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2012-08-09

Venezuela: Law regulating leases wreaks havoc on housing market

By Beth Dalmau and Milagros Rodríguez for Infosurhoy.com – 09/08/2012

Statute threatens to eliminate the home rental market in the South American nation, already suffering from a housing deficit of two million.

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Eloísa Álvarez, 51, spent 23 days with her daughter camped outside her apartment’s entrance in Caracas, Venezuela after the family she rented her apartment to refused to vacate the unit at the end of the lease. (Courtesy of Eloísa Álvarez)

Eloísa Álvarez, 51, spent 23 days with her daughter camped outside her apartment’s entrance in Caracas, Venezuela after the family she rented her apartment to refused to vacate the unit at the end of the lease. (Courtesy of Eloísa Álvarez)

CARACAS, Venezuela – Diego Maldonado checks the classified section of the Venezuelan dailies every morning, with one hope: to find a decent home for his family.

After living in a three-bedroom, two-bathroom apartment in El Paraíso, a quiet residential area southwest of Caracas, he shares a 64-square foot room with his wife, Marisa, and his two toddlers.

“A year ago I had to leave the apartment where I had lived for more than 10 years,” he said. “Since then, I have been looking for a decent place to live. But so far, there’s been nothing.”

The rent for the room, which is in a dilapidated house in western Caracas, is $2,500 bolívares (US$582) a month, the same amount he paid for the apartment.

“It was this or being homeless,” Maldonado, a 35-year-old elementary school teacher, said. “People don’t want to rent, as they are afraid of losing their rental properties. They rather have them sit empty.”

Maldonado’s ordeal is quite common in Venezuela.

Since its inception in November 2011, the Law of Regularization and Control of Home Leases has brought the rental market in this nation of 28 million to a halt.

The law allows tenants to remain in rental units even if they stop paying rent. It also allows them to buy the property – even if they’ve been delinquent on rent – after 20 years of leasing.

The law also sets rental prices at 3% to 5% of the value of the home, as it only takes into account the size and age of the unit – not its location.

As a result, the price to rent a home in the most luxurious area of Caracas costs the same as it would to rent a unit of the same size and age in a low-income neighborhood.

“I believe the owner [of the apartment he rented] got scared,” Maldonado said. “I was never late with the rent, but since the government approved the laws, she started asking us to leave.”

Rental property owners said that rather than solving the country’s housing crisis problems, the new law has worsened Venezuela’s gargantuan housing deficit – estimated by the government at two million units. It dismantled the rental market and increased real estate prices.

“The property owners’ rights have been totally violated,” said Roberto Orta, president of the Association of Urban Property Owners (APIUR). “The possibility of obtaining a fair return on one’s investment is much lower than what you would receive interest on your savings account. People don’t want to rent and they’re right not to. With so little supply and such a high demand, prices have gone up.”

A burgeoning “black market” of leases, created out of desperation of the more than eight million Venezuelans who don’t own a home, has emerged as a result of the law, with hundreds of thousands of unregistered rental agreements, verbal contracts and illegal occupations.

“After eight months under the Leasing Law, nobody in Venezuela is complying with it,” said Aquiles Martini, the president of the Real Estate Chamber of Venezuela. “This law has destroyed the housing market.”

Rental property owners have also criticized the creation of the Superintendence of Leasing, a government body who oversees all rental contracts, negotiations and owner-tenant relations.

“This will generate more red tape and will delay and increase the steps to set up a rental agreement,” said Zayda Hernández, a real estate lawyer in Caracas.

The government countered by launching a nationwide housing program dubbed the “Great Housing Mission of Venezuela” in 2011 to eliminate the housing deficit.

The government claims it will fund the construction of about 200,000 houses nationwide during the next 13 months, but opposition lawmaker Julio Borges is incredulous.

“Those numbers don’t check,” he said. “There are housing projects being built but just a small number of what was promised. And those that actually are sold have structural problems, cracks in floors and walls, and in many cases they don’t have basic services such as water and electricity.”

Meantime, Venezuelans who saved for years to become landlords at the properties they’ve purchased are being forced to evict delinquent tenants.

Eloísa Álvarez, 51, leased her apartment to a family when she had to return home to live with her ailing parents in 2002. But when Álvarez and her 24-year-old daughter Macarena returned to the apartment, which the tenants had leased yearly, they refused to move out when the contract expired in 2010. The tenants refused to pay rent before claiming they were protected under the Law of Regularization and Control of Home Leases once it became effective the following year.

