Mortgage Loan plan of the City of Buenos Aires

The Government of the city of Buenos Aires has launched a new mortgage loan plan. This new loan plan targets to those people that can prove having a minimum income of $2.300 pesos or more per month. The Mortgage loan Plan took the name of “Primera casa BA” (First House BA), and it aims at providing young people their own house, by paying affordable installments with accessible interest rates. This new plan was launched through the IVC (Institute of Home of the City) and the loan will be granted through the “Banco Ciudad”. Moreover, through the plan, a financing of the 85% of the property value is expected.

In order to be eligible for the loan, the following requirements are a must:

-          Being between 18 and 50 years old.

-          Being Argentine or having the residence in the country (for at least 2 years before the application.)

-          Not having history records of debts

-          Having a net income from $2.300 to $9.200 (for individual applications); and from $2.300 to $11.500 (for joint applications).

The type of home to acquire must fulfill the following requirements:

-          It should be to use as a permanent home.

-          It must be within the City of Buenos Aires and Gran Buenos Aires.

-          It must have a value of up to US$70.000 (for applicants without kids); and up to US$95.000 (for applicants with kids)

-          The square meter value must not be higher than US$1.700

According to the Head of Government in the City of Buenos Aires, it is estimated that there will be given around 3.500 loans during the first year. These (loans) will be given monthly through a score system that will take into account: the house conditions, family situation and income.

On the other hand, according to some specifications, the mortgage loans will be given in pesos through the “Banco Ciudad”, for periods of 15 to 20 years. Moreover, interest rates are fixed and are of 7% (during the first year); 8.50% (during the second); 11% (in the third); and from the forth years on, the interest rate will be of 14%.

Mortgage Loan plan launched by the National Government

A few days ago, the National Government has launched a new Mortgage Loan plan. During 2012 and 2013, 100.000 mortgage loans will be granted. The idea of this new launching of loans is to promote the construction business, and help the economy to move and generate jobs, as well as providing people new homes.

The Mortgage Loans will be granted by the “Banco Hipotecario” with funds from the ANSeS (National Social Security Administration).

The Plan aims at people between 18 and 65 years old, without a minimum income amount. The loans will be up to $350.000 (Argentine pesos).

According to the family income and the type of credit that the person wants and the amount, the payment period will vary (installments are to be paid in 20 to 30 years), as well as the interest rate.

In addition, according to the loan plan, you can access to one with or without having your own plot of land. For those who do not own their own plot of land, the government will provide 1.700 hectares of Public Land around the country. All those who qualify to receive the loan mortgage (and don’t have a plot) will take part in a draw done by the national lottery.

On the other hand, the interest rates will be fixed during the first years. Afterwards, they will be variable, between 4% and 18% according to the type of loan.

The Mortgage Loan Plan is part of the “Programa Creditos Argentinos del Bicenterario para la vivienda única”. Its target is wide, since it aims to reach all social groups, in order all of them can get their own house, and, in the mean time, the economy and all its sectors continue moving.

Would you sell your property in pesos?

Since the end of 2011, the Argentine economy has gone through some changes in its politics and the idea of “pesificar” (make all transactions in pesos) has been trying to be inserted into the Argentine minds. One of the ways of accomplishing this was through the prohibition of the free exchange of currencies (especially dollars). This has caused a great impact over the real estate business, since all transactions were generally made in dollars. Currently, the idea of getting dollars for this or any type of transactions is banishing, so even the same real estate agents are beginning to implement the idea of “pesificar”. If you were on this situation, would you sell your property in pesos?

The truth is that the Argentine mind still thinks in dollars, so if a person wants or needs to sell his/her house, he will think of doing it in dollars.

Nonetheless, there are many people that really need to sell their houses, and maybe they have the idea of buying another. If a person is in this situation of urgent necessity, maybe they have no other choice than selling it in pesos.  Moreover, if they are planning to buy another property with that money, you should first check if the seller of that house accepts pesos as well. So, if you are planning to sell you property and reinvest it in the country, it shouldn’t be too bad to accept the pesos.

On the other hand, if the intention of “pesificar” the whole country (and taking the dollar out of the minds of many) works, having your savings in pesos will not be a crazy idea, either. It is only a matter of investigating if the economic situation will change and if the objectives the government has planned become a reality.

