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Rentals: What are the changes that made the supply of units grow by up to 200% - Infobae
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Alquileres: cuáles son los cambios que hicieron crecer hasta 200% la oferta de unidades
En CABA se multiplicó por tres y en las principales plazas del interior del país por dos, desde niveles muy deprimidos. Efectos sobre los precios de las locaciones
www.infobae.com
March 16, 2024
In CABA it multiplied by three and in the main squares in the interior of the country by two, from very depressed levels. Effects on location prices
By Jose Luis Cieri
Rent deregulation injected new life into a market experiencing a mismatch between demand and supply (Freepik)
In just over two months, the repeal of the Rental Law through the Decree of Necessity and Urgency (DNU) 70 - which the Senate rejected last Thursday, but remains in force as long as Deputies do not validate the rejection - revolutionized the Argentine real estate sector.
The validity of the DNU brought notable changes in the negotiation conditions between owners and tenants and revitalized the rental market.
According to various sources in the sector, the deregulation of rents revived a market that was experiencing a strong mismatch between demand and supply and resulted in prices perceived as disproportionate, in the face of a housing deficit that continues to be an enormous challenge.
Before the repeal, the legislation established that contracts had to have a duration of three years and could only be updated annually according to the Lease Contract Index (ICL) for those signed between July 2020 and October 2023. Contracts signed after of legislative changes last October and until December 29, the date of the repeal, were governed by a semiannual update under the Own Home Index.
With the annulment of the previous framework, it is now possible to negotiate the terms of the contract, including terms and price adjustments, with complete freedom under the Civil and Commercial Code, allowing quarterly or four-monthly adjustments, providing greater flexibility in the face of inflation.
The change motivated hundreds of owners to return to the market, ready to enter into agreements more in line with their economic expectations. Currently, there are more than 12,000 homes in CABA, in one of the main portals and it is estimated that the supply has expanded 200% since the DNU came into force.
Currently, there are more than 12,000 homes in CABA, in one of the main portals and it is estimated that the supply has expanded 200% since the DNU came into force (Reuters)
While it is estimated that in the main places in the country such as Córdoba, Rosario, Mendoza, Salta, La Plata, Mar del Plata, Neuquén, the supply has expanded by 100% since the previous regulations were repealed.
The increases in values slowed down at the starting point of the contracts with the deregulation of the market, although prices remain high (a three-room apartment in CABA does not go below $460,000 per month).
According to Zonaprop, prices in Greater Buenos Aires increased 8.3% between February and the last few days, a slowdown compared to previous increases that ranged between 12% and 18% month-on-month.
Tenants make counteroffers on the listing value and manage to reach an agreement, with most contracts set for up to 24 months.
The repeal of the Rental Law allowed more contracts to be signed instead of short-term extensions (Freepik)
Essential modifications
Specialists maintain that the most significant change that DNU 70 brought was the encouragement to rent by owners who had empty properties.Soledad Balayan, from Maure Inmobiliaria and sector analyst, told Infobae that the measure “massively encouraged the supply of rentals and, as a result, prices stopped increasing above inflation. Furthermore, by allowing greater flexibility in contract terms, greater agility was achieved in the market, while the costs associated with carrying out a contract were reduced, both in terms of fees and expenses related to the bond or surety insurance.”
The DNU allowed free agreement between the parties in various fundamental aspects, such as the possibility of contracting in any currency agreed upon by the parties, and without judicial intervention to modify this condition.
Source: Maure Inmobiliaria
“In addition, the freedom to agree on the term of the room contract was established, without establishing a minimum, and the free determination of the period and the form of adjustment of the rental fee. Likewise, the parties can agree on the amount and currency of the security deposit, and the contract can be modified by agreement of the parties at any time, as long as it is in writing and with the signature of all the parties involved," explained Alberto Héctor . Loyarte , Real Estate expert and real estate broker.
And Loyarte added: “If the DNU remains in force , it would facilitate the regularization of previous irregular situations, and the owners trust in the fulfillment of the contracts, we could see a significant increase in the supply of rental properties. In this scenario, it would be reasonable to consider maintaining the initial rental values, prioritizing the quality and payment capacity of the tenants.”
It is crucial that the contract accurately details the condition of the property and its components to prevent possible conflicts due to deterioration or damage, and thus clearly determine responsibility for repairs.
“The DNU makes it possible, through appropriate wording, to agree that the tenant assumes certain repairs or improvements, an option not permitted by previous legislation,” Loyarte commented.
In dollars
Of the current offer in CABA, half of the apartments are offered in dollars but no longer for temporary agreements, but for agreements of up to a minimum of one year.
A three-bedroom in CABA does not go below $460,000 per month
According to the Real Estate Report, until a week ago, the average rental value for 2-room apartments used in CABA was around $278,000 per month.
José Rozados , from the platform, told this medium: “As we have pointed out in our reports over the last three years, beyond the averages of public offers for standard units, if you are looking for a unit in optimal conditions, the values exceed these figures widely.”
In dollars, the values of 3-room apartments exceed the equivalent of USD 450 per month.
Balayan emphasized that the abundant rental supply is especially notable in CABA “and is already generating a downward trend in prices for those really interested in renting. The wide range of options available gives greater bargaining power to tenants, which represents a significant change compared to the dynamics under the rental law prior to the DNU.”
Territorial growth
Among the most notable changes in different areas of the country is the notable increase in supply, facilitated by the flexibility of contractual conditions and the return from temporary rentals to the traditional rental market.The latter has occurred as a result of a renewed preference for long-term housing contracts by tenants who previously opted for temporary solutions.
In Córdoba capital, a two-room apartment starts at $180,000 per month
Emilio Caravaca Pazos , president of the Real Estate Federation of the Argentine Republic (FIRA), highlighted that “the DNU allows local adaptations to the specific realities of different regions, provinces and cities, offering a more flexible framework compared to the previous law, considered rigid for many. This local adaptability contributed to the slowdown in the pace of increase in initial rental prices, a critical point under the context of high inflation that Argentina faces.”
Despite the adjustments and changes, conditions of the previous legislation are maintained, such as the charge of expenses and the adoption of known adjustment indices, which indicates a smooth transition to the new scheme.
Caravaca Pazos also anticipates that if inflation declines sharply over the next three months, it is likely to see an even greater reduction in rental value increases, which would offer additional relief to both tenants and landlords.
Since the implementation of the DNU, the importance of the rental contract as a document regulating the relationship between owners and tenants has grown exponentially, highlighting the need for professional advice from real estate brokers.
It is estimated that quarterly adjustments prevail internally with updates under the ICL .
In Córdoba capital, a two-room apartment starts at $180,000 and goes up to $350,000 in the most sought-after areas.
In Rosario, a three-room apartment without a garage starts at $225,000 per month, and in Mendoza capital, a three-room apartment starts at $200,000 without a garage.
A three-room house in Salta starts at $280,000 per month and in Neuquén capital, from $320,000 without a garage.
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