Does the rent law work?

One of the points on the electoral campaign agenda revolved around the Rent Law. Openly attacked by the opposition and without a clear defense of the ruling party, the National Tenant Federation denounced an economic, political and media campaign to delegitimize it. Responsible for the rise in prices real estate market hit to increase profitability and questioned the lack of regulation by the state.

The argument most heard against the rule is that the rent update index is worse than the previous adjustment. One of the central points in the defense of the law by the Federation of Tenants has to do with disarming the arguments with real data. Juan Pablo Costa, researcher at the observatory of CEPA Urban Economy, carried out a simulated evolution of the average rental price of a 2-room apartment in CABA with and without regulation between January 2017 and December 2019, taking into account the rental values ​​and update percentages at that time and comparing with the application of the current IPC-Ripte formula.

In a contract started in January 2017, the gap between the surveyed market prices and the adjustments derived from an average of inflation and wages will successively widen. According to the calculation, a contract that at the end of 2019 paid 15,741 pesos, would pay 12,792 pesos if the rental law had existed. It is a difference of almost 3,000 pesos or more than 20 percent. This, without taking into account that whoever has the contract with the old law must update it, while the other tenant has one more year at this last value. This is because the previous contracts were for two years and, from the law, the minimum is three years.

It is true that current indicators despair. Real Estate Report, a web portal that has surveyed rental prices for twelve years, indicates in the last year a rise of more than 60 percent in rents in the City of Buenos Aires. “The market hit with increases of 100 and up to 150 percent in initial prices. They are miserable, they will never allow us to rent in a more dignified way,” he says. Gervasio Muñoz, president of the Federation of Tenants and adds that “the real estate market is made up of the media, the judiciary and a sector of politics that is dedicated to the real estate market. Argenprop, Zonaprop and Reporte Inmobiliario are price makers, in addition to the pressure of the sectors that remove the supply of housing to speculate. It has nothing to do with the rent law in economic terms, the problem is totally political, “he says.

Despite representing a vast universe in the population of almost 8 million people, there are no official statistics beyond the Location Contract Index that refers to annual increases and is published daily by the Central Bank. The rest of the data is made by the portals that on the other side of the window are dedicated to the Real State. The Ministry of Territorial Development stated that they carried out a agreement with Indec to survey the rental market in large conglomerates, and they are trying to get the 2022 Census to reveal this way of living for a very high percentage of the population.

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“It is very difficult to evaluate the result of the new law because it was applied in a context of pandemic and the validity of the decree that freezed the value of rents and prohibited evictions. There are many of the effects that are attributed to the law and in reality they have more to do with that decree, which of course was necessary at that time of emergency, “says Costa.

It is not the rent law, but what is lacking to regulate. The rental price must be regulated at the beginning of the contract. And since the real estate market knows that it is the next step, it needs to repeal the law now, urgently, “says Muñoz, who is convinced that the law was an advance and now is the time to regulate what is missing, which is” the initial price and implement a strong tax on idle housing. “The specialist assigns the State the responsibility for this lack of control.” Organizations have to do everything. We had to make a web page to calculate the rental agreement index, “he completes.

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