To conclude, if you have the urgent need of selling your property and you are planning to reinvest it in the short term, there is not much to think about, accepting pesos might not be so bad; nonetheless, the recommendation might be that you can make a list of the pros and cons of selling your property in pesos and then decide. 

Agreement to pay installments for a real estate in dollar: can I seek protection from the Law?

During the last few weeks, some specialists and lawyers have commented in different media that those who thought the new rules imposed by the government were violating a constitutional right could appeal for Constitutional right’s legal protection.

Many people in Argentina are worried because they have to pay some debts in dollars, and since they have a contract, they cannot solve the situation; they can only pay in dollars. Otherwise, they would be breaching the contract. For these people, the specialists say that you can present an appeal and ask for protection from the law, so they can get the necessary amount of dollars to pay the debts.

When referring to this situation, the person in charge at the “Colegio de Escribanos” (Notary Publics’ Association), Carlos D’Alesio, mentions that “if a preliminary sales agreement says that the transaction must be done in dollars, this must be done in that currency”, so he didn’t ruled out that “the buyer can bring legal actions in order to get the dollars the person needs”. Moreover, he also mentioned that since there hasn’t been “changes in the law, those who have committed to pay in dollar, must do so”.

As the head of the “Colegio de Escribanos” explains, if the debt and the contract specifies that the payment should be done in dollars, they will have to be paid in that currency; moreover, although a negotiation with the creditor can be done in order to pay in pesos, if the latter doesn´t agree with that, then you need to get the dollars.

So, all those who have a to pay some debt or installment in dollars, especially those in the real estate business, may seek protection from the Law, in order to get the dollars and pay the debt in due time and in proper form. 

50% decrease on real estate activity

Due to the rules imposed during the last few months in Argentina, the real estate business has been affected. Since November 2011, when the impediment to exchange pesos for dollars and other currencies appeared, the real estate business began to decrease. Month by month, the situation has not improved; nonetheless, specialists in the area are looking for different ways of solving the situation.

The biggest problem is that sellers want dollars and buyers can’t get them. This has caused the real estate transactions to freeze. Moreover, this has not only affected transactions, since, during the last month, the construction authorizations have also decreased. According to Carlos Sotelo, vice-president of the “Colegio de Corredores Inmobiliarios de Capital Federal” (Real Estate broker’s association), thinks that “we shouldn’t forget that if the real estate market freezes, the main industry, the construction, will fall; and the latter has been vital to the economy after the crisis in 2002.”

According to the statistics, the situation doesn’t seem to get better, rather the contrary. For this reason, the real estate business is looking for solutions in order to unlock the situation. One of these solutions is the “pesificación” (turn the dollar transactions into Argentine pesos).

According to Fernando Lago, director of the “Camara Argentina de la Construcción” (Construction Association in Argentina), the tendency to turn the contracts from dollars into pesos “is already generalized and so it is the launching of new ones in pesos”. The problem is that the option of paying installments in pesos is valid when the construction is done from zero, since the owners of houses that have already been built, want dollars.

To conclude, while the impediment to buy dollars or other currencies continues, and so the imposition over imports of goods for construction, the real estate business will continue to be affected, and the property transactions and construction will continue to decrease. Nonetheless, the brokers and specialists are trying to find new ways of solving this problem. 

Imported materials used in construction: do they influence?

As we have analyzed on other occasions, the construction business has decreased its number of constructions. Some of the reasons for this are the economic uncertainty the country is going through and the difficulty in getting dollar bills. In addition, there is another issue which is the restriction over imports in the country.

Due to the measures imposed by the government which restrict imports, there has been a shortage (and lack) of many articles and materials necessary for the construction of new buildings and houses.

The ones that have suffered most are the VIP constructions, i.e.  the most exclusive ones. These types of constructions require special materials that you cannot get in the country, which means they need to be brought from other places. According to a consultant from Abeceb.com, “the population in possession of a higher purchasing power is the one that keeps the construction business moving, and at the same time, it is the one that demands a higher amount of imported materials when referring to the constructions of houses.”

In order to show the situation the country is going throw, here is an example: many contracts (used to finance constructions) specify on their clauses that some of the condition will be met only if the government allows the import of the necessary materials (when referring to the type and TRADE of the products).

So, as you can see, it is a fact: the restriction over the import of construction material influences directly on the business, and the specialists are on the alert, in order to see how the situation continues, so as to prevent problems in advance.