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Rentals: The decision that owners must make if they do not want to have “the property standing still” - Infobae
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www.lanacion.com.ar
June 04, 2024
The owners began to feel the consequences of the repeal of the law: there are already empty apartments; the reasons
By Candela Contreras
Rentals: after the repeal of the law, the market was affected by new rules that shook the board
“Today you can fight the price ,” say rental market specialists . After the repeal of the rental law, on December 29, 2023 - when Javier Milei's Decree of Necessity and Urgency came into effect - the rules of the game changed : the supply of rental property publications increased - by 184% so far this year, according to Zonaprop data; publication values stopped increasing above inflation - 2.3% in May, with inflation of 8.8% in April (the latest data recorded) -; The new contracts are closed for two years, in pesos and with quarterly or quarterly adjustments for the Consumer Price Index (CPI); and something unthinkable until recently came onto the board: the possibility of the counteroffer .
“The deregulation of rents allowed the sector to regain vitality,” says Diego Frangella, new president of the Real Estate Association. The owners are beginning to see the consequences of the repeal of the regulations and the anxiety to occupy their homes becomes latent : properties that were previously reserved in a few days to the highest bidder and, sometimes, even without seeing them, can now go weeks published on the same site and are shown at any time of the day, regardless of the time, as long as it is rented.
The dynamic changed in a few months : in the last three years the apartments were empty because the owners did not want to rent under the law and the tenants were desperate to find housing; Now, tenants have a wide choice, they can choose and even set certain conditions, and the owners must accept the new rules to be able to keep them occupied.
Landlords are beginning to feel desperate to rent
With the new guidelines set by the rental market, if owners do not want to have the property idle for weeks , they must begin to accept the possibility of counteroffers from tenants , who, with more options in the market, end up choosing the property that best suits them. “The demand remains the same, but, as there is greater supply, the completion time is longer. That is why it is always preferable to have the apartment rented than empty,” adds Frangella. Therefore, in some contracts, reductions in nominal terms of values can already be observed: “ Contracts are being closed with the December publication prices ,” she states.
Along these lines, Enrique Abatti, president of the Chamber of Owners of the Argentine Republic , explains that the repeal of the regulations allowed greater contractual freedom between the parties involved. Although the law , when it was passed, was intended to protect tenants, in reality , it generated a shortage of supply and inflated prices . Now, with a greater supply and fewer requirements from owners, tenants have the ability to negotiate more favorable prices . “In most cases, tenants can make proposals and fight the price, with discounts of between 10% and up to 20% less than the initial publication price . Today, with the increases in the costs of expenses and taxes, the landlord prefers to resign those percentages and rent it rather than have it empty,” says the lawyer.
“Last year, there were people who rented without looking at the apartment because they had nowhere to live . But now if the tenant is not satisfied with the property, he can find another one quickly,” explains Abatti, and maintains that landlords have to reduce their demands because “we are already beginning to see empty properties that are not rented .”
For his part, Diego Migliorisi, managing partner of Migliorisi Propiedades , agrees with the other experts and highlights that competition in the market led to a more realistic price adjustment , owners can no longer impose excessive rates. Previously, the lack of options forced tenants to accept unfavorable conditions , but now, the situation has changed in their favor. “Currently, an owner who asks a lot for an apartment that is not worth it is not going to rent it today. Before (the repeal of the law) , in order to get a home, tenants reserved a property without seeing it, it was a very distressing situation because there were no options,” he adds.
Competition in the rental market led to a more realistic price adjustment
In numbers, the average rent for a one-bedroom apartment in the city is $383,954 per month , a two-bedroom apartment can be rented for $440,072 , while a three-bedroom apartment can be rented for $588,039 , according to Zonaprop data. . The neighborhoods with the most expensive rents are - in values of two environments -: Puerto Madero ($1,052,056), Palermo ($505,329) and Colegiales ($491,794). While on the opposite side there are : Lugano ($292,018), Mataderos ($342,813) and Liniers ($357,222).
The situation in the premium market
Unlike the general real estate market , in a more premium sector of the city, such as in Recoleta, Belgrano, Las Cañitas, where Soledad Balayan, owner of Maure Inmobiliaria, sells properties, the counteroffer is almost zero . “The interested party arrives because he is satisfied with the publication price, he does not make a counteroffer.”But, what does happen is that the publication prices are maintained for one or two months , something unthinkable the previous year, despite the increases in inflation, and even in specific situations they end up falling because they are not rented .
The real estate broker states that there are fewer contract signings , and consequently the supply is increasing. “Many of the properties that were published two months ago are still valid on the platforms. Mainly those with one and two rooms.” This is because “people take more time to rent because they can analyze different options that there were not before (with the rental law).
In a more premium market, the counteroffer is almost non-existent
What happens to contracts signed after the repeal of the rental law
A key fact to keep in mind is that the first current rental contracts , which were signed in January - after the repeal of the law - with a quarterly update in June, will be crossed by their second update . “Many of these agreements, which are adjusted every three months and by CPI, today present values above those of the market ,” explains Balayan. This situation occurs because, when adjusted for inflation (the last index published by Indec is from April 2024, with an accumulated quarterly inflation of 30.21%) they are well above the increases in published properties, which in recent Three months saw increases in publications of 6.1% .“In these cases (of rent adjustments with CPI), many tenants are being able to renegotiate the adjustments with the owners , something that did not happen with the law. Today all the conditions are in place for there to be negotiation,” explains Balayán.
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