Álvarez and her daughter spent “six months living in one friend or relative’s house and three months in another” before she and Macarena started residing in the hallway leading to the entrance to her apartment.

“We spent 23 days sleeping on a mat in the hallway,” said Álvarez, who works as a logistics manager for a law firm.

Her sacrifice, coupled with the media coverage she received, paid off when the family living in the apartment left a year ago.

Carlos Salazar, a lawyer from Caracas, is pondering taking similar steps to recover his family’s property.

“Ten years ago, my mother rented an apartment to one of her close friends for $700 bolívares (US$162) a month,” he said. “But she hasn’t paid rent since 2008.”

Salazar said negotiations with the tenant have been fruitless.

“I explained to them that I need to sell the apartment because my parents are ill,” he said. “I even offered to give them 10% of the sale price, but they say that with the new law, there is nothing to discuss or negotiate.”

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19 Comments

  1. jose 09/10/2012

    I am Colombian and even though I criticize some of the power abuses by President HUGO CHAVEZ FRIAS, I believe that the Colombian people should have risen up a long time ago against the leading political class, which keeps condemning our people to misery. Let's not forget that the Chavez phenomenon arose because the people were fed up with having Venezuela's great wealth remain in the hands of a few. In Colombia we're overdue for the same kind of phenomenon. Go Chavez

  2. jose naredo 09/10/2012

    THANKS TO THOSE AND WHAT GOOD POLICIES, THESE CASES AND OTHERS HAPPEN AND WILL CONTINUE TO HAPPEN, MAYBE WORSE, what is it worth, to put away and to save, if the government doesn't let you touch or take anything out? It must be to send it to their relatives... Cubans, Syrians, Palestinians, Argentines, Bolivians....

  3. simòn 09/05/2012

    ENOUGH, SAID BOLIVAR: YOU CAN'T LEAVE A PERSON SO LONG IN A POSITION HE BECOMES USED TO ORDERING AND THE PEOPLE TO OBEYING HIM... (THEY DON'T CALL THEMSELVES BOLIVARIAN) THERE IS A WAY ...

  4. victor delgado 09/04/2012

    The policies of this regime are chaotic, sowing terror is their Marxist philosophy truncating any person effort, misery is their northern star the all-powerful eliminate the noble right to private property and feed them based on lies and expectations, resulting in slicing morale and knee to the ground it's their style

  5. marcelo 09/03/2012

    I think the pseudo statesmen of Venezuela, Ecuador, Nicaragua, Bolivia should let their countries be governed by someone who has intelligence (at least mid-level intelligence) and without personal power ambitions, wanting to take us into a more than 50 year-old backwards Cuban socialism that is always blaming a capitalist country for its failure and not having been able to advance, enough already, react

  6. HARRY PEREZ 08/31/2012

    THAT LAW IS USELESS

  7. Fernando Torres 08/27/2012

    AS AN ECUADORAN AND LATIN AMERICAN, THE DIFFICULTIES OF OUR VENEZUELAN BROTHERS MAKE ME THINK A LOT. I SUGGEST THAT THE LAW SHOULD BE REFORMED IN THE SENSE THAT "EVERY SPACE" AVAILABLE, WHETHER IT'S HOUSES, APARTMENTS, ROOMS, OR ANNEXES, SHOLD BE RENTED TO THOSE WHO DESPERATELY NEED THEM, FOR REASONABLE PRICES AND WITH GREAT RESPECT FOR PRIVATE PROPERTY. TAKING AWAY SOMEONE ELSE'S ASSET BY FORCE IS CALLED STEALING. WE LATIN AMERICANS DO NOT NEED TO STEAL FROM EACH OTHER AND THAT'S THAT. WE WOULD BE DOING TO OURSELVES THE SAME THING WE KNOW POWERFUL COUNTRIES HAVE DONE TO US HISTORICALLY.

