BuySellBA
Administrator
Traditional vs. temporary, in the face of a change in trend: Supply grows and housing rental becomes profitable again - Infobae
Source:
Tradicionales vs temporarios, ante un cambio de tendencia: crece la oferta y vuelve a ser rentable el alquiler habitacional
Expertos sostienen que tras la derogación de la Ley de Alquileres, el formato de largo plazo ha ganado mayor interés entre los propietarios, quienes optan por volver a poner sus propiedades en el mercado de alquiler
www.infobae.com
February 12, 2024
Experts maintain that after the repeal of the Rental Law, the long-term format has gained greater interest among owners, who choose to put their properties back on the rental market
By José Luis Cieri
The profitability between traditional and temporary rentals was once again even and now property owners are returning to the long-term format after the DNU that repealed the Rental Law
Although values in the Buenos Aires real estate market remain high, a change in trend is perceived: traditional rentals surpass temporary rentals after more than three years.
In recent times, the rental segment has been in turmoil due to successive legislative modifications. First the Rental Law of 2020, then its modification last October, and now the DNU of the new government that deregulated the sector.
The owners' rejection of the Rental Law gradually reduced the number of traditional contracts and a constant increase in temporary ones, due to the migration of owners in search of more favorable returns. This generated an oversupply in the temporary segment, of between 45% and 50% in 2023, with the publication of more than 20,000 properties in CABA alone.
After the implementation of the DNU, owners who previously opted for temporary rentals began to withdraw. In some cases, because their units were not very suitable to compete in this rental segment. Properties for temporary rental are usually occupied on average between 10 and 11 months a year, but have a higher risk of vacancy, especially if they do not meet the required conditions. The lower quality offering could not compete with units designed for this format.
Darío Rizzo, from Alternativa Propiedades, told Infobae : “Today these owners are coming back and asking us to make two-year contracts, with quarterly adjustments, and with prices that even improve profitability compared to temporary ones. And this is validated by the market, because the units are rented on the same day due to strong demand. Yes, one difficulty that the owner who had escaped from the temporary worker is going through is what to do with the furniture. Several are selling them or keeping them.”
Transformed paradigm
Basically the new rules, at least for now, are that there are no rules. The parties have the ability to agree on practically everything. Contracts can have a duration of one year and be denominated in dollars if both parties agree. Likewise, the adjustments (for the most part), in this context, are supported by the market to be carried out quarterly or four-monthly, according to the Consumer Price Index (CPI).“It is worth clarifying that in most first world countries, traditional housing contracts are for one year, with the option of renewal. For example, in Spain, traditional contracts are for one year, while temporary contracts are for up to 11 months,” said Rizzo.
Inflation, dollars and decline in tourism
The challenge of tourist or temporary rentals lies in the fact that, with the update of exchange rates and the marked inflation, Argentina is losing part of its attractiveness. Simultaneously, the current economic crisis is slowing down domestic tourism.Enrique Abatti (h.), lawyer specialized in real estate law and director of the Chamber of Owners of the Argentine Republic, said that “upon seeing an improvement in legal security in rental relationships, several owners reconsider their participation in the market. This change is reflected in the reintegration into traditional rental of properties that were previously excluded (see graph below).”
Source: Soledad Balayan for Maure Inmobiliaria
With a more favorable legislative outlook, properties are returning to the traditional rental modality, which implies less effort and dedication compared to tourist rentals. Currently on the portals there are an average of 10,000 homes for rent in CABA, 62% more than a year ago.
Even profitability
Experts maintain that the current market is going through a situation where the profitability of traditional rentals is equal to or exceeds that of temporary rentals. Although the published prices present differences, it is crucial to consider that temporary ones imply additional costs such as furnishing, equipment, maintenance and constant renovation, in addition to including expenses, taxes and services.In numerical terms, both types of rentals generate an annual dollar return that ranges between 5% and 7%, depending on the unit.
Rizzo commented: “This is the current situation, but it is likely to evolve over time. We will have to be attentive to the relationship between the dollar and the CPI, as well as the value of the properties, which would impact the updates of traditional contracts.”
Tips
The DNU allows contracts for terms of two years, which is a reasonable period for renting a home, while giving the parties freedom to agree on the price and its adjustment (only groups of tenants preferred three-year contracts). years).Abatti (h.) noted: “This improvement in real estate offers is generating that from now on tenants will begin to have more options when choosing a property to live in.”
In temporary properties, the properties must be equipped with all the furniture and equipment for living. It also requires personalized monitoring from the owners so that everything works well with the tenant who pays in dollars.
After the repeal of the law, experts advise owners and tenants to consider housing rental agreements for 24 months in pesos with quarterly or quarterly adjustments based on the CPI. This approach provides flexibility, allowing the parties to review the lease price after 12 months.
“Rent can now more accurately reflect fluctuations in the cost of living, providing a more equitable framework for both parties. The restriction on dollarization was lifted in certain areas, such as the Avenida del Libertador corridor, Belgrano R, Puerto Madero, Avenida Alvear, San Isidro, and several countries and closed neighborhoods,” clarified Abatti (h.).
Prices
Today the average price of a temporary rental in Recoleta, Palermo, Belgrano is USD 750 per month, with options in adjacent areas starting at USD 450.“As for terms and renewals, we carry out temporary rental contracts that are known as short-term , that is, those that range from one month to three months, with the possibility of renewing them for up to one year. Currently, the average term of the rentals we are doing is 6 months,” Rizzo explained.
In the traditional one, today there are options that average $270,000 in neighborhoods like San Telmo (for a two or three room apartment), in this case it would be more expenses and services, and without furniture and equipment.
What is needed for a contract
In general terms, for a tourist rental you are looking for a fully equipped property, with all the comforts, well maintained and functional.After the implementation of the DNU in traditional contracts, the parties can now freely agree on the duration of the contract, set the price, payment currency and update terms.
“In this format, it is not necessary for the property to be furnished or have kitchen appliances. It is also not essential that it be freshly painted, since it can be agreed with the tenant to carry out this work, discounting a part of the rent or even a full month, offering flexibility in the terms of the agreement,” concluded Abatti.
www.buysellba.com
