Homes empty and tenants homeless as Argentina’s peso crisis hits rentals

Landlords are leaving one in seven homes empty in Buenos Aires rather than let to locals in Argentine pesos, as triple-digit inflation, tight regulations and an influx of dollar-wielding foreigners disrupt the city’s rented housing market.

Inflation has surged in Argentina in recent years, with the annual rate hitting 160.9 per cent in November — a big factor, analysts say, in the triumph of Javier Milei, a radical libertarian economist who has promised “shock therapy” to fix the country’s dysfunctional finances, in November’s presidential election.

For locals, finding a new flat had become “mission impossible”, said Gastón Levy, a 39-year-old administrative assistant in the capital.

In a sign of the disruption caused by inflation, which has left landlords struggling to set and reliably collect rents, a monthly average of 228,500 of the capital’s 1,586,200 homes were vacant in the year to February.

The data, obtained from Argentina’s state energy regulator by development research centre Cedesu and shared with the Financial Times, revealed that those houses used less electricity than the amount required to power a fridge, a proxy for vacancy.

The figure, which predates the latest steep rises in inflation, had jumped by 14 per cent from the same period a year earlier and by 57 per cent since 2018. 

Even as these homes stand empty, Buenos Aires residents are struggling to find places to live: campaigners say they are facing the city’s worst housing crisis in 30 years.

Levy grew up and still lives in Palermo, a chic neighbourhood filled with coffee shops and popular with tourists. On Levy’s current lease, signed in 2021 and ending in February, he pays 46,000 pesos a month.

But rents are spiralling even faster than inflation. Today, “most normal one-bed flats” advertised within the city limits were rented out for about 400,000 pesos, he said.

The value of Levy’s monthly salary of 250,000 pesos has fallen by about 70 per cent over the past 12 months to $250, if he exchanges his money on the black market, where most Argentines go to convert savings into dollars. That leaves him with a big problem when his lease ends.

“On top of [the higher prices], they want me to pay in dollars, which is impossible for me because the dollar is always going up. If I don’t find something, I will have to move in with my parents.”

In its first week in office in December, Milei’s government devalued the artificially high official exchange rate, from around 400 pesos to the dollar to 800 pesos. The devaluation is expected to fuel monthly inflation, which economists say will surge from 12.8 per cent in November to up to 30 per cent by January.

Milei, a self-described “anarcho-capitalist” who scorns most regulation, has also said he will push to scrap Argentina’s rental law. Passed in 2020 and updated in October, it sets a three-year minimum term for contracts and allows landlords to raise prices only twice a year.

While renters’ unions say the legislation protects tenants, estate agents say it leaves landlords reluctant to enter into contracts on the normal rental market in the face of unpredictable inflation.

Some landlords have pivoted to a booming market for short-term lets, and many are pricing contracts in dollars.

Zonaprop, Argentina’s largest property site, said that 70 per cent of long-term lets were priced in dollars, compared with 27 per cent three years ago.

“In the last three years, the [number of properties in the] normal rental offer has shrunk to a size that I have never seen in my 25 years in the market,” said Diego Nocera, an estate agent in central Buenos Aires. 

Rents for the city’s remaining homes are skyrocketing, far outpacing price rises in other sectors. A June study by the Institute of Economic Research of the Córdoba Stock Exchange found rents had risen an average of 140 per cent in inflation-adjusted terms since 2020.

Part of the problem for locals is a growing crowd of remote workers and tourists from the US, Europe and neighbouring countries, who are taking advantage of the cheap lifestyle available to those with access to dollars to sell on the black market.

Jack, a 27-year-old web designer from the UK, said he was asked to relocate to Argentina by a US company so that it “could pay [him] less to afford the same lifestyle”. On his $3,000-a-month salary, he can easily afford the $620 rent on his large studio flat in a luxury building in Palermo.  

“None of my friends in London are paying as little as that for a room in a shared house, let alone your own place. It works out very well for me.”

To tap foreigners’ dollars, landlords were increasingly investing in “nice furniture, fast WiFi and Nespresso coffee makers”, said Maximiliano Götz, an agent specialising in short-term rentals.  

At last count in October, 27,773 private homes were listed in Buenos Aires on Airbnb, a 75 per cent jump from the same month in 2022, according to activist data project Inside Airbnb. Airbnb says the project’s numbers over-represent the total offer because some ads are inactive or posted twice.

An attempt to establish a city government register of temporary rentals has failed miserably, with just over 500 registered as of November.

The short-term rental phenomenon has spread beyond classic tourist hotspots — upscale neighbourhoods Palermo, Recoleta and Retiro plus artsy San Telmo — to residential areas across Buenos Aires and other cities, said Bruno Giormenti Moravec, a researcher at Cedesu. “It’s at the point now where ordinary Argentines are having to rent places on short- term, dollarised contracts.”

Ricardo Botana, president of a renters’ union, said the law needed to be reformed to create more flexibility for landlords and tenants “to negotiate a limited number of price increases” but that “no law” could end the rental crisis with this level of inflation.

Gervasio Muñoz, spokesperson for a separate renters’ union which lobbied for the rental law, argued that the root of the problem is not the regulation but the consolidation of properties in the hands of fewer owners and a lack of regulation in the temporary market. Between 2006 and 2020, the proportion of city residents who own their home shrank 7.1 percentage points to 53.5 per cent.

Muñoz added that Milei’s plan to scrap the law would worsen the situation for tenants. He said: “Their plan is to institutionalise ‘every man for himself’.”