Originally containing 664 articles, the bill sought to reimagine the country’s elections, restructure the lower chamber of Congress and enact tough new restrictions on protests, including through penalties of up to six years in prison. The streamlined version is still massive, with over 500 articles. If passed, it would hand broad legislative powers to Milei’s executive branch for an “emergency” period of one year.

Foundations for the Reconstruction of the Argentine Economy,’ Milei took his chainsaw to rent control and other tenancy regulations. The result has vindicated economic theory: the supply of rental accommodation is surging and rents have tumbled.

A form of tenancy rent control was introduced in Argentina in 2020 – and many British and American progressives would like to do the same. Tenancies were mandated to a minimum length of three years and permissible annual rent increases were capped at a weighted average of inflation and wage growth. Both measures aimed to provide tenants with more economic ‘security’. Landlords were still free to adjust rates between contracts, but ending tenancies prematurely was basically impossible. Deposits were capped, while rents themselves had to be paid in pesos.

Economic theory grants us predictions about these regulations. Tenancy rent control and contract length regulations burden landlords with more risk of obtaining submarket rents within tenancies and being stuck for three years with troublesome renters. On the margin, this makes it more lucrative to sell properties for owner occupation, list on excluded short-term rental sites like AirBnB, or even just leave properties empty. By reducing the supply of traditional rental homes, this raises the average level of rent, even if the growth of rent is capped within minimum length tenancy contracts.

An environment of high inflation worsens these risks for landlords. With surging prices, it makes sense to change rent levels more regularly. This allows tenants and landlords to find contract provisions to make sure rents both reflect market realities and tenants’ ability to pay (as wage growth often lags inflation). Yet these regulations only allowed rent adjustments once per year (or twice from October 2023). High and volatile inflation thus interacts with these regulations to raise rent risk and vacancy risk (given the sharp jumps in rents). Landlords might therefore like to hedge against inflation by charging in another currency, like dollars. But this was prohibited too.

The results of all this were predictable. Around the policy’s introduction, it’s estimated that 45% of landlords stopped renting to instead sell their properties, not least because most home sales were made in dollars. A lot of landlords shifted to short-term rentals on AirBnB too. In 2019, Buenos Aires had 10,000 properties listed on AirBnB; now it’s over 29,500. There have thus been no end of stories about a rental housing crisis, with tenants unable to find rental accommodation, despite the Financial Times reporting late last year that energy use implies ‘one in seven homes’ in Buenos Aires, the capital, laid empty.

This supply crunch led to soaring rents. Bloomberg reported that rents jumped sharply after tenancy rent controls were announced, as landlords opted out of the market or front-loaded rent increases to protect against inflation. Having been falling in real terms through 2018 and 2019, and tracking inflation for most of the previous decade, rents in Buenos Aires grew at 1.7 times the pace of inflation in 2020, broadly tracked inflation in 2021 and 2022, and then accelerated much faster than inflation again in 2023 as the rate which rents could be increased within tenancies was tightened further to the lower of wage growth or inflation.

As a result, the average rent for a two bedroom apartment in Buenos Aires has surged from 18,000 pesos per month at the end of 2019 to 334,000 pesos today, far above the 210,000 pesos if prices had merely tracked broader inflation, as used to happen. This relative price hike obviously hurts the poor most, because they cannot easily afford deposits to buy homes, or more expensive shorter-term dollar rentals.

Controls on rents within tenancies also soured landlord-tenant relations, incentivising landlords to orgo expensive maintenance (thus allowing the value of the property to fall towards its regulated price or to encourage tenants to leave). Misallocation of properties was rife. Reports in Buenos Aires described friends having to share apartments further out of the city centre, meaning cramped conditions and longer commutes. Under such controls, people enjoying sub-market rents are incentivized to stay in properties ill-suited for them, while others must leave properties they can afford prematurely when rents adjust sharply before their wages rise.

One of Milei’s first acts in his decree scrapped these damaging regulations for all new contracts. Rents will now be decided in free contract negotiation, meaning no more central bank indices capping rent increases. He’s also scrapped the three-year minimum contract length while making it legal for rents to be paid in foreign currency (i.e. dollars), providing landlords a hedge against inflation.

Already the reduced risks to landlords is leading a rebound in the rental supply. Broker Soledad Balayan has shown a 50% rise in notices for traditional rentals since the decree. A host of other sources, including the Argentine Real Estate Chamber, have confirmed large supply jumps. Perhaps unsurprisingly, reports show new rental prices falling, by between 20 and 30% so far.

