Radical change in rental law

[HeyBA]

Gradually the laws were changed to exempt from controls properties renting for more than $X per month and then renters earning more than $Y per month, so that with modest inflation over time, only a small percentage of rentals is still controlled. (And highly coveted by the way!) 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.

Agreed. In New York now, you end up now with these ridiculous situations in the older buildings there where some units rent for half or a third as much as similar units in the same buildings. Some kid that everyone thinks is rich has to shell out 1200 a month compared to his neighbor paying 500. It's not always that extreme, but it's common. In those buildings, the landlords don't do much upkeep, especially if they think it will force people out so they can raise the rent. This often works best on the people with high rent, who have the least interest in holding on to the lease, so you see these same units, which can be raised 20% each tenant, go up from 800 to 1200 in a few years, while people shuffle their friends and families in and out of the old lease (everyone, from all different classes and backgrounds, does this). If everyone was paying 700 per unit, there would be neighborhood roll over still, but with enough time to put a kid through school, rather than people moving farther and farther out into the Burroughs, looking for anything they can afford, and completely displacing working people wherever the young and trendy end up aggregating.

 

[nuitzangaro]

I agree that it is unfortunate that the "garantía" problem is not being addressed, but all in all this doesn't seem like a bad proposal. It is my understanding that it has been illegal to charge rentals in dollars for years now, but that it just has not been enforced, so it is questionable whether this will change that practice or not. Limiting the commission of real estate agents sounds fabulous. Last time we moved the commission was over half of the expense. I don't know if you, Sergio, have more information are just assuming this will be equally applied to temporary rentals or not, because I saw no mention of it in the article, but if that is the case, even as someone who works renting temporary housing to tourists, it's hard to get behind complaining about having our ability to charge exorbitant prices to people with no guarantees just because they come from a better economy than ours. I'll have to look into this more. It would be interesting to see the real legislation.

 

[surfing]

Agreed. In New York now, you end up now with these ridiculous situations in the older buildings there where some units rent for half or a third as much as similar units in the same buildings. Some kid that everyone thinks is rich has to shell out 1200 a month compared to his neighbor paying 500. It's not always that extreme, but it's common. In those buildings, the landlords don't do much upkeep, especially if they think it will force people out so they can raise the rent. This often works best on the people with high rent, who have the least interest in holding on to the lease, so you see these same units, which can be raised 20% each tenant, go up from 800 to 1200 in a few years, while people shuffle their friends and families in and out of the old lease (everyone, from all different classes and backgrounds, does this). If everyone was paying 700 per unit, there would be neighborhood roll over still, but with enough time to put a kid through school, rather than people moving farther and farther out into the Burroughs, looking for anything they can afford, and completely displacing working people wherever the young and trendy end up aggregating.

Please tell me where in NYC to rent any apartment for $1200 a month. Maybe 15 years ago.

 

[HeyBA]

Please tell me where in NYC to rent any apartment for $1200 a month. Maybe 15 years ago.

Right that it's difficult in Manhattan. Not hard to find the farther out that Brooklyn and Queens get gentrified. I left rent control in a Brooklyn studio for 1050 (starting at 1000 seven years previous) for a share in a modern 2 bedroom that a friend had a deal on for 1,250 all bills, which was almost to Avenue D in the East Village. And in the first building in Brooklyn, I really did have neighbors paying 500 and 600 while I paid 1050. They were both working class long-time New Yorkers as well as from the early generation of the creative types that gentrified the neighborhood.

One lady that was living there forever was actually paying under 300 until she died in 2006 or 7 or so, no lie. An identical unit on another floor rented for 1,500 a few years later, literally five times as much for the same unit. Mine rolled up to 1,250 when I left. No repairs had been done while I was there. There were one feet curls of paint in the bathroom, and a one foot by one foot hole through the tile in where the super had to bang through once to fix a pipe and never fixed. Mice would go in and out. When I left, I actually knew the contractor who was going to fix it because he lived in the building. He had strict instructions to do the bare minimum, patch over holes, one coat of paint, etc.

Just one of the perils of rent control. The guy had every interest in getting his tenants to leave so he could raise the rent, rather then keep his honest tenants that paid on-time and took care of the place because the rent was already at market value.

 

[sergio]

The rental system in Argentina is something of a two edged sword. Contrary to what some readers of this website may think, the law in Argentina favors inquelinos (tenants) and not owners. Tenants who stay beyond the expiration of their lease are not easy to evict. The process can drag on for a long time. Because of the widespread lack of trust in all areas of Argentine society, the garantia system is a necessity. The only way that an owner can be sure that he will be covered in the event of a deadbeat tenant is to have one or two guarantors who are completely responsible for the rent and related expenses should the legal tenant default. This happened a couple of years ago to a friend of mine. She agreed to be guarantor for a relative's friend. The renter stopped paying rent so my friend, an old age pensioner with a modest income, was forced to pay thousands of dollars in rent and utilities until the deadbeat tenant could be evicted. By that time the poor guarantor had depleted most of her savings. It used to be that almost all expats in Argentina were employed by major international companies who acted as guarantors for their employees who usually lived in houses in Zona Norte. Those expats who married Argentines and assimilated found guarantors, if needed, through their spouse's network. With the arrival of hordes of expats as a result of the devaluation, this pattern changed. Lots of expats needed housing but they were essentially interlopers in Argentina, outside the culture and the system. They could not find guarantors. An American friend of mine told me that he protested to the owner of an apartment he wanted to rent "But I have a property in the US worth $400,000"! The owner replied: "That's in the US, not here". Irrelevant what he had in the US; the courts could not touch his assets there if he stopped paying. A bad tenant is an Argentine owner's worst nightmare. Eliminating the system of guarantors is really impossible. Even in countries like the US bad tenants can be a serious problem and even there co-signers are sometimes necessary. In Argentina the potential problems are infinitely greater. Though it may seem unfair to charge foreigners higher rates in dollars, the fact remains that the owner takes a risk renting to foreigners who are almost always beyond the reach of Argentine law. Short term renters also seldom pay maintenance fees, utilities or taxes which are usually the responsibility of local tenants.

