Burning rents: supply which has collapsed to historic lows and there are record increases of over 110%

Portals and specialized consultants have reported in recent days the prices of housing for rent in the city of Buenos Aires. Tenants have received bad news as those looking for a property to enter into a contract or renew it will have to shell out more than 110%, a record figure in recent times. This private measure even exceeds the value of 89.56% year-on-year stipulated by the index of rental contracts (ICL) regulated by the Central Bank.

It is a drama that has worsened since the entry into force of the controversial rental law and which, in addition to pushing prices (corrected more for inflation) towards the clouds, another situation has become complicated: the shortage of supply is increasingly felt in CABA and in the main cities of the country.

Currently, in CABA, it is estimated that there are only 1,500 traditional rental units (with contracts lasting 3 years) between apartments, PH and houses. On the contrary, the supply of temporary rentals has increased and there are more than 15,000 rental units, but in dollars and through agreements that can be extended for a maximum of one year.

Mariano Garcia Malbranpresident of the Chamber of Real Estate Services Companies (CAMESI), said GlobeLiveMedia that whatever increases in values ​​“if the political class does nothing in the short term, there will be no apartments available. The offer is less and less important and the demand does not stop growing. It sounds like the title of a series of disasters, but no, between March and April it will be practically impossible to rent an apartment or a small house or a PH in CABA or in the most important cities of the country such as La Plata, Córdoba, Rosario, Bahía Blanca, Mendoza, Salta, among others. Today, it is very difficult to find a location for this type of property”.

Since the entry into force of the Rental Law, it has generated a drop of more than 30% in the supply of real estate for traditional rental, and fostered the fury of dollarized temporary rentals (daily, weekly or up to at three months). And the need for housing affects university students, professionals and dependent workers.

“Landlords who decided to stop renting their properties believed that a minimum three-year contract, plus only an annual update based on a state-mandated index and more than mandatory registration of the contract at AFIP, was a cocktail. that they were unwilling to deal with it and decided to put their property up for sale or assign it to the temporary rental market,” added García Malbrán.

Another symptom that illustrates the moment is that the few properties with these characteristics that the owners offer to the real estate brokers they trust are not published since the real estate agents have orders (searches) pending from several clients, therefore a simple search is performed. single visit and at the same time the reservation of the property is taken.

From the real estate sector and the groups that defend landlords, they demand that the government and the National Congress face a reform of the rental law and understand that politics must no longer interfere with this sector, because they have not intervened only to cause problems and not solutions. to the housing problem.

“As we expected, President Alberto Fernández made no mention of the rent situation or the need to change the law in Congress. Therefore, we believe that the majority bloc in the Lower House will continue to make the deaf ears to endless proposals about rents,” he said. GlobeLiveMedia Marta LiottoPresident of the Professional Real Estate Association (CPI) of Buenos Aires.

Several experts agree that it is essential that the debate resume to modify the rental law and that it return to the agenda of Congress.

Liotto added that “the political decision to advance in the treatment will have to be put into practice and taken, from our sector we will continue to propose the urgent modification. We are vigilant as thousands of Argentinian families desperately need this issue resolved once and for all.”

For tenants the situation is serious, many families, people moving alone and retirees have had to leave the places listed and even move away from CABA because they cannot pay for new contracts when the previous one is over. But another traumatic issue is that many landlords are offering to enter into informal agreements where they offer to switch to 6 month and 2 year contracts, as was the case before the new law came into force.

Ricardo Botana, president of the Argentine Union of Tenants (UAI), recommended not to enter into illegal agreements and to sign 3-year contracts as indicated by the regulations. “We receive requests from many people who, desperate not to find housing, are tempted to conclude agreements within the expected time. And at the CABA, for example, that they don’t pay real estate fees, that they only pay one month’s deposit, that they be attentive. Yes, extensions can be made,” he said.

A meeting point on which the three sectors (real estate, landlords and tenants) agree is that with the question of the increases, something must be done, because if inflation continues to punish the pockets in 4 months, pay a three-room apartment in CABA cost more than $100,000 a month and it will be very difficult to be able to cope month after month with wage earners who lose their savings power every 30 days in the face of inflation.

“This needs to be addressed urgently in the National Congress, and we believe the adjustment formula needs to be changed. We believe it is vital to change the preeminence of the average taxable earnings of stable workers (Ripte) over consumer price index (CPI), because the Central Bank’s ICL increases by more than 2% every 20 days. And if not, I propose that the parties mutually agree on the rent. Before the new law, the increases averaged 20% every 6 months, which is more sustainable for people’s pockets,” Botana said. GlobeLiveMedia.

It should also be taken into account that the rental value and the staggering of its adjustments are not the only complication that tenants suffer from an economic point of view.

Liotto, added that “currently the biggest concern that we notice among people looking for apartments to rent is the value of expenses, which have increased sharply, a studio apartment does not go below $10,000 per month and a three-bedroom apartment can easily cost $40,000 a month and that’s a blow to all renters.”

According to Zonaprop, rental values ​​increased by 8.6% in February and new rental contracts rose by 16% in the first two months of the year.

The rental value of a studio in CABA is $88,110 per month, for a two-room apartment, $107,835 is requested and a three-room apartment of 70 m2 is rented for $144,639 per month.

The neighborhood of Palermo is positioned as the most expensive in CABA (and in this portal they have excluded Puerto Madero because in this layout almost all values ​​are in dollars) with an average price of $135,122 per month. They are followed by Chacarita and Núñez with $128,012 and $122,974 respectively. In the middle zone are Santa Rita ($106,518 per month), Caballito ($104,450), and Villa Devoto ($99,345 per month). The cheapest neighborhoods to rent are Liniers ($80,429 per month), Floresta ($83,458), and Parque Patricios ($84,695 per month).

While the Real Estate Report reported average two-bedroom prices led Recoleta with $78,125 per month, followed by Las Cañitas with $76,665 and Belgrano R with $74,625 per month. The cheapest are Liniers with $52,600, Parque Avellaneda with $52,500 and Constitución with $52,145 per month.

While the Center for Economic and Social Studies Scalabrini Ortiz (CESO) reported that renting a studio in CABA was 13% more expensive in February compared to January 2023.

The median of offers for 2-room apartments is $85,000 (6.3% more than last January) and $130,000 for 3-room apartments (8.3% more than January ), according to SACO.

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