
Ley de Alquileres: cuáles son los cambios de la reforma que aprobó el Senado
El oficialismo logró su dictamen que reforma dos artículos de la Ley de Alquileres: la mantención de contratos con una duración de tres años y el ajuste de precios a través de la fórmula Casa Propia, que se emplea en los programas Procrear
www.infobae.com
September 29, 2023
The officialism achieved its ruling that reforms two articles of the initiative: the maintenance of contracts with a duration of three years and the adjustment of prices through the Casa Propia formula, which is used in the Procrear programs.
By José Luis Cieri
The session of the national Senate today was opened by the vice president of the nation, Cristina Fernández de Kirchner
The Chamber of Senators of the Nation approved this morning the modifications to the Rental Law promoted by Kirchnerism. With 37 votes in favor and 29 against, progress was made with the initiative that returns to Deputies in second review.
The project received some changes proposed by the Frente de Todos interbloc, so now it will be in the Lower House where it will have to be decided whether to insist on the original sanction or accept the modifications.
Kirchnerism had the support of the senators who make up the Federal Unity bloc. For its part, Together for Change voted against because it intended to approve the initiative that came from the Deputies and sanction the reform today. In this way, the modification of a law is stretched even further in the midst of the paralysis that the real estate sector is going through.
The FdT senator from Mendoza, Anabel Fernández Sagasti , was the last speaker before the vote. In her speech she crossed the opposition by accusing them of “not wanting to sign anything until October 22 with the Frente de Todos.” In this way, she defended the official proposals on the issue. “The opinion tries to balance between two opposing points,” she highlighted.
“We know that the issue of tenants is an issue that affects 10 million people, that the tenancy of housing is a global phenomenon, that it must be worked on holistically,” he added. After that, he questioned the project that has half a sanction in Deputies for “producing uncertainty and a paralysis of rental contracts.”
Regarding the current legislation, Fernández Sagasti recalled that, at the time of its approval, “it came to solve many problems that were presented to tenants.” “Clearly, we must debate a law that has to do with turning housing back into a right and not a financial asset,” he said.
Minutes before it was the turn of the radical senator Martín Lousteau, who pointed out against the officialism. Although he stated that “it is clear that in a contractual relationship the weakest is the one who does not have the property,” he stated that “by taking care of the weakest, he is harmed.” In this way, he explained that, from his point of view, “intervening in a relationship between two parties” causes “a problem to be generated” due to the inflationary context that the country is experiencing. In this context, he indicated: “They do not renew your rent or they renew it at a value that cannot be accessed.”
For this reason, he pointed out against the index that governs the price of rentals by saying that “it causes prices to rise,” while projecting that “it would generate a problem when Argentina begins to reduce inflation. ”
In a context where the supply of apartments for rent in the city of Buenos Aires has been drastically reduced to less than 450 units and prices have reached high levels (for example, a one-bedroom apartment rose 238.5% year-on-year), the Reform of the Rental Law gained high relevance in the Senate.
Two proposals were proposed that seek to address the problem of the rental market, but that move in opposite directions. On the one hand, the proposal promoted by the political opposition, which has already received approval from the Chamber of Deputies, is based on the principle of free agreement between the parties and two-year contracts (as it was before the regulations that came into effect in 2020). This approach would allow the parties to choose an adjustment index of their free choice, which could be through the Consumer Price Index (CPI).
On the other hand, the officialism has rejected this proposal in committee and has introduced changes to the opinion that was discussed today in the Senate, where it has a majority. This initiative proposes that rental contracts be adjusted every six months according to the Casa Propia index and that the duration of the contracts be maintained at three years.
Casa Propia is published by the Ministry of Territorial Development and Habitat of the Nation, and takes into account the lowest index between the average salary variation of the last year and the average inflation of the same period.
The objective of reforming some articles of the law that governs housing rentals is twofold: to encourage the supply of rental properties and to allow prices to adjust according to the dynamics of market demand.
What the official project says
The key points of the project promoted by the ruling party include:
- Maintenance of contracts for three years.
- Semiannual adjustments instead of annual ones.
- Application of the Casa Propia index, which considers the lowest index between the salary variation and inflation of the last year. Currently, the Central Bank's Lease Contract Index (ICL) is used.
- Contracts in national currency.
- Tax incentives for owners who rent their homes.
On the other hand, the majority opinion in the Senate eliminates this option and maintains the regulations as they are in the current law.
The proposal will now go to the Chamber of Deputies. The proposed changes do not structurally alter how rental contracts will be carried out in Argentina, and there is skepticism among experts about their effectiveness in a market with limited supply.
Marta Liotto, president of the Real Estate Professional Association of Buenos Aires, told Infobae that the project “is disastrous for the sector and could deepen the current crisis, reducing the formal offer to zero and increasing prices.”
The entity also issued a statement in which it points out that the majority opinion does not respect the positions of the representative entities of the sector presented in previous presentations before the legislative commissions.
What does the Deputies project say?
What was approved in the Senate differs from the initiative sanctioned by Deputies, which returned to the two-year period for rentals, with updates every four months and freedom to choose the index between the parties. That project was harshly questioned by tenant organizations, and in the Senate the officialism reached an agreement to modify it.
In the case of residential housing, the approved project provides that the tenant cannot be required to pay advance rent or security deposits exceeding one month. The latter must also be returned to the value of the last month's rent or the proportional part if the guarantee is less than one month. Neither may a payment of “goodwill or equivalent” nor the signing of promissory notes “or any other document that is not part of the original contract” be required.
The minimum term of the contract will be two years and will be considered that term if its duration is not stipulated, but the tenant or tenant may waive that term, in case of prior notice, under certain conditions.
The minimum period of two years will not be valid for certain types of rentals, such as leasing for diplomatic contracts and, in particular, rental of furnished units “for tourism, rest or similar purposes and for any other temporary purpose in the interest of the tenant.”
For now, the Rental Law passed in June 2020 is still in force and nothing has changed. Contracts already signed or those signed these days are not altered. The agreements made could only be modified once the national Congress sanctions the definitive changes.
Regarding repairs to the rental unit, something that usually generates friction in the contracts, it is established that the owner must take care of urgent repairs in no more than 24 hours from the notification of the tenant or tenant and in no more than 10 calendar days in case of non-urgent repairs. If there is no response after these deadlines, the tenant can take charge of the repairs, charging the costs to the owner. Article 4 specifies: “Any repair of those services that, due to their severity, prevent or hinder the agreed use and enjoyment of the leased property, will be understood as urgent.”
Future
Real estate market specialists do not know what could happen once what was approved today in the Senate is again analyzed in Deputies. It is estimated that because there are only a few weeks left before the October 22 elections, it would not be discussed until after that date.In the city of Buenos Aires in two years there was a reduction in supply, according to the Real Estate Report, which ranges from 63%, and is greater when compared to pre-pandemic times: in December 2019 there were close to 10,000 properties in traditional location per month, between August and today, less than 450 apartments.
Emilio Caravaca Pazos, president of the Real Estate Federation of the Argentine Republic (FIRA), told Infobae that “all sectors agree on the diagnosis whose main points are the lack of supply of rental housing, as well as conditions that have deteriorating over time.”
They understand that any modification, whether in the indices, the type of updates, or the duration of the contracts, that favors one party to the detriment of the other, could further aggravate the current adverse scenario.
“In short, any provision that deviates from economic reality, such as indices that are below the inflationary and real wage update parameters, as occurs with 12-month update periods in a context of spiraling inflation, could deepen the adverse conditions currently experienced by owners and tenants,” concluded Caravaca Pazos.”
www.buysellba.com
