Rents LUC: the mechanism that still does not move the needle and is a star of the campaign

The promoters of the referendum attack a “express eviction and they understand that the conditions for the tenant are precarious because they can be displaced from the house from one day to the next if they do not comply with the payment. In the ruling party they defend instead that they installed a new regime, alternative to the current oneswhich facilitates access to a home for low-income people or immigrants without the need to obtain the guarantee.

The Law of Urgent Consideration (LUC) created the possibility of making a lease with the absence of any guarantee in favor of the lessor, as long as the parties agree on the conditions in writing. However, that article will not be among those challenged on March 27, but those that detail the deadlines for the eviction.

Specifically, the government’s commitment to give legal status to a situation that was already happening in fact admits as a counterpart that a good payer can be evicted 30 days after the sentence is issued, while bad payers can be displaced in six days. The other law on urban and suburban leases –which is still in force beyond the LUC– establishes, for these same cases, considerably longer terms: one year or six months for the first, and twenty days for the second.

Another sensitive aspect of the discussion is that the tenant’s delay –and the fine that it entails– becomes effective on the third business day from the summons, when in the other system that occurs after ten days. “Delaying three days, it can happen that a tenant who has paid regularly and had an unforeseen event can already fall into default, and that is a very important vulnerability of the weakest party,” he assured. The Observer the deputy of the MPP, Lucía Etcheverry.

But in fact, the current regime still does not move the needle, as transmitted by the different actors in the system. According to the Continuous Household Survey, it is estimated that before the LUC there was already 38% of the population – more than 90,000 households – that rented without guarantee, between oral and written contracts. Now, although there are no official records, the consolidation of the mechanism as a certain alternative in the market has not materialized.

The only numbers on the table are that between the validity of the LUC and November 2021, 2.1% of the total of 1,131 evictions occurred under the terms of the norm, according to the Supreme Court of Justice and reported by El País. On the other hand, the Real Estate Chamber took note, through a survey of members, of “a few dozen contracts (by the LUC) for rentals that ranged between $8,000 and $12,000 in Montevideo, and $24,000 inside the country,” he told The Observer the referent Leon Peyrou.

“You have to associate it with the fact that the law is still in an impasse system,” said the businessman. “Little by little it is consolidating but it is essential to define whether it is here to stay or not. There is concern from the people who are renting with this about what happens if the law falls, because it leaves half in a limbo“, he expressed.

The new rental modality has been one of the most sensitive issues of the campaign

“There were some notices and they have been lowered, because, of course, no one is going to rent now for the LUC if on March 27 the Uruguayan people vote Yes and those articles are annulled. That generates uncertainty,” former senator Rafael Michelini, one of the Yes spokesmen, agreed weeks ago.

For his part, the MPP senator Alejandro Sánchez states that “the impacts of the laws must be seen as permanent over time.” “The fact that unsecured rents are applied to a single Uruguayan is enough to say that we do not have to give legal support to a usurious contract with fines of up to 60% of the value if it is three days late,” he said.

“It gives us the impression that renting without guarantees is very positive considering that it is an alternative option, it does not oblige or replace contracts already made under other regulations,” declared Peyrou from the Real Estate Chamber, although he clarified that as a union they do not have a political position on the referendum.

According to the businessman, the “option is a good one” since the owner “in other circumstances had to take risks.” In his opinion, the terms of up to more than a year to carry out an eviction “without any type of return” implies a “risk quota” that means that “he ends up charging much higher rents than they should be.” “It is a chance where there is more to gain than to lose: it can be taken by those who previously had no possibility of paying and went for a pension – which runs from one day to the next – or to a settlement”.

The detractors, on the other hand, maintain that in an unfavorable situation and with a housing deficit, the interested party in renting is at a disadvantage. The lawyer specializing in Housing, Juan Ceretta, has expressed in different interviews that this regulation is based on the conception that whoever gives the lease and whoever leases are in equal conditions, which he considers a “regression”.

Peyrou, meanwhile, estimated that the new modality may have an impact in the interior, “where people know each other and take the neighbor out of the commitment to rent to the friend’s son without guarantee” or the “worker who comes to settle for a year”. “And in Montevideo, potential clients can be students, low-income people who can’t afford insurance, immigrants. You are giving him the chance to take a decent home instead of going to a boarding house”.

Sources from the Ministry of Housing recognized The Observer the low scope that the modality established by the LUC has had to date, and one of the readings on the table is that for the owners it is still more convenient to request the guarantee.

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