Temporary Rental Agreements..LegalIncreases $$$

[Rich One]

Thanks for the advise received.
Hope this thread will not turn into another furious debate landlords v/s tenants in Argentina.

All ideas welcome to address my situation!

 

[sergio]

What really bothers the hec out of me with landlords here (and I am one, by the way) is that they want to increase their rentals according to "supermarket" inflation. This is simply not fair and I'll explain why. In the REAL economic world, prices are raised to cover increased operating costs, and to increase profits, you expand your sales base either by adding customers of products for sale. Supermarket inflation is easily 25% and in some cases more, as I used to own a small retail business and know how many times the products I ordered increased in price. Sometimes it was 2 or 3 times per month believe it or not. If you are owner of a property that you rent to others, here in Argentina, the overhead is usually paid by the tenant, they pay the expensas, ABL (real estate tax), and depending what you stipulate in the contract, they have to return it to you in exactly the same condition they rented it, painted, floors shined, etc. That is why I don't understand why so many landlords demand huge percentage increases each time they renew. They fail to realize that first, it's unfair, second, it creates a lot of turnover, third it creates animosity between the landlord and tenant, and lastly it asfixiates the renter financially. Of course, I don't expect many landlords to take these things into account, tney obviously don't care. For example, I have a small commercial property. Last time it was rented I checked the local area for similar properties and set the rent based on average of 5 other similar properties. Each year, the rent increased 10%. The tenant was responsible for paying their utilities, ABL, and the part of the expensas that were recurring, any additional items, such as major repairs to the building, I paid that part of the expensas. When the toilet broke, I gave him the option to replace it or have it replaced and deduct it from the rent. When the metal gate got stuck open, I paid to have it fixed. When he wanted to upgrade the locks on the doors, I split the cost with him. When he called me, I got back to him within 24 hours EVERY SINGLE TIME! THIS IS HOW YOU TREAT PEOPLE WHO RENT FROM YOU! Not like some anonymous ATM machine that you don't respond to and just cash out from. My tenant never missed a months rent, left the place impeccable, and even nicer than he received it. He left because his business grew and he needed more space. So now it's for rent again, I gave it to an inmobiliaria to rent for me and of course they suggested 20% per year increases. I gave them the numbers they thought I was crazy, but it's been for rent for only a month and several people are interested. And now is a difficult time to rent both for the owner and tenant, due to the shape of the economy. I feel using these sound and make sense principles for rental property will work for the long term. Argentine economic principles and practices for the most part are a huge failure, all we have to do is look at past history and the present.

Yes, this is all true and I am glad that you have been able to make this work for you but it is because you are the owner and you set the rules. The problem in Argentina is cultural. Argentines invariably want the maximum money they can get and then they offer little, if anything, in terms of customer service. It is very frustrating for people who come from countries where the system works well. Argentines think that they know a lot about capitalism in countries like the US but in fact they do not. They insist on using the term "savage capitalism" to describe free market systems but my experience has been that Argentina has far more raw and savage capitalism. Price gouging, dishonesty, lack of customer service, few protections etc. if this is not savage capitalism I don't know what is.

 

[citygirl]

Sadly, I'm afraid you are SOL. Your only option as far as I can tell is talk to the landlord and see if s/he is willing to compromise on the rent to keep you as a tenant. You could probably point out that if you leave, the apt will sit vacant for a while and s/he will miss out on the guaranteed rent. To be honest though, a lot of times landlords just don't care.

20% increases every 2 years used to be pretty standard, now it seems to be going up by a lot more. Building expensas are increasing a lot, that's part of the reason. If you live in a building with portero/encargado/etc - those 20%+ annual salary increases have to be paid for somehow.

 

[Rich One]

Sadly, I'm afraid you are SOL. Your only option as far as I can tell is talk to the landlord and see if s/he is willing to compromise on the rent to keep you as a tenant. You could probably point out that if you leave, the apt will sit vacant for a while and s/he will miss out on the guaranteed rent. To be honest though, a lot of times landlords just don't care.

20% increases every 2 years used to be pretty standard, now it seems to be going up by a lot more. Building expensas are increasing a lot, that's part of the reason. If you live in a building with portero/encargado/etc - those 20%+ annual salary increases have to be paid for somehow.

