El real estate boom that our country experienced in the last decade, was marked by restrictions in the exchange market, high inflation, the consequent distrust in the peso as a reserve of value and the low sophistication of many national investors, resulting in an insufficient channeling of savings to the Finance system.

As inhabitants of Rosario we have observed how part of the surpluses from the boom in soy production in the province have been turned into construction, with the aim of forming an asset that acts as a refuge of value (in a context of inflation and volatility) and /or as a source of additional income via rental.

The report emphasizes this sector, we specifically refer to the issue of Holiday. To understand this market, we must first consider the general context, where there exists in our society a housing problem.

The housing deficit refers to both quantitative and qualitative issues. Both dimensions seem to get worse in recent years.

If the 2001 census is taken as a starting point, 2.600.000 households, 25,8% of the total, had unmet housing needs. According to the 2010 census, the number increased to 3.000.000 households, 24,6% of the total. Of those three million, 66% needed to improve or complete their home and the remaining 33% required a new home.

Regarding the qualitative dimension, according to INDEC, at the end of 2020:

• 78,9% of households and 74,5% of people live in homes whose materials are of sufficient quality.
• 7,8% of households (9,6% of people) live in homes whose materials are of insufficient quality.
• 13,3% do so in homes whose materials are of partially insufficient quality. In the case of people, 15,8%.

With regard to public services Only 52,3% of homes (46,4% of people) have access to running water, sewage and natural gas services. The rest do not access at least one.

The rental market

Regarding the particular characteristics of the market, we find that the housing supply for rent, or housing in general, is relatively inflexible in the short term, given the time involved in its construction, therefore it usually responds late to changes in demand. From this it follows that measures that do not include incentives to increase supply will in practice result in an increase in prices (given that we would have equal supply and increasingly more demand).

While, on the side of the housing demand for rental, it should be noted that it is not homogeneous, it is composed of segments of different incomes or purchasing power. The poorest families are those that are in the most critical condition and, at the same time, are excluded from credit markets due to lack of guarantees.

In relation to the evolution of the Prices Regarding rents and expenses related to housing maintenance, the information is quite diffuse, given that the characteristics of the homes are dissimilar. The CPI is made up of twelve baskets, including “Housing, water, electricity and other fuels.” The graph shows the monthly series of the general CPI and the aforementioned basket.

As can be seen from 2017 to mid-2019, the increase in these expenses was higher than the general average of the economy; this mainly occurred due to the removal of subsidies and tariff updates. As of mid-2019, the update of public service rates was suspended and in relation to rents, their increases were lower than inflation. However, these data correspond to the average of the 31 agglomerations surveyed by the EPH.

Unfortunately, there is no specific data available to analyze the behavior of rental prices in the large cities of the central zone (Rosario, Córdoba, Mendoza, Santa Fe). The only data on disaggregated rentals available are those published by the Government of the City of Buenos Aires that. However, a study carried out by Zonaprop seems to indicate that the price of rentals grew 58% in the last year in the Federal Capital, and 62% in Rosario, when inflation was 46% in the same period.

The following graph characterizes the tenure regime of housing, according to data published by INDEC based on the EPH for the 2nd semester of 2020.

Legal framework

According to art. 14 bis of our National Constitution, all inhabitants of the Nation have the right to access “decent housing.” This implies, among other issues, legal security of tenure, which can take different forms, including rent.

At the end of 2019, a global pandemic broke out known by the virus name SARS-CoV-2 (COVID-19). In March 2020, to address this epidemiological challenge, the national executive branch established a series of Necessity and Urgency Decrees (DNU). DNU 260/2020 decreed a health emergency throughout the national territory, DNU 297/2020 decreed social and preventive isolation.

Under this unforeseen and fragile context, with a State in default and inflation that exceeded 40% annually, a new DNU was established, 320/2020, which briefly froze the price of rents already agreed upon and prohibited eviction due to lack of pay. Then, successive extensions caused the emergency regulations to be extended until April 2021.

In June 2020, the national congress approved a new rental law (Law 27551), with the purpose of updating the regulatory framework of the activity and trying to solve the various legal conflicts that the sector presented. The main differences with the previous regime can be seen in the following table:

In addition, other measures are incorporated, such as the obligation to declare the rental contract before the AFIP and the registration of the parties' emails for notifications.

The report is completed with a synthesis of the regulatory framework in Chile and Uruguay as a comparative parameter. As can be seen from the regulations in neighboring countries, we see that the housing problem is also present in them.

Conclusions

Broadly speaking, the new regulations impose more risks and restrictions on bidders and encourage them to “launder” their activity. While the mechanisms to expedite evictions due to tenant non-compliance are not yet regulated.

In addition to this, the possibilities of claims or indexation of the value of the rentals were stopped by DNU (decree of necessity and urgency), which emerged in response to the global context of the pandemic generated by COVID 19, which, as we all know, It caused a huge drop in activity and income across the board.

Almost a year after the implementation of the new law, it can be seen that many of the customs of the “previous regime” are still maintained in practice. Furthermore, the price of rentals in this same period increased at a rate that almost doubles the inflation rate published by INDEC, while in previous years rents maintained an average inflation rate of around 28%.

What is observed in practice is that sectoral policies seem not to take into account the long-term incentives they cause in the market. In addition, it is necessary that policies at different levels of government be coordinated so that specific sectoral policies achieve their objectives.

Rental housing policies must be a complement, not a substitute, for home ownership, respond to the context and be adapted to the specific spaces or places in which they are applied. The State must include renting as an additional housing policy option within its general urban planning plans. These plans must take a holistic view and must address issues such as access to public services and transportation.