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Without a Rental Law, 86% of the extensions became new contracts that were freely agreed upon - Infobae
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Sin Ley de Alquileres, el 86% de las prórrogas se convirtieron en nuevos contratos que se pactan libremente
Así lo confirmó un análisis privado, que relevó la actual dinámica de los acuerdos entre propietarios e inquilinos en Argentina. El estudio detalla los métodos de ajustes, los plazos de duración de los pactos y las prácticas más comunes en los contratos de alquiler actualmente
www.infobae.com
August 25, 2024
This was confirmed by a private analysis, which revealed the current dynamics of agreements between landlords and tenants in Argentina. The study details the adjustment methods, the duration of the agreements and the most common practices in rental contracts today.
By Jose Luis Cieri
Landlords and tenants make free and inter-party agreements after the 2020 Rental Law was repealed. The current regulation is based more on the Civil and Commercial Code of the Nation (Illustrative Image Infobae)
A notable increase in the formalization of rental contracts is one of the main trends observed in the country after the repeal of the Rental Law of 2020 through a DNU of the current Government, according to a survey carried out by the Real Estate Federation of the Argentine Republic (FIRA).
This measure generated greater stability in contractual relations between tenants and landlords, as evidenced by the fact that 86% of the extensions, which were common until the end of the year due to the rejection of the repealed law by the owners, are now renewed as new contracts.
FIRA conducted its survey based on more than 53,000 contracts in Argentina, of which 41,500 are residential and the rest correspond to commercial premises (see graph below).
Emilio Caravaca Pazos , president of FIRA, stressed to Infobae that this stability and the DNU led to the rental market showing signs of recovery and balance. “Previously, tenants faced a limited supply and long waiting lists, but currently the market shows an expansion of the supply of properties available for rent in various cities of the country ( in AMBA it grew by 218% this year ).”
Source: Real Estate Federation of the Argentine Republic (FIRA)
As regards the duration of the contracts, the survey revealed that most agreements are established for a period of 24 months, with 71.6% in the case of residential rentals and 60.6% in the commercial sector.
The length of these contracts can vary depending on the specific needs of the parties involved, particularly in commercial properties requiring improvements.
Most used settings
In terms of adjustments and updating of rental values, the Index for Lease Contracts (ICL) is presented as the index most used for housing contracts, while the Consumer Price Index (CPI) is predominant in the commercial sector.
Source: Real Estate Federation of the Argentine Republic (FIRA)
Adjustments to the values may be agreed between the parties on a quarterly, four-monthly or half-yearly basis, depending on the type and characteristics of the property.
FIRA also found that there is currently a greater willingness to negotiate and make contract conditions more flexible, as reflected in the recommendations of real estate brokers who suggest that owners and tenants seek continuity in their relationships, if these are satisfactory.
Source: Real Estate Federation of the Argentine Republic (FIRA)
This greater real estate offer results in an expansion of negotiation possibilities, benefiting both parties in the updating of values and renewal of contracts.
Caravaca Pazos highlighted the positive impact of these trends on the stability of the Argentine real estate market, especially after the DNU, and the long-term potential it represents for balanced growth in the sector.
Source: Real Estate Federation of the Argentine Republic (FIRA)
An additional aspect highlighted by Caravaca Pazos is the low level of conflict and the high stability in the fulfillment of rent payments, both residential and commercial.
Tenants and merchants prioritize maintaining good tenant relations, which they consider essential in their financial and operational planning.
Recommendations
In the current market environment, professional real estate agents often recommend that landlords and tenants, if they have a good relationship, look for ways to continue it.
Source: Real Estate Federation of the Argentine Republic (FIRA)
Quarterly adjustments prevail in new contracts. In fact, and taking advantage of the freedom that now exists, different adjustment methods can be agreed upon during the agreement, but they must be recorded in writing before signing the contract.
“Shared effort and flexibility in negotiations are key to reaching beneficial agreements. The greater supply of properties allows for greater possibilities for negotiation, which benefits both parties in updating values and renewing contracts,” Caravaca Pazos clarified.
Prices
As for the rate of increase in rental prices, as inflation is slowing and supply is expanding, values are beginning to stabilise and are not rising as strongly as they were at the beginning of the year.According to Zonaprop, in the City of Buenos Aires the increase until July accumulated 163%; on the other hand, Reporte Inmobiliario reported that the inflation for the period analyzed (July 2023 vs. July 2024) was 285.9%, and that in that same period, used apartments for rent showed an increase of 184.25% on average for two-room apartments and 174.28% for three-room units.
In Salta capital, rental prices rose more sharply than in other areas due to the boost in demand from those who are going to work in lithium extraction, according to reports from the real estate market.
The average price, according to Zonaprop, of a two-room apartment in CABA is $464,742 per month and registered an increase of 3.3% in July. In 2024, the increase is 39%, 50 percentage points below the accumulated increase in the same period in 2023 (89.6%).
Caravaca Pazos pointed out that the year-on-year increases in the interior of the country are similar in percentages. “There are even provinces where, depending on local dynamics, the increases can be up to 12% or 15% higher due to the high demand, such as in Neuquén due to the boost from Vaca Muerta, mining in San Juan or lithium in Salta and Jujuy.”
Below are some reference monthly prices for homes in different areas:
Two-room apartments
- Resistance: $160,000.
- Inns: $220,000.
- Cordoba capital: $250,000.
- Mendoza capital: $234,000
- Santa Fe Capital: $210,000
- Catamarca: $150,000.
3-room houses (Standard, 80 to 100 m2)
- Resistance: $300,000.
- Inns: $450,000.
- Cordoba: $400,000.
- Mendoza: $416,000.
- Santa Fe Capital: $320,000.
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