Radical change in rental law

[chris]

Property is the last safe investment for Argentines. If the market is strictly regulated it could discourage investment in the country. A lot of Argentines depend on rentals for their retirement income (due to a poor pension system). Take away their power to control rentals and they will have a serious problem.

 

[Bajo_cero2]

In the last decade, without controls on newly-constructed and re-purposed housing, development has reached a pace not seen in 60 years. Rents, while very high by global standards, are once again negotiable, which hasn't been the case in 60+ years. .

Well, there was something called real state bubble. Perhaps the development of real state was related to the high prices and profits of that busisness instead of the laws you mention.

However, I have been living in NYC and the real state for renting there or sucks or its too expensible. I don t agree about the way it is managed in NYC is precisely a good example.

I agree with your points here. Note, however, that a freed peso exchange would at least nominally cause inflation only for imported goods..

Well, with all my respect, it makes no sense.

If you free the dollar, the owners of the dollars rise the price. Who have dollars in high ammounts in this country? Farmers.

They own the casas de cambio.

So, they have a huge % of those dollars abroad and they leave a little bit here. Then, of course, the price rise.

When this happens, the industrials and busisnessman rise the prices in pesos to avoid lossing profits.

Then you have Moyano asking for a rise of salaries.

After 10 years this country is more expensive than Japan and the economy collapses.

So, this is produced by greed and political fights.

Farmers believe that this country should be like Chile, it means high class and low class.

These types of controls just don't work, because clever people find a way to circumvent them, leading to more rules and more controls that are equally circumvented. The result is inefficiency, overhead, and bureaucratic costs that increase prices - ergo inflation - for everyone. .

Creative, I have to admit it.

No comment on the YPF operation. Otherwise I might win the award for longest and rantiest post in history.

As I asserted before, economy is not a science, in the best escenario is just doctrine in the same way religion is.

However, some people thinks that economy should be the study of the past as a way to find rules that help us to predict the future as it is in any science.

The comments I made are regarding what happend 3 times since 1973.

Regards

 

[jago25_98]

If people and companies send the dollars abroad, then there are no dollars for paying the imports. This is simple.

What produces inflation in this country is complex. Paranoia, lack of dollars because they send them away, greed of Unions and companies together are a cocktel molotov with a lighter on.

How do we tell between how much cash is being printed and market forces?

Same problem all over the world. The excuse to say print more money to balance markets, yet every printing of money episode has resulted in disaster, from before gold debasement in the Roman Empire to WWI & WWII and beyond.

If I could print pesos, buy something here and sell for dollars I would have the country at my feet... could I resist the urge? Could you?

Get down to the Banco Piano and play that golden tune.

Regards rent control,
you need a market solution to a market problem; a way of adjusting the market in a smooth manner that adapts as the market adapts. Arbitrary controls don't fit the market and distort it.

 

[Crema Americana]

Perhaps I'm missing something, but I don't think these are good changes. I'm really not sure what this administration has against property and business owners.

Nobody has the "right" to rent and properties are made available by those that own them... thus they should have the right to set the price and the conditions. Why does the government need to step in something that should be controlled by simple supply and demand and an agreement between two private parties? Should they control housing prices as well? Or control how much EVERYTHING in the country costs? (They're doing a fine job of it as it is...)

What we need are stronger rental contracts (which both sides agree to) and better enforcement and legal recourse of those contracts... on both sides. Both the landlord's obligations (of keeping the place livable and returning the garantia) and the renter's obligations (which is to pay the agreed upon rent until the end of the contract, not destroy the place, and leave when they agreed.) It's not complicated. Why is the government now saying how much you can charge or how long you are able to rent for?

It seems like a way to pander to those who rent, who obviously get the better end of the deal. A renter can always walk out on a contract... after 6 months they can walk out as it is, or simply not pay and get kicked out - eventually, because we all know how fast the legal system works here. Three years is a very long time to be stuck with a tenant.

