Enrique Abatti, president of the Chamber of Owners of the Argentine Republic (CAPRA), and a lawyer specializing in real estate law, stated in statements to Perfil that “the new rental law (27,551), at the time of its entry into force on July 2020 It was already noticeable that it was the chronicle of an announced failure”.
He further stated that the regulation harmed both tenants and owners and also to those who unite the will of both parties that are real estate brokers.
“We really define it as a parity law, because it hurts everyone equally,” he added. The specialist highlighted that “In CABA, where there was normally a constant offer of between 5,000 and up to 7,000 properties, currently there are only 1,200 housing units. Tenants are suffering from this emptying of the rental offer“.
Rental Law: “Contracts will enter a legal limbo”
“This law was not necessary”Abatti pointed out, “We understand that when the current bill was presented, the intention was to capture the vote of the tenants and ingratiate themselves with them, through a highly interventionist law. The result, as in all state interventions in inter-particular relations, it was the opposite effect of the wanted one. Tenants, landlords and real estate brokers were greatly harmed.”
Regarding the effect, he pointed out that “the law paralyzed the rental market and discouraged real estate investment.” Abatti pointed out that “with inflation this year, according to economists will widely exceed 105% and even 110% According to some projections, you can’t have a flat rent for a year because inflation eats you away. Quite rightly, the owner to protect himself, part of an upper floor.
Rental Law: “Contracts will enter a legal limbo”
At the moment, Another effect is that many of the properties that were usually used for rental for housing, are now used for tourist rental, especially small apartments with one and two rooms. That offer disappeared for families. The Airbnb system allows you to charge much more and for short periods of no more than three months. This has depleted the market and hurt tenants enormously.
When asked about the effect of a possible suspension on current contracts, the specialist pointed out that “the previous law is always applied, irretroactively”, unless a rule establishes the retroactive effect specifically. “A contract signed since the entry into force of the new rental law 27,551, if it is extended, it is up to the same law to continue to be applied.”
But in the case of contracts entered into before the new law in force and that are about to end, if they are extended, it must be done with application of the previous law, that is to say with the norms of the Civil and Commercial Code. On the other hand, the specialist pointed out that “if the contract is renewed, we are talking about a novation of the obligation of article 933 and following of the Civil and Commercial Code, for which, since it is a new obligation, the new law must be applied ( the one currently in force).
Specifically, there are two possibilities: “a contract prior to the new rental law 27551, if it is extended, the Civil and Commercial Code continues to apply, if it is renewed, the new law is already applied, with a minimum term of three years. But if the law is suspended by a decree of necessity and urgency, the same law will apply to those who have a current contract that must be extended. However, the new contracts that are concluded after the suspension will enter a legal limbo,” said the President of CAPRA.
Rental law: a legal limbo
As reported, the intention would be to repeal or suspend for 180 days the validity of the current law, which “is legal nonsense from a technical legislative point of view. The validity of the law cannot be suspended, because an interregnum would be created during the period of suspension and until the sanction of a new regulation. A legal limbo where the parties would not know which rule to apply,” explained Abatti.
Rental law: a legal limbo
Neither the regulations prior to the reform could be applied because there are several articles in the chapter on locations of the Civil Code that were repealed by law 27551, which today is intended to be suspended. “Suspending the rule for 180 days would be a real nonsense, there would be no rule to apply directly. The legal minimum term would cease to exist, it could be rented for three, six months, one year, or whatever the parties set, which would generate an instability for the tenant due to the lack of a legal minimum term,” Abatti warned promptly.
What you should know, owners and tenants, is that for the moment the contracts signed and valid until their expiration, continue under the same conditions and applicable norm. Thus, the agreements are with a minimum term of three years and with annual adjustments through the Leasing Contract Index (ICL) regulated by the Central Bank.
