Sunday, July 14, 2024

ECONOMY | 23-08-2023 18:57

Opposition approves Rent Law reform in lower house

Passage after attempts by Juntos por el Cambio and La Libertad Avanza to repeal current legislation. Under approved reform, contracts will once again have a term of two years and prices will be updated every four months.

With 125 votes in favour, 112 against and three abstentions, Argentina’s main opposition coalition has approved a rent reform bill with the support of deputies from Córdoba Federal, Provincias Unidas and SER.

Frente de Todos, left-wingers Frente de Izquierda y Trabajadores and La Libertad Avanza voted against the reform. For the caucus headed by Javier Milei, their leader is dead set against any kind of regulation of the property rental market.

The current initiative, enacted in 2020, with three-year contracts and an annual adjustment based on fixed indexes combining the CPI and the RIPTE Average Taxable Income, did not have the expected outcome amidst rampant inflation and changes in the property market. The increasing removal of units from traditional rent, due to the boom of temporary lets on foreign platforms and a retraction in demand, in view of other forms of property speculation have exacerbated the situation.

The reform of the existing Rent Law was long overdue, given the irreconcilable differences between the Frente de Todos and the opposition. 

The setting for Juntos por el Cambio in the run-up was challenging and complex, since quorum was questioned until the last minute. Yet it overcame this first hindrance, by getting 129 deputies from different opposing caucuses to take their seats.

Despite having its own opinion since last year, the initial bid agreed upon by Juntos por el Cambio was to repeal the poorly-named “Lipovetzky Law,” but it was mission impossible as by not having an opinion report for such an initiative, they required two-thirds to table the issue: 124 voted for it and 110 against. 

After this misstep, they voted for the opinion supported mostly by Frente de Todos, which was predictably rejected. They suggested upholding the main pillars of the current law. The only novelty they added was a series of tax incentives for owners, so as to stimulate the supply of properties for rent and curb the accelerated removal of dwellings from the market.

The minority opinion spearheaded by Juntos por el Cambio which ended up being approved on a preliminary basis is rather laxer in contractual conditions, with a two-year term and adjustment based on indicators agreed on freely by the parties. 

"Legislating means protecting the weaker party and that is what we must do”, said deputy Carlos Heller, criticising the minority opinion for leaving the price of rent up to the parties, where the strongest usually prevail in a contractual relationship.

The opposition bill also incorporates a series of tax stimuli for landlords, as explained by one of its authors, Alejandro Cacace (Evolución Radical): “As everybody knows, there is a retraction in the supply of rental properties, we’re providing tax advantages for sole traders, bank debit and credit taxes, and different mechanisms for more properties to be rented".

“In leases of property for housing purposes, the price of rent must be fixed and monthly, which can be adjusted as agreed upon by the parties not earlier than every four months,” the minority opinion states.

Pablo Tonelli (PRO) assured that what was needed to “reinstate normality in the property market is to restore a balance” and he considered that it existed prior to this law when contracts were governed by the Civil and Commercial Code.

Deputy for Frente de Izquierda, Myriam Bregman, in turn, claimed that “the problem is that the changes proposed here, whether a repeal or the minority opinion, are detrimental to tenants.”



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