Economists have frequently cautioned against traditional rent controls that apply caps on rents within and between tenancies. But in recent years there’s been a new drumbeat for providing more security for tenants by controlling rents within longer, secure tenancies. Argentina’s experience provides a textbook warning of how this policy can backfire, and more grist to Milei’s educational mill.

Originally Posted By gachase21⏩

Originally Posted By OPGenesis⏩

The Rental Law died: the offer of apartments in CABA has already doubled and prices are falling
According to the chamber of the sector, in a month, the offer of apartments for rent doubled. Why now it is preferred to agree on contracts in pesos and no longer in dollars. How and when the update is agreed. How much did the values fall?

Belén Fernández

The end of the Rental Law generated an almost immediate impact on the real estate market. Since the repeal by Javier Milei's DNU came into force, the offer of apartments in the City of Buenos Aires has already doubled, according to data from the Cámara Inmobiliaria Argentina (CIA), and prices have already fallen, until now, by 20%, say the brokers of the sector.

According to camera data, in 2023, the offer of apartments for rent in CABA had plummeted, to just over 400 units available. "In December, after Milei's announcement, that number doubled. Today, we have a stock of more than 800 departments and it grows day by day," explained Alejandro Bennazar, director of Institutional Relations at the CIA.

The largest offer, along with the possibility of freely negotiating between parties - a key change, since the extinct law fixed a semi-annual update by an official index - had an effect on prices. "If the update is monthly, no matter what index is used for adjustment, rental prices were reduced from 20% to 30%, compared to the values of November and December," explained Daniel Salaya Romera, owner of the homonymous real estate with a great presence in Zona Norte.

"If the contract is signed with bimonthly adjustments, the values fall, on average, by 15% compared to December," he said.

In the last two months, prices had strong distortions and reached historical values, with an average increase of 40% above the inflation of 2023, which was 211.4%, the National Institute of Statistics and Censuses (Indec) announced on Thursday. Thus, in December, an average of $ 334,888 per month was paid for a two-environment in Capital, according to Zonaprop.

"It is not surprising that, in many cases, values still fall in an inflationary context. What we noticed, in general, is that prices stagnated, something that didn't happen years ago," observed Iván Ginevra, president of the CIA.

In addition, far from what happened only a few weeks ago, when 60% of the offer was in dollars, today, most of the contracts are made in pesos. "The expectation is that inflation in pesos will exceed the increase in the dollar this year," explained Daniel Bryn, owner of Invertare Real Estate.

"Many properties for rent that were published in dollars, when they were changed to pesos, did so with a reduction, to accommodate the demand that exists today," he added.

The new strategies

The counter-offers have now reached the rents. "This practice is used in the advance annual payment. Something that, before, could not be done because the repealed law prevented it," described Salaya Romera.

"For example, in the case of a three-room apartment, with 100 square meters, brand new in Vicente López, furnished and equipped, 35% less was negotiated for an advance payment of a year," he said.

Currently, each negotiation is particular. The Decree of Necessity and Urgency (DNU) that entered into force on December 29 annulled the Rental Law and re-established the Civil Code as its regulatory framework.

Most real estate companies are closing contracts for periods of two years - and not three, as established by the repealed law - with quarterly updates (instead of semi-annual) and values in pesos.

"There is good acceptance by tenants and landlords. Prices will continue to fall and new forms of payment will emerge, which will be adapted to the needs of each tenant and owner," concluded Salaya Romera.

For Adrián Cyderboim, owner of the real estate company Crecer, in Villa Crespo, activity increased sharply in the last week, with prices that, in most cases, remained stable or even had casualties, compared to December.

"There are many owners who have their properties for sale. But they are waiting for the scenario to be clarified and for prices to recover, so they decide to turn the property to rent," he explained.

"At the end of December, we didn't have rentals in the real estate. Today, we offered them again. The offer grows week by week," he exemplified.

K5N: let's see, tell me how the tomato went up with Milei

-It went from 900 to 400

K5N: the same quality, the same tomato?

-YES

K5N: and the rest for sure went up, right?

-NO, the potato from 900 to 600, the onion 550 to 450 the orange from, the carrot from 1200 to 100, the pumpkin from 700 to 580. Ah, the apple from 2000 to 1400.

