Rentals. The most controversial points of the law that the Senate could approve

gracielle

Registered

3 June 2020
Rentals. The most controversial points of the law that the Senate could approve
The rental bill that could be passed tomorrow in the Senate divides the waters between property owners, real estate agents and lawyers, on the one hand, and tenants, on the other.
The first group points out that emergency laws on urban rental matters such as this have a negative effect, because they retract the present and future supply of rental units, since one of the parties - the owners - faces more risks. And this, paradoxically, then affects tenants because rents increase.
Meanwhile, tenant associations highlight the fact of having specific legislation after 36 years (the last was Law 23,901 in force until July 31, 2015 when the new Civil and Commercial Code came into force) and with a system of update of target prices , among other things.
Here are the various points under discussion...

 

Ceviche

Registered

3 June 2020
Rentals. The most controversial points of the law that the Senate could approve
The rental bill that could be passed tomorrow in the Senate divides the waters between property owners, real estate agents and lawyers, on the one hand, and tenants, on the other.
The first group points out that emergency laws on urban rental matters such as this have a negative effect, because they retract the present and future supply of rental units, since one of the parties - the owners - faces more risks. And this, paradoxically, then affects tenants because rents increase.
Meanwhile, tenant associations highlight the fact of having specific legislation after 36 years (the last was Law 23,901 in force until July 31, 2015 when the new Civil and Commercial Code came into force) and with a system of update of target prices , among other things.
Here are the various points under discussion...

Being a Bilingual Argentine, I would have expected a better job at translation than using Google translate, Grace.
 

FallenAngel

Registered
I do not see any improvement for landlords. It sounds like rental terms are longer, but yet tenants can break the term at-will with just a small advance notice. Only one month in guarantee allowed. Now the government controls how step-ups are done to compensate for inflation instead of the landlord. The landlord is not allowed to pass on any fees to the tenant. Etc


Considering rental yields are < 2% I would rather just leave my apartments empty.
 

sergio

Registered
I do not see any improvement for landlords. It sounds like rental terms are longer, but yet tenants can break the term at-will with just a small advance notice. Only one month in guarantee allowed. Now the government controls how step-ups are done to compensate for inflation instead of the landlord. The landlord is not allowed to pass on any fees to the tenant. Etc


Considering rental yields are < 2% I would rather just leave my apartments empty.
Is ideology interfering with sensible rental laws?
 

Ceviche

Registered
I do not see any improvement for landlords. It sounds like rental terms are longer, but yet tenants can break the term at-will with just a small advance notice. Only one month in guarantee allowed. Now the government controls how step-ups are done to compensate for inflation instead of the landlord. The landlord is not allowed to pass on any fees to the tenant. Etc


Considering rental yields are < 2% I would rather just leave my apartments empty.
There is a great book on the topic: Culture and Inflation in Weimar Germany, by Bernd Widdig. As the book’s description notes, “For many Germans, the hyperinflation of 1922- 1923 was one of the most decisive experiences of the twentieth century.”
(The book is an excellent economic history of hyperinflation and a sneak peak at what could happen in the United States/Argentina and other developed nations if hyperinflation hits the economy.)

One of the book’s takeaways (which support many of my own views) is :

Residential real estate: In many episodes of hyperinflation, residential real estate traditionally has been at the mercy of rent controls imposed by governments. In other words, rent controls prevented rents from rising at the same pace as other prices in the economy. And by deflecting the ability to collect market (i.e. substantially higher) rents, rent controls also prevented residential property values from appreciating. Potential investors understood they would not be able to make money by renting out an apartment or house, so demand stayed muted, and prices remained low.
 

antipodean

Registered
The thing that I do like for tenants is more certainty regarding price and adjustments being more in-line with their income. I do not think it fair that every landlord gets to decide on the adjustment amounts - especially when the tenant usually does not decide on the inflation applied to their wages etc. Using an "independent" amount linked to real inflation is the fairest approach.

IMO, providing AirBnB is regulated and there is not a huge boom in international tourism any time soon, I am not sure it will lead to a massive shortage of supply. The only option over the next few years is to make money from a property is renting that property or board it up and let it gather dust since selling it for a good amount is a pretty poor prospect over the coming years anyway. The yields here are not really any worse than Australia, France or other similar countries and given most purchases here are fully paid up in cash and linked to a USD value, it is not entirely disproportionate - it just shows that if you peel away all the noise, political risk aside, Argentina really is not such a great or bad place to invest once you get past the lures of 30% interest rates on deposits or 50%+ inflation etc.
 

gracielle

Registered
4 June 2020
The opposition blocked the treatment of the Rental Law in the Senate
The opposition today blocked the treatment of the bills on the Rental Law and Distance Education, in the midst of the fight over the decrees of necessity and urgency (DNU) that are discussed in the session, in a very tense start....

 

gracielle

Registered

11 June 2020 • 8:31 pm
Rental Law. The most controversial points of the law that passed the Senate

The rent law passed by the Senate divides the waters between property owners, real estate agents and lawyers, on the one hand, and tenants, on the other.

