Few posters can be seen with offers and what appears is rented in hours in the city / Gonzalo calvelo
The rental market is altered in the City: auctioneers from La Plata fear that the time for “zero offer” will soon arrive, given the very small number of properties that are available. To maintain the place after the expiration of the contract or either by entering a property, an almost 100 percent increase is applied with reference to what was requested a year ago.
Since the rental law 27,551 came into force, criticism has not stopped for the regulatory framework it imposes: the three-year term, in a dizzying inflationary context like the one the country is experiencing, triggers complaints from owners and tenants.
The auctioneer Ramón Penayo from La Plata told this newspaper that “we hope not to reach the level of zero offer in rentals. We are practically very close to that, because a property is released and within a few hours or during the day it is published it is taken care of”.
This situation causes rental prices to climb with increases that can reach three digits, according to local auctioneers. For example, they point out that a studio apartment that was rented for 30,000 pesos at the beginning of last year today asks for around 60,000 pesos and is rented without waiting too long.
“We are in a context of high demand and low supply. Tenants tend to renovate the properties they occupy because they do not find many options on the market. Perhaps, in some cases, they will exceed 100 percent,” said public auctioneer Mariana Valverde.
The professional also mentioned that the prices of the renewals must be informed approximately one month in advance and no more to try to be as accurate as possible.
Outside of the 27,551 law, the year-on-year rent increases are close to 100 percent, but within that controversial rule that governs rents, the increase reached 220 percent. The creation and implementation of the law completed two years and five months.
That 220 percent arises from the Rental Contracts Index (ICL) regulated by the Central Bank, which weighs the inflationary rise and the salary increase.
Rental prices rose throughout Argentina and in some cases excessively and this is due to the great demand and low supply that leads to owners asking for more than what a normal appraisal would indicate.
“We are not going to get tired of saying that this law enacted in 2020 is bad for all parties and even the tenants tell us, so modifying something that is wrong, in practice is useless. It is necessary to sanction one that sets the semi-annual update, with a validity of the contract to 24 months. Making clear the eviction for non-payment ”, says an expert on rental issues.
Mirta Líbera, auctioneer and president of the Chamber of Real Estate Agents of the province of Buenos Aires (CIBA), told this newspaper that “for new rental contracts, the location index of the Central Bank is adopted as floor (it was 80.8 percent for January and an estimated 83 percent for February). In this context, some new units have entered because the price has recovered a little” and she added that “it is still a concern that the contracts are for three years”.
held back in Congress
In May of last year, three opinions were signed in the National Congress: one with a majority representing the Frente de Todos and two with a minority, from Together for Change and the legislator Graciela Camaño. As reported, the proposal that had the majority opinion does not alter the minimum term of three years or the annual adjustment. For the opposition, on the other hand, the term and the update indices are the central issues to be modified with options such as returning to the two-year term and semi-annual adjustments agreed by the parties according to different indices.
The current law introduced two key changes: extending the duration of the contracts from two to three years and validating a single annual update of the monthly rental value according to an index that combines the evolution of salaries and inflation. Given the uncertainty of the owners, one of the first effects of the law was a rise above inflation for new contracts.
In this way, since the application of the new tenant index began, the percentages have been growing month by month. For the contracts signed in January 2021, this month they had to face a rise of 80.81 percent. Meanwhile, during 2022, the increases began with 52 percent per year in January of last year and ended in an increase of 77 percent per year for contracts signed in December 2020 or December 2021.
Various auctioneers consulted warn that in the first half of the year the supply of rental units will continue to decrease. And in the second half of 2023 there may be even higher increases than those currently registered because the first contracts agreed with Law 27,551 expire.