-OK

Originally Posted By gachase21⏩

Originally Posted By Islandboyo⏩

Originally Posted By gachase21⏩

Originally Posted By adamsz⏩

Originally Posted By Islandboyo⏩

Originally Posted By gachase21⏩

Originally Posted By Islandboyo⏩

Originally Posted By Paul

The presidency of Macri focused on reforming the national economy and improving diplomatic relations. He moved from a fixed exchange-rate system to a floating one, and removed taxes on exports and reduced subsidies on energy to reduce the fiscal deficit.[6][7][8]He aligned the country with gradualist neoliberalismand re-opened Argentina to international markets by lifting currency controls (which he reinstated shortly before his term ended), restructuring sovereign debt, and pressing free-market solutions. Domestically, he pursued moderate socially liberal policies, and liberalized the energy sector.

MICHAEL HUDSON: For precisely the reason that you explained. The neoliberal policy has its aim rolling back any of the wage increases in employment that Mrs. Kirschner, the former president, implied, as part of the class war. So in order to shrink the economy, you have to basically cut back business, cut back employment. And so the purpose of the IMF loan was to enable the wealthy Argentinians, the oligarchy that’s run the country for a century, to get all its money out and run. So like almost all IMF loans, the purpose is to subsidize capital flight out of Argentina so that the wealthy Argentinians can take their money and run before the currency collapses.

The aim of the loan is to indebt Argentina so much that its currency will continue to go down and down and down, essentially wrecking the economy. That’s what the IMF does. That’s its business plan. It makes a loan to subsidize capital flight, emptying out the economy of cash, leading the currency to collapse, as it is recently collapsed. As soon as the $50 billion was expended, or wasted, in letting wealthy Argentinians take their pesos, convert them into dollars, move them offshore to the United States, to England, to the Dutch West Indies, and offshore banking centers. Then they let the currency collapse so that the IMF model, which it’s announced for the last 50 years, the model is if you can depreciate a currency what you’re really lowering is the price of labor. Because raw materials and capital have an international price. But when a currency goes down it makes imports much more expensive, and that causes a price umbrella over the cost of living; that labor has to pay the equivalent international price for grain, for food, for oil and gas, for everything else.

And so what Macri has done is they agree with the IMF to wage class war with a vengeance, devaluation, leaving Argentina so hopelessly indebted that it can’t possibly repay the IMF loan. So what we’re seeing is a replay of what happened in 2001.

And yet here, here again, we’re having a replay of what happened was, after Mrs. Kirschner came in, it was obvious to the [inaudible] to everybody, as it had been to the IMF staff, many of whom had resigned, that Argentina couldn’t pay.So about 80 percent of Argentines’ bondholders agreed to write down the debt to something that could be paid. They said, OK, you know, either it’s a total default because they can’t pay anything, or we’ll write it down very substantially to what could be paid.Because the IMF really made a completely incompetent- not incompetent, directly corrupt insider deal. Well, unfortunately,the oligarchy had a fatal clause put in the original bond issue, saying they would agree to U.S. arbitration and to U.S. law if there was any dispute.

Well, after the old Argentine bonds depreciated in price, the bonds that were not renegotiated as part of the 80 percent, you had vulture funds buy them out. Especially Paul Singer, the Republican campaign donor who tends to buy politicians, along with foreign government bonds. And sued, and said, we want 100 percent on the dollar, not, you know, the 40 cents on the dollar or whatever they’d settled. And the case went to a senile, dying judge, Griesa in New York City, who said, well, there was something that’s about a clause that said investors have to be treated separately. And Argentina said, well, that’s fine, we’ll pay the other 20 percent [inaudible] the 80 percent of all agreed to. The majority rules. And Griesa said, no, no, you have to pay the 80 percent all the money that the 20 percent demands. That’s symmetry, because only if you let the hedge funds win can you go bankrupt again, wreck the government, and bring in oligarchy.

And so that ruling caused absolute turmoil.The United States State Department set out to support the oligarchy by doing everything it could to destabilize Argentina. And the Argentine people said, well, we’d better vote in a government that’s supported by the United States. Maybe it will be nice to us. I don’t know why foreign countries think that way, but they thought maybe if they voted the neoliberal that the United States would agree to forgive some of its debt.Well, that’s not what neoliberals do. The neoliberal did just what you said at the beginning of the program; announced that he was going to cut employment, lower, stop inflation by making the working class bail, bear all of the costs, and would borrow- actually, it was the largest loan in IMF history, the $50 billion to enable the Argentine wealthy class to move its money offshore, leaving the economy a bankrupt shell. That’s what the IMF does.

Originally Posted By Trillhouse⏩

Originally Posted By Stizzel⏩

Originally Posted By Stizzel⏩

Originally Posted By Trillhouse⏩

Originally Posted By Paul

Originally Posted By ThePD⏩

Originally Posted By Stizzel⏩

Originally Posted By Trillhouse⏩

Originally Posted By Stizzel⏩