The measures launched include three financing lines aimed at facilitating the necessary guarantees for tenants, among several others.
By iProfessional
13/04/2023 – 13,35hs
The head of the Buenos Aires government, Horacio Rodriguez Larretaannounced a package of measures aimed at “alleviating” the crisis in the market of rentals in the Autonomous City of Buenos Aires.
Specifically, the package of measures is made up of three programs that will be offered by the City Housing Institute (IVC) aimed at finance the costs of the initial rental contract and the renovation of disused houses, plus two tax exemptions. The details are already published in vivienda.buenosaires.gob.ar.
Rentals: the highlights of the package
The most important points of the package launched by the Buenos Aires Government are the following:
1) Financing for guarantees
The first point announced by the City was baptized as “easier guarantee“This is a program that will subsidize up to 70% of the surety insurance, so that owners can use that insurance, which according to Buenos Aires officials is much more reliable than an owner guarantee. Tenants, in this way, do not they would need owner guarantee and could face the cost of surety insurance, they explained from the City.
- It is applied for rentals of up to 654 UVAs (about $146,000). With the benefit approved, the future tenant chooses one of the insurers attached to the program.
- A surety bond is a type of guarantee provided by an insurance company to cover the losses produced in the event that the tenant does not pay the rental fee. For the Government, it is a more efficient, fast and accessible alternative to proprietary guarantees.
- The insurance company, before issuing the policy, does a credit analysis where the solvency and payment capacity of the tenant is verified.
- The guarantee is granted by Insurance Companies that are permanently audited by the National Insurance Superintendency.
- In case of non-payment by the tenant, the insurer is the one who responds, holding the owner harmless. It seeks to be more efficient and faster than other alternatives. The surety insurance is executed within a period of a few months, unlike proprietary guarantees that require long judicial processes to be executed.
In addition, the owner is exempted from facing a large part of the legal procedures, since the insurer provides legal assistance during the eviction process.
The program that will subsidize up to 70% of the surety insurance
2) Financing the initial costs of renting
The second point, “rent easier“, consists of a credit to move. It seeks to break the barrier for those who can pay rent, but face difficulties in facing entry costs.
As detailed, it will allow tenants to cover the expenses of the first month of rent, deposit, moving and guarantee. The maximum amount is up to 3 months of the value of the monthly rental fee declared by the applicant at the time of enrollment in the Program, subject to their ability to pay. In no case, the maximum amount of the credit may exceed 1,962 UVAs (about $439,000). The return period is 12, 24 or 36 months and it is updated according to the evolution of the Reference Stabilization Coefficient, but they can never have an accumulated increase greater than the average salary, measured by the salary variation coefficient (CVS).
To access, the future tenant must present the rental commitment of the house to which they will move and within 30 days after the disbursement of the credit must have the rental contract.
In addition, the declared monthly rental fee must be less than or equal to 654 UVAs ($146,626.80).
3) Loans for housing renovation
The third initiative in charge of the IVC, “Easier Refurbishment”, is aimed at financing reforms in unoccupied housing to increase the offer. It aspires that the owners can add value to their properties and can rent them in better condition; and so that tenants have available houses in good condition.
The maximum amount that can be financed is 6,500 housing units (UVIs), about 1,357,525 pesos.
The City Government launched a relief program for tenants
The fees increase according to the construction cost index, but they can never have a cumulative increase greater than the average salary, measured by the salary variation coefficient (CVS).
The IVC grants a bonus equal to 15% of the total amount to be financed if, at the time of enrollment in the Program, the home to be renovated has a current lease agreement.
In addition, the IVC grants a bonus equivalent to 15% of the outstanding balance for those cases in which, despite the fact that the home was not rented at the time of registration, it begins to be rented during the first 24 months of the credit.
4) Gross Income Exemption
Beyond the three financing programsthe package also includes tax benefits for owners who seek to encourage the rental offer that must be presented in the form of bills in the Buenos Aires Legislature.
As announced by the City, the Gross Income tax exemption for rental contracts will be expanded, to improve the profitability of traditional forms of rental. The exemption ceiling will go from $75,000 to $220,000. In addition, the exemption was for a maximum of a second property and now that limit goes to three properties.
5) Exemption from ABL
Also through a project that must be dealt with by the Legislature, units rented for up to 36 months or the duration of the contract will be exempted from ABL and real estate tax. There will be a tax value cap and a rental value cap, equal to the gross income ($220,000).