The only part of this that I agree with is the ability to pay in pesos. Pesos should be the legal tender here for all debts... though I do think the owner should be able to set the price in dollars and accept the peso equivalent. Setting prices in pesos would just lead to having to readjust the price every few months to keep up with inflation, which leaves the door open to more speculation. I think most people agree that forcing someone to price a rent or product at today's price and having to stick with it for three years is unfair given the local economy. You can't treat symptoms and hope the main problem goes away by itself.


And if the government wants the people to spend, use, and save pesos... they need to make the peso worth something! That's in the government's hands. Stop printing money, stop putting in hundreds of rules making the peso hard to trade - nobody wants a currency you're stuck with and that historically only loses value because the government loves to play games and purposefully devalue it. Honestly I think Cristina has no idea how economics and currency works and she's trying to have her cake and eat it, too.

 

[Bajo_cero2]

Perhaps I'm missing something, but I don't think these are good changes. I'm really not sure what this administration has against property and business owners.

Nobody has the "right" to rent and properties are made available by those that own them... thus they should have the right to set the price and the conditions. Why does the government need to step in something that should be controlled by simple supply and demand and an agreement between two private parties? Should they control housing prices as well? Or control how much EVERYTHING in the country costs? (They're doing a fine job of it as it is...)

Welcome to Argentina.

Free market is not a popular religion in Argentina.
We had bad experiences with it.
Basically because as I explained, Argentina is a tiny market easy to manipulate and to distort.

Why is the government now saying how much you can charge or how long you are able to rent for?

Because this is a Roman Catholic society where equity is law since 3000 years ago.

The 100 years war was about it precisely. Equity vsus free market (Calvinissm) http://en.wikipedia.org/wiki/Calvinism

It seems like a way to pander to those who rent, who obviously get the better end of the deal. A renter can always walk out on a contract... after 6 months they can walk out as it is, or simply not pay and get kicked out - eventually, because we all know how fast the legal system works here. Three years is a very long time to be stuck with a tenant.

Well, as I mentioned before, the continental law is roman law and we have more or less the same rules since the roman empire.

Since those days the State gets involve in contracts under certain situations and since then the law works to compensate the lack of power of tenants vsus landlord.

The dogma about that tenant and landlord are equals in a contract for us (culturally) is or naive or primitive.

The only part of this that I agree with is the ability to pay in pesos. Pesos should be the legal tender here for all debts

In fact it is like that nowadays, so, you are missing the point about the new civil code.

though I do think the owner should be able to set the price in dollars and accept the peso equivalent. Setting prices in pesos would just lead to having to readjust the price every few months to keep up with inflation, which leaves the door open to more speculation. I think most people agree that forcing someone to price a rent or product at today's price and having to stick with it for three years is unfair given the local economy.
You can't treat symptoms and hope the main problem goes away by itself.

Well, I think she is trying to avoid what happend in the US with the real state bubble.

The whole idea about the State getting involved about the contracts is by these reasons:
1. To avoid contracts in dollars;
2. To update the rents without abussing (equity);
3. To avoid that owners evade taxs.

And if the government wants the people to spend, use, and save pesos... they need to make the peso worth something
That's in the government's hands.!

If the central bank is empty of dollars because people sent them away, the peso worths nothing.

So, the restriction about sending money abroad is regarding to make the central bank strong and the peso stronger.

In the old days the money was exchangeble for gold, now it is for dollars.

stop putting in hundreds of rules making the peso hard to trade - nobody wants a currency you're stuck with and that historically only loses value because the government loves to play games and purposefully devalue it. Honestly I think Cristina has no idea how economics and currency works and she's trying to have her cake and eat it, too.

Interesting. Perhaps that s why while the world is having a huge crisis, here we have some discomfort. She should be a lucky dumm, isn´t She?

 

[jp]

I seem to be in the minority, but all the changes are great from my perspective (a tenant with a standard 2 year contract).

 

[sesamosinsal]

Interesting. Perhaps that s why while the world is having a huge crisis, here we have some discomfort. She should be a lucky dumm, isn´t She?

