After the failed attempt to make changes to the Rental Law last year, the 2023 started with rather low expectations in Congress for this debate. The topic was not included in the extraordinary sessions convened by the Government, so owners and tenants must wait for March at best.
The debate in the Chamber of Deputies on possible modifications to the current regulation -which established 3-year contracts and annual adjustments indexed for inflation- began in April 2022 but the differences between the two projects presented by the ruling party and the opposition stuck it.
Neither of the two sectors managed to gather the necessary majority to take the discussion to the venue and submitting the proposals submitted to a vote during the period of ordinary sessions that ended on November 28 and the political fight between the Front of Everything and Juntos por el Cambio obstructed the possibility of dealing with them during the extension.
Now, the Government called extraordinary sessions between January 23 and February 28 with a list of 27 projects to be discussed, but the Rental Law is not on the agenda, despite the inclusion of other initiatives with an economic impact in addition to the political trial against the judges of the Supreme Court promoted by the ruling party.
Due to the fact that in extraordinary sessions the Congress has to limit itself to dealing with the agenda defined by the Executive Power, The debate on the rental law could only be resumed when the new period of ordinary sessions begins on March 1. However, the legislative scenario would not change much by then.
Ley de Leas: why will it be difficult for the changes to advance this year?
The current norm was promoted between 2019 and 2020 by the then PRO deputy Daniel Lipovetsky. The criticism that aroused in the real estate market did not take long to be transferred directly to that opposition leader who has now joined the party headline’s campaign team, Patricia Bullrich.
The debate on the Rental Law was not included in the agenda of the extraordinary sessions by the Government
It was for this reason that the leader, embarking on her presidential candidacy, came out a few days ago to ask that Congress “advance” in the extraordinary with “those things that are important” and gave as an example the “repeal” of the Rental Law.
Once that possibility was closed, the issue would move to March or later, but the imminence of the electoral campaign does not offer good prospects for the eventual vote on the changes demanded by real estate brokers and independent tenants (not so by tenant groups).
In electoral years, the activity of Congress is usually very low because a good part of the legislators are campaigning. To this are added two other factors: the fight between the ruling party and the opposition that has kept the sessions of Deputies paralyzed since November and the fact that both spaces still do not have enough votes.
Meanwhile, in the first half of January there was an increase of almost 81% in prices and, according to the Real Estate Professional Association (CPI), it is expected that for the second half it will reach 85%.
What happened to the rent debate?
The current law establishes 3 year contracts of duration with annual adjustments determined by an index published monthly by the Central Bank and which combines the evolution of the inflation (CPI) and the salary variation (RIP).
Criticism of this system is based mainly on the low supply of properties for rent due to the extension of the contracts and in the sharp rise in prices which, although it moves slightly below inflation in annual terms due to the incorporation of the RIPTE in the index, has an impact on the pocket due to the difference in value between one year and another.
The strong and constant rise in prices led the opposition to try to revive the discussion, but they were unsuccessful.
This situation led the Chamber of Deputies to begin a debate in committees in April 2022 that it extended more than expected due to the lack of agreement. This was followed by the presentation of two very different projects of which only one (the opposition) has the support of real estate brokers.
After several months without progress, in October a group of PRO deputies headed by Cristian Ritondo tried to raise the issue through negotiations with other opposition blocs that had signed the ruling but then, according to parliamentary sources consulted by iProfesional, they withdrew support. .
The idea was to gather the number of signatures necessary to call a special session to deal with changes to the Rental Law. However, in the midst of these efforts, the Lower House got into the debate on the 2023 Budget and, shortly after the relationship breakdown between the Frente de Todos and Juntos por el Cambio blocked all debate in the venue.
In December the pro-government bench included the issue in the list of projects to be discussed for what was going to be the last session of the year. It was the bargaining chip to convince the opposition to give a quorum and get out of the legislative paralysis, but it failed.
Rental Law: how is the opposition project?
The reform project promoted by the opposition return to 2 year term for rental contracts, as it worked before Law 27,551 entered into force in 2020. That will be “the minimum legal term” when there is no other “express and determined greater”, according to the project.
Regarding the adjustment, it establishes that “the parties must agree on the mechanism for updating the rental price at the beginning of the rental relationship” for intervals between 3 and 12 months. Tenants and owners may resort to official indices to set the value of continuity of the contract if they wish.
In the best of cases, the debate could be resumed in March
In the attempt to rebuild the consensus between the opposition blocs, the possibility of modifying that article and leaving the adjustment in 6 or 12 months was raised.
The opposition opinion also proposes “incentives to increase supply” of housing for rent, such as exemptions on the Personal Assets Tax and bank debits and credits for savings banks that are used to collect rents.
What does the official proposal propose?
The project of Frente de Todos leaves the current regulatory framework as it is and only proposes “offer incentives of real estate for residential purposes” with which they aim to try to solve the problem of the shortage of rental properties that both the real estate sector and the tenant sector highlighted.
Exempt from personal property tax to properties for rent “exclusively used as a home”, which will not be reached when their value is up to $30,000,000, a point that coincides with the opinion of the opposition because it is also based on the amounts of the law that governs this tax .
It also establishes a benefit for small taxpayers who have rental properties for housing. The ruling indicates that those who “do not own more than three (3) operating units may continue in the Simplified Regime, without considering for these purposes the case of properties that are assigned to the lease exclusively for the tenant’s and his family’s home. “.
Besides, incorporates the obligation that rental contracts for residential purposes record “the necessary bank details of the lessor to receive the payment of the agreed canon by transfer or bank deposit”.
In addition, it establishes that “all advertising, in any medium or platform, that includes the price of real estate rentals for residential purposes must be done in national currency” and prohibits doing so in dollars.
