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The rental crisis: what is the best strategy to extend contracts in a market without supply - Infobae
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www.infobae.com
October 07, 2023
Experts provided details on how to do this effectively, ensuring both landlords and tenants agree to clear terms to avoid future complications.
By José Luis Cieri
Due to the current situation, today it is normal for rental contract extensions to be made. Until the uncertainty regarding possible changes in the current law governing rentals calms down, there are few three-year contracts and interannual adjustments (Photo: Getty Images)
In September, in the city of Buenos Aires, 12,000 rental contracts made under the Rental Law passed in 2020 expired. In a context marked by the shortage of housing supply and the desperation to secure a roof, the vast majority of these contracts They are being extended. The extension seeks to provide additional time for tenants to find new housing in an increasingly restrictive market.
In CABA, tenants usually opt for a negotiated extension of the rental contract, generally with the intervention of the real estate agency that managed the initial operation. This type of extension is commonly done when the contract is about to expire. In the negotiation, specific terms are established such as the duration of the extension - which is usually three months - and the monthly value of the rent during that period, which is normally updated. It is crucial that both parties are clear about these aspects before signing the contract extension.
Oscar Puebla, architect and real estate broker, told Infobae that, in a turbulent context, the extension of a housing rental contract works as a good faith agreement between the parties. “It doesn't matter how many times; It is similar to an expired lease in which the tenant continues to pay and the landlord issues a receipt. You both may assume you are out of contract, but you are never actually out of contract. This agreement prevails over the current Rental Law and would be the applicable regulations in the event of litigation.”
Specialists agree that the law does not establish a limit on the number of times the parties can extend a rental contract.
To sign an extension, it is vital to read each clause carefully before endorsing the extension of the rental contract for a home (Photo: Pexels)
“Generally, when the contract is extended, it is used to establish a new rental price, which will then be adjusted according to what the law dictates and what is agreed between the parties,” explained Joaquín Vallebella, partner specialized in litigation and real estate at the Brons & Lawyers Chambers.
It is common to carry out these extensions in situations where the tenant plans to leave the property, with the aim of providing the time necessary to find a new place and move. This practice has become common in a difficult real estate market.
Ricardo Botana, president of the Argentine Tenants Union, indicated that “when the extension is made, the ICL does not apply, except when the extension is for more than one year; In that case, the increase should be year-on-year.”
“Agreements are often established with different adjustment variables. Some take the free dollar as a reference and others take inflation. In short, if the relationship between the tenant and the landlord is good and payments are made on time, the contract is likely to be extended. The law did not benefit any of the parties and until it is modified, it is likely that this scenario of continued extensions will persist,” Puebla said.
In general, what the parties do is set in writing a new expiration of the contract and take the opportunity to adjust the price.
Vallebell added: “The rest of the conditions usually remain without changes and/or adjustments. An exception may be guarantees or security deposits by the tenant. The parties may take the opportunity to modify or adjust such matters.”
The Senate, in the debate on the rental law (Photos: Celeste Salguero/Senate Communication).
It is key to assume that it is an extension and not a new contract. “Tenants should try to extend the agreement for as long as possible until they can find new housing. However, according to the queries and reports we receive, they rarely achieve extensions for more than three months,” Botana said.
If the parties do not reach an agreement for the extension, the owner has the option of sending a document letter to the tenant 10 days before the expiration of the contract to request that they leave the property. If the tenant does not comply, a judicial eviction process will begin, which is usually lengthy. In that case, the owner has the right to resort to legal proceedings due to the expiration of the contract.
What to do if the contract cannot be extended again because the owner does not want to extend it or needs the property? There are cases of families or individuals who have been searching for housing for months without success.
In relation to the time for moving, the current law establishes that in rentals intended for housing, the parties must begin negotiations for the renewal of the agreement during the last 3 months of the contract.
“Either party can notify the other to begin these negotiations. Therefore, the tenant has a 3-month window. If he cannot find another home, he can try to negotiate a grace period with the landlord. Meanwhile, the rental contract remains valid according to its terms, but this does not imply a tacit renewal,” concluded Vallebella.
Source:
La crisis de los alquileres: cuál es la mejor estrategia para prorrogar contratos en un mercado sin oferta
Expertos brindaron detalles sobre cómo prorrogar pactos de manera efectiva, asegurando que tanto propietarios como inquilinos acuerden términos claros para evitar complicaciones futuras
www.infobae.com
October 07, 2023
Experts provided details on how to do this effectively, ensuring both landlords and tenants agree to clear terms to avoid future complications.
