BuySellBA
Administrator
Rentals in the Milei era: The 3 keys to the new Government's plan for tenants
November 28, 2023
There are nearly 8 million people who rent their homes in the country. The shortage of supply does not stop growing and the rise in prices is constant
By José Luis Cieri
Current contracts will remain active until their expiration. In the case of repealing the current law and returning to the Civil and Commercial Code, the enacted changes will be considered for future agreements (Illustrative image Infobae)
The final data from the 2022 Census from Indec confirmed that, as of July 2022, the Argentine population amounted to 46,234,830 people. At the national level, 69.9% of the population owns their home, while 17.4% are renters: some 8 million reside in rented homes, a situation that raises concern due to the crisis affecting this segment.
President-elect Javier Milei announced his intention to repeal the Rental Law , enacted in June 2020 and recently reformed. Milei maintained that it is necessary to understand the rental as a contract between parties and expressed that the current law caused more harm than good, especially affecting those whom he intended to protect. In addition, he pointed out that contracts can be agreed in any currency, highlighting the importance of monetary freedom in the direction they seek to advance.
In this context, questions and questions arise without answers. In real estate, several agreements about to be signed these days vanished. The owners prefer to postpone decisions, to better understand the possible implications of the change in the libertarian scheme after December 10.
In this context, three key points currently stand out regarding what could happen with rentals in Argentina and are detailed below.
1 -What future contracts would be like
Although the president-elect expressed his intention to repeal the law and return to agreements under the Civil and Commercial Code, it is relevant to note that, although the current legislation has deficiencies in residential locations, it remains adequate for other destinations such as offices and commercial premises. , according to experts.It turned out that there were talks between libertarian leaders who will work on housing and some sectoral chambers that represent real estate companies, builders and developers.
If the agreements prior to the law were returned (until June 2020), the contracts would have a duration of two years through the Civil and Commercial Code of the Nation (modified in 2015), with adjustments and freedom to make agreements between the parties, as stated by Milei, who also advocates for currency freedom.
At a time when finding housing is a challenge and those available have prices that are practically inaccessible for an average wage earner, uncertainty grows (Photo: Getty)
“What corresponds is to completely repeal law 27,737, which has been in force since October 18, 2023, and partially, 27,551, July 1, 2020. The latter, in article 14, establishes the repeal of articles 7 and 10 of the Convertibility law that prohibited agreeing indexation clauses in contracts. If all of 27,551 were repealed, the beneficial repeal of the prohibition on indexing contracts would also be lost. So that provision should be maintained. What's more, it should be applicable by another law to all contracts,” Enrique Abatti (h.), a lawyer specialized in real estate law and director of the Chamber of Owners of the Argentine Republic, told Infobae.
The regulations cannot be repealed by Decree of Necessity and Urgency. As it is a law approved in the national Congress, its repeal, whether total or partial, would require new legislative treatment.
Abatti added: “Article 765 of the National Civil and Commercial Code should also be modified, which establishes that foreign currency is one thing and is not equated with legal tender, which makes it impossible to agree on rents in foreign currency.”
Experts maintain that perhaps the only thing that should be left out of Law 27,737 (in force since October 18) are the tax benefits for both owners and tenants.
2 - Updates
If free agreements between the parties were returned, it would also be crucial to reduce inflation, one of the great challenges for the incoming administration.In the past, in contracts, a type of forecast was usually made to set prices throughout the two years of the agreement, with updated adjustments in months 6, 12 and 18 of the agreement.
In the scenario of repealing the current regulations and returning to the path of 4 years ago, it is likely that the increases will be below inflation. The uncertainty lies in the choice of the currency in which the contracts are agreed, considering whether one other than the Argentine peso is chosen.
Everything must be resolved in the National Congress, the main uncertainty being the possibility of it meeting during the summer.
In this context, experts suggest that the optimal thing is for owners and tenants, whether with or without real estate intermediation, to reach an agreement and document the terms in detail in writing to prevent future problems.
3 - Social rentals
Social rental is an integral part of Title III of the current law that regulates locations, addressing the National Social Rental Program with the purpose of “facilitating access to decent housing through formal contracts.” According to article 18, the body in charge is the Ministry of the Interior, Public Works and Housing, through the Ministry of Housing. Although it began during the Macri Government, the Ministry of Territorial Development and Habitat was created with Fernández, without success. With Milei, the housing portfolio will once again be a secretariat, and its dependence on Human Capital or Infrastructure has not yet been determined.The Social Rental program, never implemented, is presented as an alternative for a sector with strong shortages, areas without supply and high prices. Libertarian sources indicated to Infobae the intention to address the problem, highlighting the crucial need to increase the stock of available units, arguing that “what does not exist is not rentable.” They highlighted the importance of generating a sustainable development shock focused on housing, urbanization and work.
This program aimed to especially consider victims of gender violence, in line with the Law for the Comprehensive Protection of Women and the Elderly. It became another failure within the complex scenario that access to housing involves.
