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Rentals: How to agree between owners and tenants on a formula to update the price - Infobae
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Alquileres: cómo acordar entre propietarios e inquilinos una fórmula para actualizar el precio
Sin ley de Alquileres, qué recomendaciones seguir al firmar nuevos contratos y establecer un mecanismo de ajuste. Además, cuál es el impacto potencial de los nuevos créditos hipotecarios en el mercado de locaciones
www.infobae.com
May 10, 2024
Without the Rental Law, what recommendations to follow when signing new contracts and establishing an adjustment mechanism. The potential impact of new mortgage loans on the market
By Jose Luis Cieri
The new rental contracts since the DNU of the Government that repealed the Rental Law came into force are being adapted to the current economic situation, seeking agreement terms that benefit owners and tenants. In the face of economic uncertainty and market fluctuations, more flexible clauses are being established. One of the main novelties is the implementation of quarterly updates, instead of the previous annual or semi-annual ones and in accordance with the variation in economic indices.
Rental agreements establish an initial increase based on official indices, seeking a balance between the financial security of the owner and the tenant's ability to pay, thus facilitating financial planning for both parties.
Although prices registered strong increases during the last 18 months, a slowdown is beginning to be observed . With more supply, initial contract prices decrease, although economic challenges persist for tenants due to the high cost of housing in Argentina.
Vanesa Ibarra , from Salguero Propiedades, commented to Infobae : “We observed that, during the first months of adjustments, numerous rentals exceeded the market value. Specifically, several contracts, especially those with high values, were renegotiated. This indicates that, despite there being a signed contract, the owners are taking into account the situation of the tenants, which represents notable progress.”
In Buenos Aires, the average rent is $400,000 for two rooms and $530,000 for three rooms, which represents a financial challenge for tenants.
With the launch of new mortgage loans , there is a growing interest among tenants to stop renting. However, it is still early to determine the impact that these credits will have in the short and medium term.
First settings
The legal framework for rentals evolved significantly, moving from three-year contracts with annual updates to shorter periods with indexations related to inflation. Today, two-year rental contracts are concluded, with price reviews every three or four months based on the Consumer Price Index (CPI) and the Rental Contract Index (ICL).Mariano Rico Alcázar , from Asempro Propiedades, said that “the quarterly or four-monthly updates introduced a price dynamic to which we were not accustomed. Now, owners do not have to initially increase the value of the contract for fear of mismatches due to inflation. This framework tends to balance output prices. Even so, the high initial inflation of the year led to considerable adjustments in rents, some even above the market, leading certain landlords to review and adjust these values.”
“To prevent distortions in the price, it is crucial to correctly choose the index when writing the contract, with the CPI being the most used,” explained Rico Alcázar.
Tenants faced difficulties with the first increase, since it was calculated based on high inflation in recent months. In some cases, there were requests for negotiation with the owners to adjust the increase and thus keep rent payments up to date.
Tobías Fanelli , from Salguero Propiedades, pointed out that “the first adjustments were established at 56% according to the quarterly CPI and 45% according to the ICL.” With the increase in rental supply, those with excessive prices recorded a decrease in rental speed, prolonging their available time on the market.
“Since the increases are based on inflation, either through the CPI or the ICL, a decrease in this could result in lower increases compared to previous periods,” Fanelli added.
Buy and rent
The rental supply is stabilizing, providing relief to tenants who last year could not find viable options to move.
Consultations were activated in real estate agencies to buy homes with up to three rooms
“As for mortgage loans, those who can access them will surely choose to buy. Although initially a significant impact on the rental market is not anticipated, if investors or owners of multiple properties decide to use these credits to acquire new properties and rent them, this could translate into an additional increase in the rental supply,” Fanelli anticipated.
Market behavior is currently more influenced by expectations than by fixed realities.
An example of this is the offer from Banco Hipotecario seen on its website, which proposes loans to buy a studio apartment in Villa Urquiza or Saavedra with a value of USD 70,000 and applying a credit for 75% of the price over 30 years: the installment initial amounts to almost $460,000 and the rent for that same property does not exceed $300,000; Additionally, you must have a savings of USD 20,600 to access the credit and cover the associated expenses.
The arrival of mortgage loans encourages new buyers, reflecting the Argentine dream of being a homeowner, a cultural and aspirational objective, especially when the payment equals the rent, said Rico Alcázar.
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