Scarcity and astronomical adjustments: Argentine inflation turmoils the rental market

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A suitcase with signs that said: “I want to rent, but I also want to live”. This was the way tenants found to protest and demand new solutions to the rent problem in front of Congress. “Alert, alert, alert tenant, they leave us homeless in the Argentine Republic!” they shouted.

According to the Federation of Tenants of Argentina, in 2021, 60,000 families abandoned their rented home due to the high prices of their leases.

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The secretary general of the Argentine Real Estate Chamber, Claudio Vodanovich, criticizes that “politically the landlords look like the bad guys in the movie”, but in his view, the big problem with rents is called inflation.

In June 2020, a law that regulates rents in Argentina came into force. This seemed beneficial to tenants because it prohibits monthly increases. In fact, it established that rental price updates are annual and that they are governed by the so-called RIPTE index, which is composed half by inflation, half by the evolution of wages.

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One of the protesters in the suitcase, Rosário, considered that this point of the law is fair, since “salaries are not updated every three months, nor every six”. On the other hand, the owner of the Real Estate Chamber warned that the big loser with this scheme is the owner.

“It turns out that putting in the value of a monthly rent is equivalent to a kilo of sugar. When it reached the end of the year, it lost the purchase value of that money. He lost 50% of the purchase value of that money,” explained Vodanovich.

So, problems for the tenant arise when the lease expires. At that time, the owner can set a new price. Vodanovich maintained that “the loss of money he has throughout the year charges him the new price.” In this sense, the owner of the Real Estate Chamber indicated that owners usually apply increases of 70% or more with the objective of mitigating the effects of future inflation.

Rosário admitted that he was unable to renew the contract where he rented because of the high prices. “I had to do without an apartment. A lot of people whose contracts expired too and then they go back to their parents’ house or you have to live in boarding houses.”

Looking for rent and not finding it is another problem that tenants suffer from. Vodanovich said that “many homeowners have decided to take their apartments off the rental listings and move them to the ones for sale.” According to data from the Argentine Real Estate Chamber, the number of properties for sale has tripled.

“This generates a circle that reproduces itself and suffocates you more and more”, lamented Rosário.

This circle becomes even more vicious as the demand for rentals is growing. According to data from the Government of the City of Buenos Aires, the number of tenant families rose from 27.7% to 34.8%.

The latter seems logical if we consider that Buenos Aires is one of the 10 cities in South America where it is more expensive to buy real estate, as shown by a survey by Mercado Livre.

According to two real estate agents, Claudio Vodanovich and Hernán Iradi, these are useful tips for finding a rental in Buenos Aires:

If you are renting, negotiate an extension or renegotiation of your lease at least three months before your current lease ends to give yourself more time to look for your next lease.

Although it is advisable to be able to live close to where you work, and if the value of the houses you are looking for is above reasonable possibilities of payment, look for areas of lower value and with good transport connectivity.

Due to the high demand for rentals, when visiting a rental property, take a reasonable amount of money with you to formalize a reservation if you are interested.

Check the conditions of the items inside the property for rent before signing any contract. For example: check for broken objects or if the oven, refrigerator, etc. work well.

Make sure what the cost of the expense to pay is. According to the Real Estate Professional College, in July they will increase by 58%.

Source: CNN Brasil

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