The question of paying in dollars or pesos was addressed by someone in another thread some time ago. As I recall, a reader of this website did some research and found that payments can be requested in currencies other than pesos. Maybe someone out there can point to a definitive source regarding this.

Also to answer another question, no I do not have any more information than what is stated in the article. At the present time my understanding is that leases must be two years minimum. Temporary rentals seem to be a grey area. I believe they do leave the owner somewhat vulnerable if someone decides to stay put. Again, maybe a lawyer knowledgeable of this or someone else with information can clarify this point. Remember, the article is about a BILL, not a law. I do agree that in today's political climate such a law COULD be enacted. It's pretty obvious that the government is taking the country in the direction of Venezuela. Just how far this can go before it explodes, if that ever happens, remains to be seen.

 

[captainmcd]

Having seen inflation well into double digits, per MONTH, it would be hard for anyone to make a rental agreement for three or more years. If this law were enforced the availablity of any rental property would approach zero, and anyone who wished to stay in Argentina for less than three years would have to stay in a hotel.

 

[sergio]

I agree Captain however it COULD happen. The government has a far left agenda and they might just make this a law. Needless to say it would have disastrous effects however CK is not to be underestimated.

 

[Davidglen77]

People who are interested in this issue should really read the "LEY Nº 23.091" - Ley de Alquileres. http://infoleg.mecon.gov.ar/infolegInternet/anexos/25000-29999/27287/norma.htm For those of you not familiar with a "general rule" here in Argentina let me clarify it for you. No matter what clauses you add to your rental contract or ANY other type of contract for that matter, and the contract is signed, sealed and delivered. If the law states something contrary to what you list in your contract, well then your clause is invalidated and the law takes presidence. For example, I own a small commercial property, it was empty as I was planning to use it for a new business venture, when suddenly a friend of a friend asked me if they could rent it from me for a "short" period of time. We drew up an informal contract, stating the term (5 months), rent (very low as it was a favor) and that he had to maintain insurance, pay certain bills, etc. Low and behold the day I gave him the keys, was the day the guy stopped talking to me, never paid the rent, broke several things in the property mailciously, and threated to stay as long as he wanted via a lawyer. Turns out that there is no such thing as a 5 month rental contract. The law states that commercial rental contracts have a minimum of 3 years and the 5 months mean nothing. He was entitled to stay for 3 years at the very low rent if he chose to do so. He knew exactly what he was doing when he so humbly asked if I would rent him my property temporarily, and took advantage of it in a very mean way and the law was totally on his side. So I had to hire a lawyer, and negotiate the return of my property. Cost me about several thousand pesos to pay him off to leave plus thousands in repairs for all of the damage he did. So those of you who rent, BE VERY CAREFUL who assesses your contract and don't do ANYTHING informally, you will lose, this is Argentina, nobody is to be trusted with your property, unfortunately.

 

[sergio]

You are speaking of commercial property but it probably applies to residential too. This is what I suspected. That just goes to prove my point that garantias are necessary given the law and culture. Also expats should not gripe so much about short term rental prices, paying in dollars etc. They must understand the local culture.

 

[ElQueso]

I suspect the government is trying to curb inflation a bit. Long term contracts usually have an increase built-in every year, mine have been 20% in the past. Renting long term in dollars can have an advantage to both parties in that inflation has tended to outpace the rise in dollars vs pesos, but everyone feels this can't be maintained long term. The owner gets a bet on the peso losing value in the future, with a relatively stable currency in hand and the renter usually gets no increase in his rent for paying in dollars and has a stable rent price at least through the contract. That works well in a situation where one has access to dollars and it's anticipated the peso will fall relative to the dollar.

Not many people are willing (or able) to pay in dollars, therefore the built-in inflation of something like 20% in rental contracts. Things are getting out of hand.

It's kind of a built-in inflation generator. People lose faith in the currency, they "know" inflation is coming, they build it into their rental contracts, rent prices start getting hefty after a couple of years. Puts pressure on employers to pay more because everyone knows there is inflation, prices rise because everyone knows there is inflation. Unions are screaming for more money to keep up with the inflation.

The government is trying to slow down inflation by controlling rents. It's certainly a contributor (but obviously not the only one, and probably not even the biggest). Maybe it will help.

I'm a free-market guy, so the only way I know to fix things is to remove obstacles and enforce laws. Ain't going to happen here, but maybe rent control can lend a hand in a brute-force fashion. I wonder else will be negatively affected...