The first group points out that emergency laws on urban rental matters such as they have a negative effect, because they retract the present and future supply of rental units, since one of the parties - the owners - faces more risks. And this, paradoxically, then affects tenants because the rents increase. Meanwhile, tenant associations highlight the fact of having specific legislation after 36 years (the last was Law 23,901 in force until July 31, 2015 when the new Civil and Commercial Code came into force) and with a system of update of prices established by the State, among other things.

Here are the most discussed points:
1) Duration of the contract. According to the law, the minimum term of the contractual link between the parties it will be three years, when until now it was two. This extension is seen with good eyes both by the president of the Chamber of Property Owners of the Argentine Republic (Capra), Enrique Abatti, and by the head of the Association of Defense of Tenants, José Griselli, for the reduction in expenses that entails both for landlords (property owners) and the tenant (who demand the rent).

With this duration, as they understand, the owners will not have to be reconditioning the properties every 24 months when they become vacant and the tenants will not have to incur the expenses involved or a move to a new apartment or the adjustment of the guarantee deposit. .
However, according to the architect and founder of Reporte Inmobiliario, José Rozados, this longer duration can be a drawback for the owners if the tenant is in conflict or problems arise in the course of the contract.

2) Update rate. Based on the new standard, rents must be adjusted annually based on an index made up in equal parts by the monthly variations of the consumer price index (CPI) and the average taxable remuneration of stable workers (Ripte), which must be prepared and published monthly by the Central Bank.

This novelty provides tranquility in the case of tenants and uncertainty for owners, as expressed by the different parties. "I see very well that there is an objective guideline for updating. The tenants are going to know what their rental fee is going to be from the beginning to 36 months, which generates a lot of tranquility," explained Griselli, while Rozados said that the uncertainty for Owners come on the side of a potential lag in the index.

"Until now it was agreed what the rent would be throughout the contract through an increasing mechanism and now this is going to be entered through an index. Obviously there is uncertainty because we already had these experiences of managing the indices that did not they reflected the reality of what was happening and apart from an annual update it loses the value of the real rent to the detriment of the owner, "he said.

A third position is that of the housing specialist economist, Federico González Rouco, wh
o points out that tenants do not want an update rate in the current context because the stoppage of property sales will cause rental prices to fall in terms real and an index would put a floor.

3) Guarantees. The law assumes a greater variety of guarantees. The most used is the title of a real property and adds to the bank guarantees, surety bonds, surety guarantees and personal guarantees of the tenant, which are documented with pay stubs, income certificates or equivalent.

The problem arises because the text says that, if the tenant offers two of these options, the landlord must choose one, which makes it an imperative norm, according to Abatti and Rozados, who reasons that in the same way that an owner You can choose whether or not to rent a property. You should be able to choose the guarantee that offers you the most security.

Another factor to the detriment of the tenants is that this condition in the facts would be almost non-compliant. "That the owners have to accept any of the guarantees is a lie, because, even when the law says that, the owners can say that in the end they will not rent the apartment or that another interested party appeared. It is impossible for it to be binding because of how the market, " explained Gonzaléz Rouco.

4) Deposits. According to the initiative, the guarantee deposit is limited to one month's rent, which benefits tenants, because it makes entry to a property cheaper, but hurts the owners, according to Abatti, because it leaves them "in a delicate situation before tenant defaults that exceed the value of the deposit. "

5) Early termination and renewal. Following Abatti, with the new law, the tenant who warns that he will leave a property one month in advance will pay compensation, unlike the current situation, in which there is nothing established in the Civil and Commercial Code and, therefore, does not pay. If the notice is three months in advance, there are no penalties.

Regarding the renewal, according to the text of the law, within the last three months of rental relationship, either party may call the other, notifying it reliably, in order to agree on the renewal of the contract, within a period no more than 15 calendar days. In case of silence of the landlord or in the face of her refusal to reach an agreement, being duly notified, the tenant can terminate the contract in advance without paying the corresponding compensation.

The latter was highlighted by Gervasio Muñoz, president of the Federation of Tenants, and Fernando Muñoz, in charge of the Tenant's Ombudsman within the Ombudsman's Office of the City, because it would avoid situations in which short notice is given how the contract.
6) Registration of contracts. According to the text, the location contracts must be reported to the Federal Administration of Public Revenue of the Nation (AFIP) within the terms established by the agency. According to Muñoz, this brings transparency to the relationship between landlords and tenants, but according to Abatti it can cause inconvenience and delays in eviction processes.

The City Bar Association, meanwhile, maintained that the law would attribute "new and vague powers" to the AFIP, whose specific need refers to tax control.

7) Repairs and expenses. With the new provision, tenants " shall not pay extraordinary expenses or taxes such as the ABL that are levied on the real property." This point was highlighted by Griselli, although he said that the rule is somewhat vague, which would leave administrations the issue of how they allocate expenses in terms of ordinary or extraordinary expenses.

Meanwhile, according to Abatti, to compensate for the current low profitability of the rentals (less than 2%), " the landlords, surely, given the impossibility of making the tenants assume the payment of taxes and fees, will increase the amount of the rents "


 
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