By José Luis Cieri
Due to the current situation, today it is normal for rental contract extensions to be made. Until the uncertainty regarding possible changes in the current law governing rentals calms down, there are few three-year contracts and interannual adjustments (Photo: Getty Images)
In September, in the city of Buenos Aires, 12,000 rental contracts made under the Rental Law passed in 2020 expired. In a context marked by the shortage of housing supply and the desperation to secure a roof, the vast majority of these contracts They are being extended. The extension seeks to provide additional time for tenants to find new housing in an increasingly restrictive market.
In CABA, tenants usually opt for a negotiated extension of the rental contract, generally with the intervention of the real estate agency that managed the initial operation. This type of extension is commonly done when the contract is about to expire. In the negotiation, specific terms are established such as the duration of the extension - which is usually three months - and the monthly value of the rent during that period, which is normally updated. It is crucial that both parties are clear about these aspects before signing the contract extension.
The shortage of supply is palpable in all Buenos Aires neighborhoods and hundreds of owners who refused to put their units up for rent since the current Law came into force are waiting for what may come out of the Senate. There is uncertainty about whether the ruling party will advance with its ruling, contrary to what was approved in the Chamber of Deputies. If it does, the initiative to reform the law will return to the Lower House, further extending uncertainty about eventual changes.
Oscar Puebla, architect and real estate broker, told Infobae that, in a turbulent context, the extension of a housing rental contract works as a good faith agreement between the parties. “It doesn't matter how many times; It is similar to an expired lease in which the tenant continues to pay and the landlord issues a receipt. You both may assume you are out of contract, but you are never actually out of contract. This agreement prevails over the current Rental Law and would be the applicable regulations in the event of litigation.”
Specialists agree that the law does not establish a limit on the number of times the parties can extend a rental contract.
To sign an extension, it is vital to read each clause carefully before endorsing the extension of the rental contract for a home (Photo: Pexels)
“Generally, when the contract is extended, it is used to establish a new rental price, which will then be adjusted according to what the law dictates and what is agreed between the parties,” explained Joaquín Vallebella, partner specialized in litigation and real estate at the Brons & Lawyers Chambers.
It is common to carry out these extensions in situations where the tenant plans to leave the property, with the aim of providing the time necessary to find a new place and move. This practice has become common in a difficult real estate market.
Price without ICL
A significant challenge is price increases. According to the Lease Contract Index (ICL) published by the Central Bank, the increase for September was 113 percent. However, the owners consider that this increase is out of date and is lower than inflation. For this reason, to extend they usually request increases of more than 150 percent. Given the shortage of housing supply, struggling tenants are forced to accept these conditions.Ricardo Botana, president of the Argentine Tenants Union, indicated that “when the extension is made, the ICL does not apply, except when the extension is for more than one year; In that case, the increase should be year-on-year.”
What to look at before signing an extension
It is common for contract extensions to be made for periods of between 3 months and one year. Both owners and tenants anticipate that the regulations could change, especially after the new national government takes office next December.“Agreements are often established with different adjustment variables. Some take the free dollar as a reference and others take inflation. In short, if the relationship between the tenant and the landlord is good and payments are made on time, the contract is likely to be extended. The law did not benefit any of the parties and until it is modified, it is likely that this scenario of continued extensions will persist,” Puebla said.
In general, what the parties do is set in writing a new expiration of the contract and take the opportunity to adjust the price.
Vallebell added: “The rest of the conditions usually remain without changes and/or adjustments. An exception may be guarantees or security deposits by the tenant. The parties may take the opportunity to modify or adjust such matters.”
The Senate, in the debate on the rental law (Photos: Celeste Salguero/Senate Communication).
It is key to assume that it is an extension and not a new contract. “Tenants should try to extend the agreement for as long as possible until they can find new housing. However, according to the queries and reports we receive, they rarely achieve extensions for more than three months,” Botana said.
If the parties do not reach an agreement for the extension, the owner has the option of sending a document letter to the tenant 10 days before the expiration of the contract to request that they leave the property. If the tenant does not comply, a judicial eviction process will begin, which is usually lengthy. In that case, the owner has the right to resort to legal proceedings due to the expiration of the contract.
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It is essential that the tenant reads the entire contract carefully, paying special attention to the new expiration date and any clauses that are modified.What to do if the contract cannot be extended again because the owner does not want to extend it or needs the property? There are cases of families or individuals who have been searching for housing for months without success.
In relation to the time for moving, the current law establishes that in rentals intended for housing, the parties must begin negotiations for the renewal of the agreement during the last 3 months of the contract.
“Either party can notify the other to begin these negotiations. Therefore, the tenant has a 3-month window. If he cannot find another home, he can try to negotiate a grace period with the landlord. Meanwhile, the rental contract remains valid according to its terms, but this does not imply a tacit renewal,” concluded Vallebella.
