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Rentals after the DNU: The keys to a completely different market for owners and tenants - Infobae
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Alquileres luego del DNU: las claves de un mercado completamente diferente para propietarios e inquilinos
Mientras la noción de libertad planteada por el Gobierno genera inquietudes entre algunos expertos, hay confianza en que el mercado se autorregulará, eventualmente alcanzando un punto de equilibrio
www.infobae.com
December 26, 2023
While the notion of freedom raised by the Government raises concerns among some experts, there is confidence that the market will self-regulate, eventually reaching a point of equilibrium.
By Jose Luis Cieri
Renting in Argentina has become a difficult action, now the Rental Law has been repealed, there will be new measures to follow to sign a contract between owners and tenants (Illustrative Image Infobae)
The Decree of Necessity and Urgency (DNU) promoted by President Javier Milei, by repealing the Rental Law passed in 2020, forced us to redefine the present and future of the real estate market in terms of housing locations in Argentina. This drastic move eliminates the rules, plunging the sector into an unexplored contractual “freedom.” As the debate rages, some express concern, while others trust in self-regulation as a path toward balance.
One of the most controversial aspects of the DNU lies in the possibility that contracts be paid in the currency that the parties agree to, whether in pesos, dollars, euros or another currency.
The DNU stipulates Freedom in Deposits and Frequency of Payments: : The parties can freely agree on the amounts and currency of the deposits or guarantee deposits, as well as their return at the end of the rental. In addition, they can agree on the frequency of payment, which cannot be less than monthly (Article 1196 of the Civil and Commercial Code, CCyC).
Government sources maintain that this change aims to regularize practices that were previously carried out informally, providing the opportunity to formally incorporate them into contracts.
“Ultimately, deregulation translates into more transparent guidelines: both owners and tenants will have a clear understanding of the terms they are accepting when signing the contract,” Lisandro Cuello, , a real estate expert who operates between Almagro and Caballito, told Infobae.
The trend toward “dollarization” of contracts has been present for more than a year, especially in CABA and some towns in Greater Buenos Aires, although with less incidence in the interior of the country. However, an additional front of concern is manifesting itself in the form of uncontrolled inflation.
The real estate agencies consulted rule out the possibility of all rents being charged in foreign currency, pointing out that this practice will depend on the type of property and its location. The heterogeneity in these variables will influence the adoption of this measure by owners and tenants.
The DNU indicated that the adjustment of rental values can also be agreed using any index, public or private (Article 1199 of the CCyC)
How long will a new contract last?
Another anomaly to take into account is that, from this moment until 2026 - until the contracts subject to interannual adjustments by the Lease Contract Index and those signed with semiannual updates between October 18 and December 20 end, when the recently repealed law was reformed, three types of contracts will coexist in the rental sector. Another situation that never happened in Argentine real estate history.
This situation arises in response to an unprecedented supply shortage, accompanied by a year-on-year drop that exceeds 50% in all areas of the country.
According to the real estate broker Alberto Héctor Loyarte, and so that owners and tenants are attentive, the DNU that has been in force since Thursday replaced article 1198 of the Civil and Commercial Code of the Nation approved by Law No. 26,994.
Article 1,198 in the repealed law stipulated the following: Minimum term for the lease of property. The property lease contract, whatever its destination, if it lacks an express and determined longer term, is considered concluded for the minimum legal term of three (3) years, except in the cases of article 1,199.
The tenant can waive this period if he is in possession of the thing.
And from now on, article 1198 was replaced by the following: Term of the property lease. The term of the leases with any destination will be the one that the parties have established. In the event that no deadline has been established, (i) in cases of temporary location, it will be up to the one established by the uses and customs of the place where the leased property is located, (ii) in lease contracts for permanent housing. , with or without furniture, will be two (2) years and (iii) for the remaining destinations will be three (3) years.
The DNU also expresses about Flexibility in Contract Duration: The rental term will be the one established by the parties. In the absence of a defined term, for permanent housing it will be two years , and for other destinations it will be three years (Article 1198 of the Civil and Commercial Code).
Who defines
Now everything was left in the hands of the Permanent Bicameral Commission for Legislative Procedure of Congress that will evaluate the DNU in the coming days. This commission has a period of 10 business days to issue an opinion on the validity of the decree and send it to the plenary session of both chambers for consideration. In the event that the Commission does not issue a decision within that period, the Chambers are obliged to address the treatment of the DNU on their own initiative. In the event that none of the Chambers submit it to treatment, the DNU will automatically remain in force.
In this scenario, prices experienced an exorbitant increase, evidenced in CABA, where rents for four-room homes rose by 358% in just twelve months.
Marta Liotto , from Liotto Properties and former president of the Buenos Aires Real Estate Professional Association, underlined the conviction that this scenario represents the best option to increase the supply of housing. “The presence of a greater offer benefits the tenant, allowing them to choose between different areas, values and contractual conditions. In the current context, with an almost non-existent supply, decisions are limited, and tenants are forced to accept what is available.”
Settings
The lack of regulation on the periodicity of adjustments introduces a scenario of uncertainty. Although the possibilities are vast, it is widely believed that a uniform approach will be adopted.Experts maintain that it will not plunge into a period of total heterogeneity. Before 2020, contracts could be monthly, although they rarely were. There was no rule that dictated semiannual adjustments based on inflation expectations, but the majority established them that way. An informal rule of emulating one's neighbor's practices prevailed, a dynamic accepted by all. Trust in the exchange of experiences between people dissipates the fear of total lack of control.
Cuello expressed: “It will take a few weeks, but by February, the supply would grow significantly again and the prices at the starting point would not be as high because the owners will be able to make adjustments more in advance, thus compensating for the loss due to inflation. In turn, tenants would benefit from a lower initial value and will have more certainty about how much they will have to pay over the duration of the agreement. From there the equilibrium point could converge.”
Termination of contract
The DNU introduces a controversial point by granting freedom to terminate the contract to both parties, eliminating the stability that previously benefited the tenant. Until mid-2020, only the tenant could terminate the contract, protected by law and paying a predefined fine.“However, with the entry into force of the DNU, the panorama changes drastically. As there is no minimum legal term, the parties can agree to terminate without cause, following the guidelines and procedures established in the contract,” said Juan Martín Luciani Otaño , lawyer and specialist in Horizontal Property.
In relation to termination, the DNU establishes that the tenant can do so by paying 10% of the balance of the future rental fee, calculated from the date of notification to the end date agreed in the contract. However, regarding the owner, the DNU does not specify, leaving room for autonomy of will and contractual freedom. According to article 1076 of the CCyC, and by virtue of the subsection added to article 1219, the parties can agree to rescind for any reason, providing the possibility that the lessor can terminate the contract if this is expressly established.
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