After the government slipped its intention to work on different alternatives to suspend the current rental law, The doubts they settled again between landlords and tenants. One of the most common is what can happen with the contracts in force today according to the controversial law.
1) News on the suspension of the Law: uncertainty has set in since the last week, when it emerged that both the Ministry of the Economy and the Casa Rosada are studying the 180-day suspension of the Law -which was an initiative of the PRO accompanied by all the blockades- with a decree of necessity and urgency to return the situation to what it was under the previous regime.
Also, that possibility includes that those who offer rental properties are rewarded with a Income exemption for proceeds of such income and personal property for that on which such property is taxed.
2) Questions from tenants and landlords: Since the news broke, uncertainty has stabilized in the real estate sector and among those who hold private rental contracts. Therefore, according to the experience of many real estate entrepreneurs, the lack of certainties has led to the postponement of many contracts They were about to close these days.
Basically, people ask what will happen to those who have a valid contract according to current legislation (27.551). “The contracts that have been signed will remain in force, they will remain as they are. The suspension or repeal of the law will apply to those contracts that will be stipulated from now on”, argued the owners of the real estate companies consulted.
“The contracts signed under the law 27.551 continue to be in force, even if a new law is enacted since it does not have retroactive effect“, remarked in this sense Roberto Arévalo, entrepreneur in the sector and former president of the Real Estate Chamber (CIA).
In other words, for those who are under contract with the current law, the agreements They continue to be three-yearly and with annual adjustments through the Leasing Contract Index (ICL) prepared by the Central Bank. The changes to the study would come once the government or Congress deliberate measures for future procurement.
3) Impacts of the law: Since the entry into force of the current legislation, in July 2020, two unforeseen situations have occurred. On one side, the supply of rental properties has decreased. It is estimated that, in CABA, the number of properties available for rent has decreased by 30% in the last year. It happens that the owners, in doubt about the new requirements established by the new law, began to withdraw their properties from the market. In some cases they preferred to sell them, in others to leave them empty or to lend them to someone they knew who would take care of the maintenance of the building.
The other consequence was rising prices: Just to protect themselves from triple-digit inflation, landlords began setting ever higher income values. In the last 12 months, according to data released by the ZonaProp platform, the rental price in the City of Buenos Aires has increased by an average of 118.6%.
4) The aspects to be modified: The law is broad and includes numerous articles to regulate the relationship between landlords and tenants. However, the real estate sector raises some “essential” points that need to be modified with respect to current legislation. The first is the duration of the contracts as the current law provided for a minimum period of three years instead of two, as was previously the case.
Secondly, the major criticisms focus on the adaptation clause: today rents are adjusted once a year by a central bank (BCRA) rental contract index (LCL) which contemplates a mix of inflation (CPI) and wage (RIPTE) trends. In April, this index recorded an increase of 92.59% on an annual basis: the proponents of the change hope for a return to semi-annual adjustments and free agreement between the parties.
5) The location of the properties: in the sector they celebrate the official idea of ending the application of the rental law but argue that “the change must take place following all the corresponding formalities”, said the Center of Real Estate Professionals (CPI).
This is claimed by the lawyer and teacher specializing in horizontal property Juan Martín Luciani Otaño “The rental law was unnecessary and was passed at a terrible time.” “The 2-year term was fine, nobody talked about it. The interest rate was agreed between the parties. Even the provisions in the buildings were agreed between the parties, generally the tenant paid it and then deducted it from the rent”.
According to the expert, “in such an inflationary country, it is not possible to establish an exact calculation of the interest rate, as it is totally unstable and unpredictable, which is why it has been demonstrated that the State should NOT be involved in matters between private individuals, unless one of the parties requests it, which in their case can go to court,” he said.
6) How much are the rental prices today: According to a survey carried out on the basis of advertisements from the Zonaprop real estate portal, rental prices in the area of the city of Buenos Aires, during the first quarter of this year reached an increase of 25.7%. Thus, the rental value of a one-bedroom apartment today averages about $96,578 a month, a two-bedroom reaches $116,822 a month, and a 70m2 three-bedroom rents for $156,078 a month.
NS
Source: Clarin
