Repeal of the Tenancy Act: is it business again to buy a property and find a tenant?

Possible title II: With the repeal of the Rent Act: Is it again appropriate to invest in real estate and use it for classic contracts?

Possible title III: Perspectives after the Rent Act: Is it worth returning to investments in long-term real estate rental?

With the recent repeal of the Tenancy Act through the Decree of Necessity and Urgency (DNU) supported by the President Javier Milea, new perspectives are opening up on the real estate market for localities. In this scenario, a crucial question arises for those with savings or dollars on the mattress: Is it again appropriate to invest in real estate intended for classic rental?

The sector says the dilemma is cleared up as homeowners have resisted the previous regulation from the start. They didn’t want to be tied down to three-year deals, preferring to come back for a maximum of two years to get their ownership back more quickly or have more rotation options.

Leonardo Rodríguez NaderCEO Investment Community and Company Treasurer Association of entrepreneurs in the field of housinghe said Infobae that the repeal of the law is a positive signal for the real estate market: “This regulation has not adapted to the current context of high inflation and a volatile exchange rate, which shows the failure of both owners and tenants. Now is a timely opportunity to generate a significant supply of quality housing, especially in large cities.”

Experts acknowledge that as the macro economy and prices stabilize, some type of order and control will need to be established. However, they emphasize the current possibility to meet the demand for rental housing, responding to the needs of tenants and tenants.

For those with savings, the return to shorter contracts has considerable appeal. There is an attraction to mixed-use projects that include both long-term and temporary rentals. In the city of Buenos Aires, this approach is supported by strong tourism demand, which provides a great opportunity in both market segments.

There are projects in tourist areas such as San Telmo, Monserrat, Balvanera or Paseo del Bajo, which are ideal for houses between 25 and 90 square meters.

Veronika PagolaCEO of Century 21 Argentina, emphasized that “now the acquisition of rental properties is again a viable option for those considering investment opportunities, it opens up a panorama that was denied due to previous regulations. In the face of apparent scarcity, any neighborhood becomes an option, with prominent locations such as Palermo, Recoleta, Belgrano, Núñez, Villa Urquiza.”

After the repeal of the law, the real estate sector highlights the decline in prices of used (48%) and brand new properties (38%) in CABA over the past 5 years.

According to Mariano García Malbrán, president of the Chamber of Real Estate Companies, buying a property now brings a double advantage. “On the one hand, less money is being invested in acquiring a home that is likely to increase in value when the economy reverses. In addition, the profitability of traditional rentals could improve in the short to medium term, making the property a profitable investment.”

Currently, the profitability of traditional rentals is around 3.5% in most neighborhoods of Buenos Aires, with notable exceptions such as Barracas and Parque Patricios, where it reaches up to 6% per year. On the other hand, temporary rentals offer an average of 6.8%, rising to 9% per annum and in dollars in select areas such as Palermo, Recoleta and San Telmo.

“The best options are two-bedroom or one-bedroom apartments, usually priced under $80,000, although Retiro, Palermo, Villa Urquiza and Villa Devoto also offer alternatives, but values ​​tend to be slightly higher in these areas,” García Malbrán added.

The repeal of the Tenancy Act opens up the possibility for investors to rent properties without restrictions and allows them to buy at current prices that could bring a solid return in the future.

García Malbrán stated that “in a short period of time, a number of owners are waiting for the DNU to be confirmed by Congress. If this confirmation were to materialise, it would likely return to the traditional rental market. This change could also incentivize investors to reacquire properties for residential rental.”

As for supply expectations, some observers believe it will rise in the coming weeks, especially from the owners’ perspective.

Since last Thursday, the owners have started consulting real estate agencies in search of detailed information about DNU and its consequences.

“Although it is difficult to give a definitive opinion, the repeal of the law and the free conclusion of contracts could encourage owners to offer their flats, gradually normalizing the rental housing market. The need for additional incentives such as tax benefits and credits for those who buy and rent are highlighted as possible factors to accelerate this normalization process,” he concluded. Miguel Altgeltfrom Altgelt Real Estate Businesses.