The supply of rental housing fell and real estate companies ask for two key modifications in the law

Access to housing both for sale and for rent is problematic in our country. The sector demands urgent changes (Pexels)

One of the decouplings generated by the new Rental Law (No. 27,551) is seen in the lack of available properties. A few months before it came into force, last July, many owners had already increased the values ​​and had removed signs on location, especially in 3 and 4 room homes.

This is how he explained it to Infobae Mariela Schenone, director of Metro X Real Estate, who argued that the changes in the locative system and the new law caused a retraction of supply. “I believe that it is purely and exclusively due to the restrictions imposed on the owners, who are the ones who put their properties up for rent and must assign most of their rights. For its part, it is not that it improved or expanded the possibilities of future tenants. To be honest, the result is exactly the opposite,” he said.

So much the landlord and the tenant play big chips in the rent; one the profitability and availability of its assets and the other, neither more nor less, than the satisfaction of its housing needs, in a context that is out of its control, inform from the segment. The difference between one and the other is that the owner can decide whether or not to rent his property depending on the underlying conditions, but the tenant must find a place to live.

“The decline in rental units is due purely and exclusively to the restrictions imposed on the owners who are the ones who put their properties up for rent” (Schenone)

That puts the parties on opposite paths, at least temporarily. Currently, the increase in housing demand coexists with the reduction in rental supply and the increase in construction developments.

“At the same time that the negotiation mechanisms between tenants and owners are tightening, instruments have not been generated that make access to own housing more agile, in a micro and macroeconomic context that disrupts the entire system as we know it (disappearance of mortgage loans, devaluation, overvaluation of properties, unemployment, informal employment, failure of the guarantee system, etc). That is, to my understanding there is no possibility of going back to a previous scheme, but a new one must be created, completely, from scratchSchenone added.

regional survey

The Zonaprop portal carried out a regional investigation carried out on users and agents from the real estate world and both agree that changes in the law are needed in Argentina to regularize the rental market.

The survey was conducted in Argentina, Brazil, Mexico, Peru, Panama and Ecuador and revealed that Latin Americans who have rental properties say that their property this year took a month or more to rent, except for Argentina and Brazil, where 49% and 52% did not take more than two weeks.

Source: Zonaprop
Source: Zonaprop

One 50% of Argentines believes that there is a lot of uncertainty regarding the current panorama of the rental market and a 45% maintain that it is wrong and feel very harmed by the rise in prices and lack of supply.

Regarding the Rental Law, 85% affirm that they agree with the suspension of the law for 180 days.

The possible reforms or repeal would be discussed in the National Congress from March, but for now there is nothing confirmed, including the insistence of chambers in the sector that are concerned about the situation and after confirming that in 2021 there were strong increases, more than 52.8% in CABA, and more than 70% in the northern area of ​​Greater Buenos Aires.

Source Zonaprop.  How rentals and sales work in the region
Source Zonaprop. How rentals and sales work in the region

Taking into account the low supply and high demand in the country, renting a property takes less than 15 days (55%). The supply of real estate for rent fell notably after the sanction of the Rental Law and also another large amount due to the pandemic and its economic consequences.

On the other hand, 33% of Argentines are looking for a new rental by 2022 (see chart below). The characteristics most sought after by Argentines for a new home are definitely green or relaxing spaces such as a garden (34%), patio or terrace (34%) and balcony (32%). In turn, having more square meters (28%) or more environments (23%) is important and having a desk to be able to telework (15%).

Source: Zonaprop
Source: Zonaprop

It is urgent to activate the market

Several protagonists also argue that to reactivate the residential rental market, the first thing that would be needed is to return to the situation prior to the current law.

For Gustavo Ortola Martinez, from Like Propieades: “This would not take us to an ideal level but it would at least improve the current activity. The last impact that was lethal for the rental market and terminally triggered the value of the contracts were two clauses of the new law promoted by inexperienced pseudo representatives of tenants and politicians little committed to the problem. The two clauses are the term of the contracts that took it from two to three years and the form of adjustment and updating -vital in an economy that is devaluing at a rate of 50% per year- that went from being in the hands of the agreement of the parties to regulation through an index imposed by the State”.

“The last impact that was lethal for the rental market and terminally triggered the value of contracts were two clauses of the new law: adjustment and duration of contracts” (Ortolá Martínez)

They estimate that by correcting these two aspects and returning them to the previous format, many properties could return to the rental market which were withdrawn due to fear of the formal insecurity of the new regulation.

Today rent a three standard rooms in Recoleta does not fall below $85,000 per month plus expenses of no less than $10,000 and a garage is not available for less than 6000 pesos. Similarly for Palermo. the unit does not fall below $65,000 for rent.

What is offered for rent and is in good condition is almost hired on the same day (Pexels)
What is offered for rent and is in good condition is almost hired on the same day (Pexels)

“Today you can’t get something decent in CABA for less than $35,000 pesos a month. Rental values ​​in CABA have climbed during the last year, well above the value of inflation: less product offered due to the legal uncertainty of the new law, plus the coefficient just in case of the arbitrariness of the index regulated and informed by the State, they have generated an explosive cocktail against the interests of the tenants”, added Ortolá Martínez.

The new regulations have made dozens of owners, instead of having the house occupied, prefer to leave it empty, or give it to a relative who pays the maintenance costs or directly publish it for sale.

Dolores Otero-Rossi, managing partner of Real Estate Otero Rossi & Cía, commented to Infobae that the regulations “harmed owners and tenants alike. It is an odyssey to find apartments with two or three bedrooms in La Plata, and houses are even more difficult. And if they are published, and it is in good condition, they are rented almost the same day”.

A rental of a two rooms in the center of La Plata ranges between $23,000 and $27,000 more expense, three main rooms between 35,000 and 45,000 pesos. A house, for example in City Bell, two or three bedrooms, varies between $85,000 and $150,000 with garage.

“It would be the State’s obligation to create credit plans and viable accesses so that people can buy and thus decompress and accommodate the real estate market that is out of kilter. If the demand could buy, that would balance the rental values”, expanded Otero Rossi.

From the sector they agree that for prices to fall there must be an increase in supply or a retraction in demand.

Schenone concluded: “To the current stock of unoccupied and available used units for occupation, the future stock of units in the process of development and construction must be added.. The latter allows us to infer that the availability of units has a growing trend that would not be reflected in an increase in supply, nor in a reduction in prices. Ergo, whoever likes it likes it, the target for triggering incentives is the offer”.


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