The rent law approved by Congress in June 2020 was conceived, as befits a good legislator, to improve a market that supposedly functioned very poorly. Of course, the opposite happened. Legislators who have fallen into the temptation to do good have assumed this impose rules on a market that regulated itself through supply and demand It could improve the situation especially for tenants.
As everyone knows this did not happen. Rather the exact opposite. But also in the face of evidence disaster caused, legislators introduced new rules in 2023, among which stands out a new indexation system which has further worsened the landlord-tenant relationship. And the consequences were disastrous.
The original law and its replacement turned out to be so bad What was supposed to happen happened: The supply of rental properties has collapsed and signed contracts have recorded very high initial values. This is because the owner tried to create a “cushion” to cope with the freezing of the monthly payment for a year. To make matters worse, the contract could be adjusted with an index below inflation only once a year, but in a contract at three years.
The law sought, its promoters explain, to rebalance a relationship that they considered unequal between the parties because it favored the owners. A statement that until then was not easily demonstrable. The reality indicated that most contracts were signed with these characteristics: two-year duration, quarterly adjustments it was agreed on sight and in advance – indexation was prohibited – and it was agreed on who would bear the extraordinary expenses.
The data indicates that between 2002 and 2020 average lease values had grown below inflation. It has been observed that adjustments are generally agreed in advance they fell short of inflation accumulated over the two years of the contract. And the landlord tried to make up some of that delay in renewing the lease.
Yes, there were clashes over the amount of commissions, who paid them, etc., which led the City Administration to put a limit on real estate companies.
In a context of falling real wages and an inflationary spiral, alleged contact persons self-proclaimed representatives of the tenantswho fought for a new law, also imbued with the temptation of good and taking charge of a mandate that will know who gave it.
Today it is clear that the failure was absolute: As mentioned above, the supply of rental apartments has collapsed, prices have skyrocketed, and many contracts have been directly dollarized, forgetting the content of the law. Many apartments have been put into temporary deals.
But the market is changing. These days it is registered an instant reaction to the DNU promoted by the new Government, which repealed the rent law and gave the parties the freedom to enter into contracts under the conditions they wanted.
What happens is that the offer has reappeared and, according to what the real estate agencies say, is returning to the pre-law system. Two-year contracts, in pesos, and quarterly adjustments taking the evolution of inflation as a reference. There is more offer, better for the tenants! The supposed representatives of the tenants should be the first to celebrate. Did they do it? NO.
The law of supply and demand resumes its operation in a vital market for hundreds of thousands of people. Little by little, common sense prevails over those enlightened people who have felt the temptation to do good.
Source: Clarin
