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The other side of the rental crisis: What homeowners expect from Milei to put units back on offer
December 11, 2023
Accessing a long-term housing contract is becoming increasingly complicated. The reasons given by the owners and why they insist on maintaining the benefits of the law passed in 2020, even if they return to contracts governed by the Civil and Commercial Code
By José Luis Cieri
There are unknowns about the future and what may happen with the Rental Law that was recently reformed. The owners have their complaints and give reasons for not renting their properties long term (Photo: Getty)
The search for a rental home became an increasingly difficult challenge. Since the implementation of the controversial Rental Law, it is estimated that around 250,000 units left the housing rental market. A considerable proportion of these properties are now for sale and some owners decided to equip them to incorporate them into the temporary or tourist rental system, in search of a more attractive profitability. This change impacted the availability of housing for long-term rental.
Facing the government of Javier Milei, the real estate market anticipates possible changes with the hope of a prompt presentation to Congress of the proposal to repeal the current reformed regulations in October and that agreements be returned to under the Civil and Commercial Code (CCyC).
Unrest among owners remains, despite recently postponed agreements. Representatives of one of the parties involved in the signing of contracts (the other are tenants) maintain an optimistic perspective, advocating the preservation of key regulatory aspects of the current legislation.
The lawyer specializing in real estate law and president of the Chamber of Owners of the Argentine Republic (CAPRA), Enrique Abatti, expressed to Infobae his opinion about President Milei's intention to repeal the rental laws (27,551 in force since July 2020 and 27,337 since last October 18). It would be a positive measure, he pointed out, with technical complexities involved, such as legislative processing, especially in the Senate where the libertarians do not have a majority.
Code issue
In relation to current laws, Abatti highlighted positive aspects of Law 27,551, which repealed the prohibition of indexing established by the Convertibility and Deindexation Law of 1991. The total repeal could result in the loss of advantages, such as the possibility of applying indexes adjustment for inflation. In addition, he highlighted the importance of reforming article 1,351 of the CCyC for real estate brokers.Regarding Law 27,737 that offers tax incentives for landlords and tenants, Abatti recognized their usefulness although he considered them to be somewhat insufficient.
Finding rental signs in Argentina is almost impossible, the supply has collapsed to historic levels (NA Photo: Damian Dopacio)
Experts consulted suggest the partial repeal of the laws to generate certainty and not lose benefits. Abatti proposes maintaining the positive aspects and repealing the rest, equalizing contractual freedom, which would allow various adjustment indices to be applied to lease contracts. “If we returned to the CCyC regime, the minimum legal term of two years would be restored, increasing the supply of housing rentals,” he stated.
The positive should be maintained. “The rest should be completely repealed, equating contractual freedom. This would allow the parties to apply the adjustment indices that they consider appropriate, such as the Consumer Price Index, salary adjustment, taking records from INDEC, the City of Buenos Aires, the provinces and entities such as the Argentine Chamber of Construction. , among other possibilities,” Enrique Abatti (h) , a lawyer specializing in real estate law and director of CAPRA, explained to Infobae.
Postponement
Recently, several contracts that were about to be signed for after December 11 onwards fell through.According to Abatti (h), both President Milei's statements and the persistence of rental laws had detrimental consequences for owners, tenants and real estate agents, and led to practically zero supply. “The caution of owners in not offering their homes for rent is due to the expectation of a legislative reform announced by the president. This expectation will not be resolved immediately, unless it is contemplated in the package of laws to be discussed during the extraordinary sessions in Congress.”
According to some specialists, the only way out of this chaotic situation is precisely, as President Milei says, to repeal them, with the caveats outlined.
A person hands over the key to an apartment in a housing rental process. Action that is not frequent these days in our country (Illustrative image Infobae)
“This is maintaining the articles that we have detailed and modifying art. 765 CCyC regarding foreign currency. In short, allow the parties to exercise the principle of contractual freedom of article 958 of the CCyC and that the State does not interfere in the relations between the contracting parties,” said Abatti (h.).
Owners who belong to groups highlight that the repeal is essential, but they also propose modifying the 2015 CCyC to allow updates by agreed indices. They warn that, without legal certainty, the repeals and modifications would have no effect, suggesting the need for an express eviction law.
Germán Matienzo, from Propietarios Unidos de Argentina, highlighted to Infobae that the null offer in CABA preceded the elections, indicating that under current law, they prefer to leave the properties empty. In his case, two apartments remain unoccupied for two years, returning to the market only if conditions change; otherwise, they would be put up for sale. “It is vital to enact an express eviction law for a quick resolution. This would increase supply by facilitating the recovery and rotation of properties.”
For now, few contracts have been made through the Casa Propia coefficient, with semiannual adjustments and three years of duration.
Matienzo was forceful and concluded: “It was not accepted because the origin of that index was to generate soft mortgage loans by the State (they are used to adjust the Procrear plans), which is the result of comparing two indexes opting for the lowest, since That value is deducted 10% in each adjustment, therefore, the State wants an individual (landlord) to fulfill their social role by subsidizing the tenant.”
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