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Rentals: The shortcut that apartment owners find to take advantage of Milei's DNU - La Nacion Propiedades
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Alquileres: el atajo que encuentran los dueños de los departamentos para aprovechar el DNU de Milei
El DNU que dispuso el Presidente podría aumentar la oferta de propiedades en alquiler
www.lanacion.com.ar
January 3, 2024
The DNU that the President ordered could increase the supply of rental properties
By Mercedes Soriano
Rentals: Milei's DNU encourages putting apartments on sale but with some requirements.
Javier Milei repealed the Rental Law by a Decree of Necessity and Urgency (DNU) and, with it, a figure in the real estate world awakened. After years of hibernating, the owners who in the past rented their properties are slowly, putting them up for sale after the enactment of the Rental Law in 2020 and now facing the possibility of agreeing the conditions between the parties. They are considering putting it up for rent again.
The profitability of the apartments was around 5.75%% annually in December, according to the latest report published by Zonaprop. This figure repelled the owners, since they were obliged to freeze the price for a year and update it by an index that ran two months behind inflation . Instead, key concepts such as currency, term, price indexation, and periodicity of contract adjustments can now be agreed between the parties. This allows tailor-made agreements to be made that guarantee a more acceptable income .
The DNU deregulated rentals and allows for tailor-made contracts agreed between the parties
“We have clients who put their home up for sale and said that if the law was ever removed, they would put their property up for rent again. Since the DNU news came out, 10% of them who have their property for sale told us that they want to rent it again,” says Diego Cazes, general manager of LJ Ramos Brokers Inmobiliarios.
Maximiliano Casarotti, broker at Cristina Barrionuevo Negocios Inmobiliarios, highlights that since Friday, 10 cases like this have entered the real estate agency where he works.
Offer with fine print
Casarotti also distinguishes a second new group that puts their property up for rent: “There are owners who have it for sale and since there is now the option of terminating the contract if it is sold, they put it up for rent again.” In other words, the new regulatory framework gives owners the possibility of taking advantage of the property and generating returns while they wait for it to be sold.This possibility is regulated in the Civil and Commercial Code. “Article 1189, section C of the Civil and Commercial Code allows the term of the contract to be made subject to the sale of the property. Then the owner agrees that the contract can be terminated if the home is sold. For example, they can clarify in writing that by giving two months' notice, the landlord could terminate the contract and compensation could or may not be agreed in favor of the tenant," says Dr. Enrique Abatti, lawyer and president of the Argentine Chamber of Owners of the Argentine Republic.
The Civil and Commercial Code allows the owner to agree that the contract can be terminated if the home is sold.
The first impression of some brokers is one of distrust, since they doubt whether the tenants will accept these terms. In short, for a tenant, moving involves high costs that they cannot always afford to repeat if the property they are moving to is sold in the short term.
“From the real estate agency we speak with the owners and we are going to promote that a guaranteed year be respected so that the tenant has a little stability. In fact, we already received an inquiry from a potential tenant to rent a PH under this modality and I didn't see it as bad," Casarotti adds about the care that this type of contract must take with the tenant.
It should be noted that this was already happening informally. “In 2021, I rented an apartment in Palermo with a friend that I found through Zonaprop . We made a three-year contract outside the law with semiannual increases of preset percentages. We knew that the property was for sale and that that moment was going to come. When we still had a year left on the contract she showed up one day, she told us that she had sold it and that she was giving us a month to leave. In the current situation it is so difficult to find a rental that we replied that we could not guarantee that we would leave within that period. That was when we negotiated compensation, with which I was able to pay half a year in advance in a new place and thanks to that they quickly took me on as a tenant in another unit,” says María, a 25-year-old tenant in the city of Buenos Aires.
For a tenant, moving involves high costs that they cannot always afford to repeat if the property they are moving to is sold in the short term.
Sell with a tenant inside
The owner who is convinced that he wants to sell and until he finds a buyer rents the unit, can add a bonus to the purchase ticket. “If you make a contract, you can now sell the property with a current rental contract of the new ones, which is much more interesting than doing it with the previous law ,” says Soledad Balayan, broker and owner of Maure Inmobiliaria.In this way, the investor already purchases a unit that has monthly rent under conditions perhaps more favorable than those offered by the market when the Rental Law was in effect. For example, he can index the value to inflation or the tenant's salary and can make adjustments every three months or as frequently as he deems appropriate. The first impression is that this could represent a threat to the tenant, who could be asked for unattainable price updates or the contract in foreign currency. Market specialists highlight that the demand will validate logical contracts. The advantage is that the freedom to agree between the parties could increase supply and that same growth should rearrange the balance to a new equilibrium point.
Balayan indicates that a factor that can attract investors is selling the property with a rental contract under the terms established by the DNU
“There is no legal problem in selling a property that is rented,” Mariano Esper, a lawyer specialized in real estate and business issues and a university professor, points out in advance. “The important thing is that the purchase ticket has a clause that says that the property is rented. And the ideal would be for that same ticket to be signed by the tenant, implying that he knows about the sale and that he is going to pay the rent to the new buyer,” he adds.
A key fact is that selling a rented property does not modify the current contract . The only thing that changes is the recipient of the rent collection in case the new owner wants to continue renting it.
“The most uncomfortable thing about these situations is having to show the property to the potential buyer with the tenant. Sometimes the landlord is afraid of what will happen next with the renewal of the contract. But we have made many sales like this and it has never been a problem. The tenants are also clients, we have chosen them and we have a good relationship,” says Soledad Balayan.
Selling a rented property does not modify the current contract
Signs of reactivation
The DNU has only been in force for a few hours. Although we cannot yet talk about trends, the first signs of market reactivation are already being registered. From the point of view of investors, the phones have already started ringing. “The inquiries about investing for rent increased,” analyzes Gabriela Goldszer, director of Ocampo Propiedades.In that sense, he explains that for some time there has been a demand to buy properties for rent, especially smaller units. “Last year they were for temporary rentals and when the law is repealed, the investor will see traditional rentals as an alternative,” he believes.
“The inquiries about investing for rent increased,” analyzes Gabriela Goldszer, director of Ocampo Propiedades.
On the other hand, the demand to rent is notable and the new offer quickly arouses interest. “We put a two-room apartment in Villa Urquiza for rent on December 31. 24 people consulted that same day and in less than 48 hours it already accumulated 100 consultations,” concludes Casarotti.
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