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Rentals: Record increase in supply in just ten days, prices and keys to closing a good contract - La Nacion Propiedades
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Alquileres: aumento récord de la oferta en apenas diez días, los precios y claves para cerrar un buen contrato
El DNU de Milei cambió las reglas de juego en el mercado de alquileres y los propietarios vuelven a publicar sus departamentos
www.lanacion.com.ar
January 11, 2024
Milei's DNU changed the rules of the game in the rental market and owners publish their apartments again
By Carla Quiroga
Rental prices have skyrocketed in the last four years
Javier Milei's DNU marked a turning point in one of the biggest dramas of recent years: the difficulty of renting an apartment at an “accessible” price or in line with income in a market that for the last three years distressed who had to go out in search of a house to live in.
Today, faced with a framework of greater freedom, the market reacts. “It's impressive, every day we have five calls to consult new values and conditions to rent ,” says Soledad Balayan, director of Maure Inmobiliaria.
In fact, this resurgence in supply is already reflected in the numbers. “There is a significant year-on-year increase in the supply of apartments for rent in CABA. If the first ten days of January of this year are compared with the same period in 2023, Zonaprop registers 20% more rental properties , while in Argenprop this increase is 47%,” says Balayan. In concrete figures, in Zonaprop the notices went from 5,700 to 6,500 in one week, he details and clarifies that this amount exceeds that of last year. But the data becomes more relevant if seasonality is taken into account: January is usually a “stop” month for rentals.
This increase in supply could be supported by the possibility that the parties have to apply any index and adjustment period, and also choose the contract term that one wishes.
Federico González Rouco, economist on the team at Empiria, Hernán Lacunza 's consulting firm , brings another issue to the table: “the accessibility of the housing rental supply.” He refers to the fact that now the apartment owners are going to stop resorting to the system of renting their apartment to relatives and acquaintances . “That offer may possibly return to the real estate agencies,” he clarifies. However, he believes that the DNU minimizes or reduces any possibility of risk for owners, but not for tenants who will feel more protected with good regulation.
Specialists talk about the opportunity to seize the moment . In this sense, Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic, anticipates that the greatest increase in supply will only “be seen 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.
Rental prices
The change occurs in a context where price increases found no limit in the last three years and with almost zero supply, during the last month of 2023 rental prices experienced a monthly increase of 18.6%, according to a survey made based on the notices published on the Zonaprop real estate portal . For reference, the same two-bedroom unit that was rented for almost $40,000 in July 2021 is now being offered for almost $335,000 per month.
Javier Milei's DNU opened new possibilities in the real estate market.
Regarding the annual increase, rents accumulated an increase of 260% , exceeding by 2.65 times that registered in 2022 when the increase was 98% almost in line with the inflation of the year which was 95%. This increase is significantly above the inflation rate (190.9%) and the adjustment of the Lease Contract Index or LCI (135.5%) used for contracts signed between July 2020 and October 18, 2023. in order to adapt the rental price, according to the Prop Zone Index.
The evolution of rental values
In numbers, a 40 m² studio apartment in CABA is already rented for $280,260 per month, while a 50 m² two-room apartment reaches $334,888. Meanwhile, a three-room, 70 m² property has a monthly price of $463,301.
The neighborhoods with record increases stand out Palermo , considered the most expensive to rent, with a monthly value of $491,737: almost half a million pesos . “There is a high demand in general, although, naturally, it varies between the different subsectors of the neighborhood ,” comments José Rozados, co-founder of Reporte Inmobiliario.
The ranking of the most expensive areas is completed with Belgrano , just below Palermo: a two-bedroom costs $487,654 and Núñez with values around $477,163.
A no small fact that reflects the same report is that there are ten neighborhoods in the city of Buenos Aires in which renting a two-room apartment does not go below $400,000:
- Chacarita ($475,151)
- Retiro ($458,284)
- Recoleta ($450,766)
- Colegiales ($446,072)
- Saavedra ($436,812)
- Coghlan ($425,754)
- Villa Urquiza ($420,953)
In contrast, Liniers is presented as the most affordable neighborhood , with a monthly rent of $273,253, followed by Monte Castro and Floresta, with costs of $284,809 and $288,139, respectively. On the other hand, Saavedra and Núñez are positioned as the neighborhoods with the greatest year-on-year increase with records that average 347%.
