The government of Mexico City (CDMX), in charge of Marti Batrespublished the reform to cap the excessive increase in rents at the level of the inflation On August 28, however, experts warn of the possibility of a black market o contracts in the dark to avoid the record of contracts.
This August 28th, Marti Batres He said that only during the six-year term of Miguel Ángel Mancera the price of rents increased eight times the level of the inflation.
It should be remembered that this reform limits the annual increase to the level of the inflation of the previous year, which in this case at the end of 2023 was 4.66 percent.
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Experts warn that curbing rents in Mexico City promotes black market
Miguel Alvarez del Castillo Herreraexpert real estate in prevention of frauds In the sector, it shows that the reform is incomplete because it does not guarantee registration in the lease contract registry which includes this reform.
In an interview with SDPnoticias he said that landlords and tenants could do informal agreements as is already done in more than half of existing incomes.
“Unfortunately, the issue of illegal rent will continue. If a price cap is imposed on a certain property, then it is very likely that tenants or owners could make an agreement that is not reflected in the contract. It lends itself to the type of black market that normally occurs when there is price control, market control… that is the risk that you face when you as a government want to control the market. The participants will always find a way to remedy this.”
Miguel Alvarez del Castillo Herrera. Real estate expert
Although it is noted that the Mexico City government would be in charge of the registration of contracts of rentathe expert sees a loophole: “There is a loophole in the initiative that was approved. It never mentions who will have control of that registry and what the objective is…”
He is also the director of CIMAC Real Estate Portfolio He points out that if the reform is applied correctly, it would have a positive impact on tax collection and that this would be beneficial for city services, even though citizens in general are not willing to pay more taxes.
“There is a tax issue here, if the contracts are declared they are obliged to pay taxes, otherwise they would be evading them. If the law is implemented correctly, it is a good point because there would be greater revenue… we have to pay so that the city can maintain the best possible services… to the extent that we manage to have more resources and the people (would have) a better quality of life… In general I don’t see it as bad.”
Miguel Alvarez del Castillo Herrera. Real estate expert
Reform to rent cap in CDMX is not clear and investors could leave: real estate sector
For its part, the Real Estate Innovation and Transformation Cluster (CITI) said that the reform limiting the annual increase in rents to the inflation of the previous year is not clear and warns that investors could go to other states.
“Rental units will continue to move normally. What could discourage the market is that investors who previously invested their investment portfolio in rental properties no longer do so or choose other locations when they begin to notice these rent controls and their lack of clarity.”
Fernando Rodriguez Bustamante. CITI
Fernando Rodriguez Bustamantefrom CITI, agreed that the essence of the reform is “noble” but has an “erroneous” approach because events such as the Covid-19 pandemic puts at risk high levels of inflation.
Housing issues remain pending in Clara Brugada
This August 28th Marti Batres He said that the pending issues regarding the implementation of this reformthe administration of the registry and the construction of housing for the most disadvantaged will be attended to by the incoming government of Clara Brugada.
2024-08-30 20:49:05