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Rentals: A report revealed what are the preferred conditions in negotiations between owners and tenants - La Nacion Propiedades
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January 12, 2024
The new rules of the game of Javier Milei's DNU changed the dynamics of rentals: a report reveals which will be the most chosen options among owners to sign contracts
By Maria Josefina Lanzi
Javier Milei's DNU brought new rules of the game for the rental market.
After the DNU of Javier Milei that repealed the rental law, new freedoms are opening up in the real estate world . There is no longer any regulation for the term that the rental agreements will last, in addition the update rate, how often and the months of deposit are points that the parties negotiate. In this context, where questions arise for both tenants and owners about what is best for them to "give up", a report was released by Alianza Urbana , a civil association in which the community of real estate development professionals participates, which reflects the preferred conditions.
“The DNU brings conditions never seen before in the rental market. There was always a framework with minimum deadlines and adjustments in a certain way for the contracts ,” says Santiago Levrio, institutional director of Alianza Urbana and details that to draw conclusions they asked some questions to generate patterns.
From the survey in which almost 600 participants from the sector participated , the association carried out a study that consulted owners who have homes and rent, about the terms of validity of the contract, the indexes, the periodicity of adjustment, and the months of deposit that they will ask for in their future contracts. A point to take into account was that those who marketed their own rentals (units that they or family owned) and third parties (for example, a real estate agency) responded to.
The rental law no longer has regulation: the term in which rental agreements will be signed, the rate and time to which they will be adjusted, and the months of deposit that will be requested are negotiated between owners and tenants.
“Faced with the fear of public opinion and people regarding the dollarization of rents and the possibility of making contracts for such a short period of time, we wanted to respond to this concern and find out what the owners will do in their contracts” , explains Levrio, the reasons why they advanced in the sample.
1)Index and adjustment period: for inflation, every three months
While the DNU governs, instead of using the Rental Contract Index (ICL) used by contracts signed after July 2020 or the Casa Propia index, established with the modifications to the law in October of this year, tenant and owner They will be able to freely agree to which reference to tie the contract update. In addition, the parties may agree on how often to update the rental value.The Alianza Urbana study revealed that 57% of respondents chose adjustment for inflation, 16% for the dollar value and the remaining 13% for the ICL. Regarding the adjustment period, 45% will do so quarterly, 18% monthly and 13% quarterly. “We have our own knowledge that most of the income from rental contracts is used by people to reinforce their salary. The usual use is to pay credit cards, colleges, prepaid cards, to support people's income. Therefore, having an index that is on the same level as inflation helps to avoid miscalculation,” says the institutional director of Alianza Urbana.
After Javier Milei's DNU, the real estate market is expectant about how the new contracts will be made.
Although for the landlord it is always better to have an instrument that adjusts as much as possible, from the supply side “a certain reasonableness” is seen , says Levrio and adds: “An adjustment for inflation is requested, which is harsh, but it is not I ask for it every month. I think that this shows a certain reasonableness on the part of the market, where the landlord seeks predictability in time, that the income serves him for the expenses that he uses, but, on the other hand, that what he asks of the tenant is sustainable.
2)Duration of the contract: it returns after two years
In recent years, contracts lasted 3 years, but with the DNU in force the term will be the one that the parties have established and, if they do not clarify it, it will last two years.In this case, the survey shows that 89% of the owners responded that they would set the contracts for more than one year. Within that, 56% will opt for 24-month contracts, while 30% will go for 1-year contracts . “Our fear of the deregulation brought by the DNU was that it would lead us to a scenario where the contracts would be very short, taking away all predictability from the tenant, but the numbers show that 9 out of 10 do not plan to offer for less than a year,” he says. Levrio.
In recent years, the contracts lasted 3 years, but with the DNU of Javier Milei the term of the rental contracts will be the one that the parties have established and, if they do not clarify it, it will last two years.
3)Deposit: 2 months and 30% of one month
The repealed rental law established that the tenant had to provide a fixed amount of deposit equivalent to one month's rent, but there is no longer any limitation on the amount of the security deposit.The study reveals that 40% of respondents will ask for a deposit of 2 months and 30% of one month . “By a minimal difference, he won two months over one month. Although we did not ask the question, the most normal thing would be to seek to dollarize the deposit, so that it does not lose value,” says the institutional director of Alianza Urbana.
The new rules
Javier Milei's DNU marked a turning point in the real estate world. Some sector experts affirm that, while the decree of necessity and urgency governs, the market is immersed in a time of opportunity , in which housing rental contracts can be signed in a market where the old rules of the game have been erased. and there are broader freedoms.
Today there is a housing rental market where the old rules of the game have been erased.
“An interesting window of time opens for those who were always willing to rent a property with a two-year contract and adjustments agreed for inflation,” says Soledad Balayan, director of Maure Inmobiliaria, and acknowledges: “I think we have to take advantage of the opportunity while the DNU is in force.”
In this sense, Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic also expresses that this is the time to arrange rentals: “ These contracts will remain in force throughout the agreed term, even if the DNU is finally rejected, because the law does not It is retroactive . " Abatti assures that we are in a time where the supply is still not much , so this is the time to conclude agreements: “As far as the housing contract is concerned, the market is not yet flooded, that will happen in approximately 6 or 7 months.” This is why the owner can now get a better price than in a while , where there will be more competition, and where the tenant will be in a position to demand more conditions.
“The most attractive or substantial thing that could revive the offer is the possibility of using any index and adjustment period, and also choosing the contract term that one wants,” adds Balayan and gives numbers: “There is a significant year-on-year increase in the offer of apartments for rent in CABA . If January 2023 is compared to January 2024, Zonaprop registers 20% more, while Argenprop registers 47% more.”
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