What do experts recommend to make a good rental contract?
Faced with this panorama, many wonder what is best when signing a good rental contract and taking advantage of the tailwind that is blowing for this market.1-What indexation to do and with what adjustment frequency?
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 last year, tenant and owner They will be able to freely agree to which index to tie the value of the contract. In addition, the parties may agree on how often to update the rental value.In this context, Abatti suggests using the INDEC consumer price index (CPI) and, if the property is located in the Federal Capital, the CPI of the City can be used. Regarding the periodicity of the adjustment, he assured: “What is convenient is quarterly indexation, given the enormous inflation we have. In normal times, indexing would be quarterly or semiannual, at most, but today it should be at least quarterly.”
While the DNU of Milei is in force, tenant and owner will be able to freely agree to which index to tie the value of the rental contract.
Mariano Esper, a lawyer specialized in real estate matters, assures that, if the contract is in pesos, it will be in the interest of the owner to keep it updated: “It is in your best interest to adjust the value every month, according to inflation, since we are in a context in which that monthly inflation varies between 20 and 30%. The tenant would be better off with something more staggered, such as salary adjustment every 3 months . ”
In any case, he assures that it is necessary to reach an agreement that adjusts to reality, since the tenant's salary is not updated every month . He adds that, if the economy normalizes, the adjustments could be made more often: “Making adjustments every 3 months today seems normal, but if the economy were to stabilize, these adjustments would be every 6 months or more.”
Regarding currency, rents may be established in legal tender or foreign currency , as agreed by the parties. Esper assures that it will be better for the owner to do it in dollars, but he believes that in most cases they will be done in pesos, since "the people who rent charge in pesos."
2-How long should the contract last?
In recent years, the contracts lasted 3 years, but with the DNU in force, 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.In this sense, Esper assures that the duration depends on several circumstances: "The owner may be better off with a two or three-year contract, if the tenant is good, but if not, shorter terms are better . " In the case of tenants, long contracts can be a good option, providing security and stability, but there are circumstances that may lead them to look for something more temporary.
“Today, housing contracts, since they do not have a minimum legal term, can be made for a year, a year and a half, or up to two years, but it is not advisable to exceed that term, to know what the tenant is like and how they take care of the property ” , advised the president of the Chamber of Property Owners of the Argentine Republic.
According to 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-Is it advisable to negotiate advance payment?
This figure was prohibited before the DNU, it was only possible if the tenant offered it of good will, but today the owners can request it. Enrique Abatti views this possibility favorably, as something advantageous for both the owner and the tenant: “It is convenient for both parties, because the tenant can negotiate the price, paying in advance, and the owner will be able to get that money, in a context of brutal inflation, to allocate it to a business or to save it in foreign currency,” he analyzes.The lawyer specializing in Real Estate Law and president of the Chamber of Property Owners of the Argentine Republic, believes that this will be more frequent when there begins to be a greater supply: “The owners, with this new legislation, will have more confidence, since there will be more legal certainty and, therefore, greater supply. And the tenant will be able to choose it and even ask for discounts, if he pays in advance.”
4-What guarantees should be accepted?
The Rental Law established that the tenant had to propose two guarantee options to the owner and that the landlord had to choose only one. For example, these could be a proprietary guarantee, a salary receipt, third party finances and surety insurance. Now this is subject to free agreement between the parties.In this sense, Esper expresses that the strongest guarantees, those that cover the most, are proprietary guarantees: that the guarantor is a person who has a property, a property, free of all encumbrances, and who can offer it as guarantee. “That is what the owner will want, but the tenant will not always be able to offer it,” added Mariano Esper.
5-How to stipulate who should be responsible for the repairs and maintenance?
Until the law existed, all repairs were the responsibility of the owner, unless what was broken was due to misuse by the tenant. Esper explains that the modifications made these rules stop being public order laws (mandatory) and that they remain “by default” in case it is not clarified in the contract.“It is important that the system of expenses , expenses, and services be clearly established ; "Who pays the ordinary expenses, taxes, fees and who takes charge and pays for breakages and deterioration of the property (kitchen, heating, washing machine)," says the specialist.
He suggests making a balanced agreement, so that the tenant does not feel that he has to bear all the expenses: “If we unbalance the market too much in favor of the owner, we will return to legal regulations again,” he concludes.
Experts point out that it is important to clearly establish the spending regime.
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