Because she's trying to control the currency? No government has the power to control its currency long-term. The market forces are just too strong for a central bank to dictate the level of price versus another currency. Last year, numerous central banks intervened in their currencies, and the interventions have done little to reverse the overall market sentiment.

Look at the daily charts for USDJPY or EURCHF, if you're interested. The Bank of Japan and the Swiss National Bank have bought millions of USD and EUR respectively to protect their export industries. It's mitigated the pain somewhat, but none of the interventions has changed the course of the trend. The JPY and CHF are seen as safer than the USD or the EUR.

The SNB and the BOJ have more in their cash reserves than the BCRA. If denying the market sentiment hasn't worked for the SNB or BOJ, how can you expect it to work for the BCRA? And if the BCRA doesn't have the same firepower as some of the most powerful central banks, what inevitably is going to happen?

 

[Bajo_cero2]

Because she's trying to control the currency? No government has the power to control its currency long-term. The market forces are just too strong for a central bank to dictate the level of price versus another currency. Last year, numerous central banks intervened in their currencies, and the interventions have done little to reverse the overall market sentiment.

Look at the daily charts for USDJPY or EURCHF, if you're interested. The Bank of Japan and the Swiss National Bank have bought millions of USD and EUR respectively to protect their export industries. It's mitigated the pain somewhat, but none of the interventions has changed the course of the trend. The JPY and CHF are seen as safer than the USD or the EUR.

The SNB and the BOJ have more in their cash reserves than the BCRA. If denying the market sentiment hasn't worked for the SNB or BOJ, how can you expect it to work for the BCRA? And if the BCRA doesn't have the same firepower as some of the most powerful central banks, what inevitably is going to happen?

1. Good point. We almost agree. She wants to avoid that people send the dollars to banks abroad. If there are too many dollars for this small market, then the price fall. And then the BC can buy them cheaper. So, this is not about ruling the price of the dollar, if you look well, she is trying to make the market healhier.

2. The idea about sttopping imports is regarding to produce those goods here. So, it creates more work and the money stays here.

3. Instead of taking the dollars away, she wants that, whoever wants to take money away, takes goods: that they export made in argentina.

3. Plus she is enforcing the AFIP and the tax collecting.

4. The SUBE, YPF, and those anti-neoliberal mesures are regarding to find a way to pay the State bills without printing money.

So, the government is taking many mesures to avoid the crisis and it is being sucessful even she doesn t believe in the neoliberal dogma.

Regards

 

[perpetualholiday]

2. The idea about sttopping imports is regarding to produce those goods here. So, it creates more work and the money stays here.

Do you honestly think stopping imports means that Argentines will suddenly buy Argentine goods? Have you seen what people bring back from Miami? I don't know anyone who doesn't shop in Europe or the US, and their electronics, toys and clothes aren't from here, they're all from abroad. The last time I flew back from the US there were at least 13 large TV boxes being collected at baggage claim--and that was just one flight's worth.

They'll just continue to find ways around it; they'll have friends bring it when they visit, or visit elsewhere to purchase it once a year. I can't tell you how many moms at my child's school buy 4 or 5 of everything and then sell it when they get back here.

The people who can afford it don't buy it here, and those who cannot afford the over priced Argentine made items will continue to not buy them. It doesn't solve anything.

 

[surfing]

Do you honestly think stopping imports means that Argentines will suddenly buy Argentine goods? Have you seen what people bring back from Miami? I don't know anyone who doesn't shop in Europe or the US, and their electronics, toys and clothes aren't from here, they're all from abroad. The last time I flew back from the US there were at least 13 large TV boxes being collected at baggage claim--and that was just one flight's worth.

They'll just continue to find ways around it; they'll have friends bring it when they visit, or visit elsewhere to purchase it once a year. I can't tell you how many moms at my child's school buy 4 or 5 of everything and then sell it when they get back here.

The people who can afford it don't buy it here, and those who cannot afford the over priced Argentine made items will continue to not buy them. It doesn't solve anything.

Not that I agree with the policies but: what percentage of Argentine society is it that you imagine jets off to Miami on a regular basis? What you are seeing at the airports is a tiny sliver of a population of 40 million.