Thanks CityGirl..!!

I pay the Rent plus Expensas plus the Services (gas,water, ABL, electric) separately. The Expensas cover the portero/janitor/encargado/etc. The rent increases are applied to the Rent on a 6 month Temporary Rental Contract.

In this building with 150 apts. there is a waiting list for units, Apts. are empty only for a day or two for cleaning purposes.

 

[ben]

DavidGlen, I'm not sure what your problem is with "supermarket" inflation. If someone is using their property as a source of income, then the point is exactly that - to use the income from the property to, um, go to the supermarket and buy things. If the supermarket prices went up 25%, and my "salary" comes from my apartment, I will try to get a raise accordingly. If people raise the prices too high, then tenants can and will opt to rent from someone like you, and the market will decide. Do you see a better system?

I understand that this forum is frequented more by renters than owners, but what logical bias is there against the owner and for the tenant? Why every time owners ask for payment at the real rate, is there an eruption of anger here by the same people who would never accept the official rate for their dollars? Why are landlords supposed to be stupid, or more charitable than everyone else?

Rich One, I'm pretty sure citygirl is right: if the old contract expires, your relationship with the landlord is over, and you are both free to negotiate a new one. What recourse do you expect to have?

 

[Davidglen77]

DavidGlen, I'm not sure what your problem is with "supermarket" inflation. If someone is using their property as a source of income, then the point is exactly that - to use the income from the property to, um, go to the supermarket and buy things. If the supermarket prices went up 25%, and my "salary" comes from my apartment, I will try to get a raise accordingly. If people raise the prices too high, then tenants can and will opt to rent from someone like you, and the market will decide. Do you see a better system?

In essence we all have a problem with "supermarket" inflation. Regardless if you are using your rental income as your "salary", if your overhead linked to your income generating asset did not increase 25% then in my opinion it's not fair to pass that kind of increase along to the tenant. Furthermore, as you stated the market will ultimately decide. People should be more reasonable when they have the upper hand (hence the landlord, in this case) and it's really sickening. I fortunately own my place and don't have to pay rent, but when I had my business I rented a store and even though I never was once late with the rent, and paid every single other expense I agreed to, I was treated EXTREMELY poorly and will never forget that experience. That is why things are such a mess here, people repeatedly trying to get over on each other or be reasonable.

 

[ben]

I completely agree with you regarding the culture of everyone trying to climb on top of each other, and it's both repugnant on a human level and bad business to treat people poorly. I just think that it is not good to ignore economic reality, and expecting the landlord to shoulder 25% inflation is less than reasonable. If you look at it in tomatoes, the landlord may not even be getting an increase - why is it fair to volunteer to take a loss?

I had added a couple of paragraphs to my earlier post to clarify my position a bit.

 

[solerboy]

What really bothers the hec out of me with landlords here (and I am one, by the way) is that they want to increase their rentals according to "supermarket" inflation. This is simply not fair and I'll explain why.

A landlord can stipulate whatever price he wants, only the market will decide if he gets that rent.

Persons supplying goods and services dont calculate their prices on what it is costing them, but on the price they thnk their customers are prepared to pay.

I do agree there are plenty of moneygrabbers out there, not just limited to Landlords, but the only way we can stop them charging is refusing to pay (by going elsewhere) if they are taking the piss.

 

[fifs2]

20% increases every 2 years used to be pretty standard, now it seems to be going up by a lot more. Building expensas are increasing a lot, that's part of the reason. If you live in a building with portero/encargado/etc - those 20%+ annual salary increases have to be paid for somehow.

The old BAT (as we called her) that owned our last office building had us tied to a 3% increase per quarter AND then in addition upped the rent 43% at the end of the 2 year contract....we waved goodbye and are much happier now in a more stylish part of town with landlords who like to be paid abroad and don't seek such increases. Sometimes it's better to walk away..even if its painful at the time.

 

[Rich One]

DavidGlen,
I
Rich One, I'm pretty sure citygirl is right: if the old contract expires, your relationship with the landlord is over, and you are both free to negotiate a new one. What recourse do you expect to have?

Dunno, The Consumers Advocate Agency to complain against greedy landlords...!