Rentals: what happens in the City of Buenos Aires | Increases above the rise in population income

Last July it was one year since the application of the Rentals Law which aimed to put a stop to the persistent increase in housing leases. However, tenants continue to have difficulty paying their rent. Last month, for a studio apartment in the Federal Capital, the average was 30,722 pesos, according to the latest CESO report.

The new rule determined that the contracts will have an annual update in accordance with the Index for Lease Agreements (ICL), which considers in equal parts the variation of inflation (IPC-Indec) and of wages according to the Average Taxable Remuneration of Stable Workers (Ripte)). In October the variation of this indicator was 47.62 percent.

Yes OK contracts with a duration of three years have two increases, renting is still a problem due to the rise in prices above the improvement in income. A speculative real estate market undermines the main objective of the law. The high profitability due to the difference between the construction cost per m2 and its sale value is the main reason for the expansion of investments in the sector.

The brand new Secretary of Internal Commerce, Roberto FelettiHe explained that “the average value of the m2 finished in the City of Buenos Aires post-crisis 2001 was 900 dollars, and in 2018 it reached its peak at 3,100 dollars. In a decade and a half, the real estate revaluation was 244 percent. The other side of this flow of capital attracted by an extraordinary income, only comparable with agriculture, was the increasing distance of wage earners from access to housing in the City. ”

According to the most recent CESO report, renting a studio apartment in the Federal Capital adds up to 30,722 pesos on average. This amount shows a year-on-year increase of 45.8 percent. The average of the offers of two environments has increased from 26,678 pesos to 38,047 pesos in 12 months, an increase of 42.6 percent. While in October 2020 the three-room housing units were at 42,670 pesos on average, today they reach 58,845 pesos, an interannual increase of 37.9 percent.

“The fact that in this context it is still difficult to pay rents has to do fundamentally with the fact that wages have not yet managed to regain the purchasing power that they have been losing for years. That the minimum wage is almost the same value as the rental of a studio apartment is something particular to CABA because the m2 is very expensive. What is the Buenos Aires government doing to take charge of this problem?”Says Virginia Brunengo, an economist at CESO.

For his part, Gervasio Muñoz, president of the Federation of Tenants, argues that the difficulty in paying the rent is due in large part to the lack of control by the State in compliance with the law and in the real estate market. “There are no official statistics beyond the Location Contract Index. Out of 3 million rental contracts, only 300 thousand were registered. The remaining 90 percent is illegal because it is mandatory to register the rental contract. This is something that the rental law establishes ”.

Muñoz adds that “the contracts are regulated is the only way to really know the value for which the contracts are signed and not to make accounts based on what zonaprop publishes, which is a portal of the real estate market to raise the rental price. This is key not only to understand that there are no real statistics, but that it is an informal and illegal market ”.

In April 2021, the decree that freezed the value of rents and prohibited evictions was no longer in force. “This implied that the renewed contracts were carried out with the released price. The owners set the initial rental price and brought increases of between 100 and 150 percent,” explains Muñoz.

“Today what the law lacks is regulate the starting price. That is the discussion that is coming, but that requires the will of the national government. Without data it is not possible to make public policies. When is the State going to have the same role on the price of rents as it does with the rest of the prices of the economy? ”, Says Muñoz.

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