With galloping inflation, rental price escalation continues to rise. In May, tenants who have to renew their lease will pay 95.93% increase in the amount of the monthly payment.
This results from the application of the Leasing Contracts Index (ICL) calculated by the Central Bank for contracts which are renewed on 1 May. This index takes the average change between inflation and average remuneration (RIPTE) and, in this context, the trend of the rent adjustment index is increasing.
According to the Professional Real Estate Association (CPI), which brings together brokers in the city of Buenos Aires, “this number shows, once again, the harsh reality of the rental market across the country due to the critical economic situation and especially the current rental law,” he said in a statement.
And he assigned to that norm, “a massive withdrawal of real estate from the rental market, reaching a practically non-existent real estate offer in the city of Buenos Aires.
According to Alejandro Bennazar, president of the Real Estate Chamber (CIA), “before the Ley de Rentas there was a 116% increase in property supply in the rental market”, Stressed on the basis of the studies carried out by the camera.
This lack of supply has been transferred directly to prices which, in the last year, have accumulated a rise of 118.6% in the case of the departments of Buenos Aires, according to the ZonaProp platform.
According to the Center for Economic and Social Studies Scalabrini Ortiz (CESO), the median of studio apartments offered in the federal capital was, in March, 80,000 dollars. Namely, taking this into account The living and rolling minimum wage is $69,500, covers only 86.9% of a rent. According to the same survey, the median bids for one-bedroom apartments are $90,000 and $150,000 for three-bedroom apartments.
Is the rental law suspended or not?
Market distortions due to the implementation of the rental law have dragged on for almost three years. But the concern in the real estate sector has intensified above all, after the Government let it be known, weeks ago, which would suspend the law in force since July 2020.
However, after that hint of announcement which, it was also assumed, could be given through a DNU (Necessity and Urgency Decree) there is still no official information on the matter. The Chamber of Commerce requested it a meeting with economy officials to address the issue, which could take place next Monday.
Marta Liotto, head of the CPI, relaunches “the urgency for the State to go ahead with a modification of the law that corrects the most harmful points it has, such as the duration of the contracts and the LCI itself”. And we recall that the sector is also asking for policies of tax and tax cuts to recover the stock of rental units.
“If progress is not made in this regard, the rental market (and, therefore, the thousands of Argentine families who depend on it for a roof) will continue to suffer from a situation that will only get worse from month to month, especially with the crisis we are experiencing,” said that body.
According to Gabriel Brodsky, CEO of the Predial company, “since the government slipped the possibility of repealing the law, the real estate market, which was presented with a very low supply of rents, has been even more affected.
“No new rentals come in, no stock available. The little that is posted is rented hours later. There is desperation for all types of property,” he tells the reality of his business.
“The only thing that ad did was that owners go into stand-by mode to see what happens. It is better for them to wait a few days or a few months and thus avoid annualized three-year contracts because if in the end the law on rents is canceled it is very feasible that they will go back to being two years”, he risked.
Source: Clarin