  8. EMILY MOLINA 08/27/2012

    MR PRESIDENT IT'S NOT THAT YOU'RE A BAD PRESIDENT BECAUSE YOU GIVE RESOURCES BUT THERE ARE MANY CHAVEZ POLITICIANS WHO STEAL THE HELP YOU GIVE TO US THE VENEZUELANS I AM A VENEZUELAN I AM 17 YEARS OLD I AM A SINGLE MOTHER AND I HAVE BEEN WAITING MORE THAN A YEAR FOR HELP FROM THE GOVERNMENT WHICH I HAVE NOT GOTTEN YET NOR HAVE I GOTTEN DECENT HOUSING I LOST MY HUT BECAUSE OF THE RAINS AND I HOPE YOU READ THIS MESSAGE AND COME TO MY AID

  9. josé mújica 08/23/2012

    I very much agree that prices should be regulated, but don't take property away from the owner, I also agree with giving the tenant time to find a place to live, a maximum of 8 months, and the owner can offer his property again to who ever he wants to rent it to, another issue is that the tenant should leave the property in perfect condition just like it was rented to him, there should be mutual respect, that is how it would be a very fair law, a law can't be made to help just the tenant and to have that same law put him out on the street because no one wants to rent their assets, I hope the president reviews this law again, let's remember we are living in a participatory democracy and it is good to hear from these people and let's not consider it notice to go against the president, I believe the president is a human being and he can be wrong as he himself has acknowledged many times...

  10. luz mary muñoz 08/23/2012

    I need to get a Venezuelan identification card because I am married to a Venezuelan

  11. ALFONSO 08/20/2012

    Every investor in Venezuela, big or small, should sell their properties and invest in countries which respect the law and the assets achieved over decades of work; for example, Chile, Brazil, Uruguay.

  12. rosariovargas 08/19/2012

    Good afternoon my president I have been waiting for a house for 12 years I am a victim from the 2000 Monteverde neighborhood [incident] I signed up they visited me and nothing and I see they're giving houses to people who rent them and they make fun of me because I am poor president my telephone number is 04167630173 I live in a room in Cabimas, state of Zulia. highway H LIBERTADOR STREET next to the La Nacional school.

  13. ROBERTO 08/19/2012

    In this country everything works backwards, the problem is that the people who govern us are resentful, they never had anything, and now they're all filthy rich, and now with these laws they want to subjugate the people so that we all depend on them, but thank god they don't have much time left, the sun's at their back, the bad thing is they're leaving the country in ruins, and now it will take many years to rebuild it.

  14. jars 08/18/2012

    How are we doing, we're doing well.

  15. luis rodriguez 08/18/2012

    THEY'RE OUT OF CONTROL WITH FEAR OF THE COMMANDANT THE PITIYANKESS CAN'T FIND A WAY TO HURT THE REVOLUTION BUT THEY NEVER WILL BECAUSE THE HEROIC PEOPLE OF VENEZUELA AWAKENED WITH THE LEADER HUGO RAFAEL CHAVEZ. DESPIERTA CASA IS 100 YEARS OLD NOW WE ARE IN THE ERA OF THE 100 YEARS AWAKENING A PEOPLE NO ONE WILL MAKE DEVIATE FROM ITS BOLIVARIAN VENEZUELAN PROJECT IT IS A VENEZUELAN SOCIALISM WE AREN'T A COPY OF ANYONE VENEZUELA DOMINATES, THAT'S WHY YOU WHO RUN THESE INTERNET NETWORKS DON'T LET IT OUT INTO THE PUBLIC LIGHT. DON'T BE AFRAID DO YOUR POLITICS THE WAY YOU SHOULD. BECAUSE EVERY TIME YOU SLANDER THE REVOLUTION EVERYTHING GETS TWISTED ON YOU. TELL ME, THE LOWLY U R I E HELPING YOU, YOU ARE SUCH TRAITORS YOU WANT THE YANKEES TO COME INTO OUR HOMELAND TO TAKE OVER OUR RESOURCES YOU SHOULD BE ASHAMED TO BE TRAITORS. BUT WE WILL WIN BECAUSE WE ARE AWARE THE COMMANDER IS THE ONLY PERSON WHO WILL BRING PROGRESS TO OUR COUNTRY.

  16. luis rodriguez 08/18/2012

    THE LAW REGULATING LEASES CAN'T HURT ANYBODY. IT IS A LAW THAT PROTECTS THE RENTER AND THE LANDLORD, THE OWNER OF THE PROPERTY AND HE RENTS IT PROTECTED BY THE LAWS. THAT IS BAD THAT CAUSES DISTRESS, IN EFFECT THE PERSON WHO RENTS A HOUSE OR APARTMENT KNOWS HE OR SHE HAS TO LEAVE WHEN THE CONTRACTUAL TIME COMES. WITH A DOCUMENT SIGNED WITNESSED BY A NOTARY. DON'T LET YOURSELVES BE CHEATED WHERE PEOPLE WORK TO CAUSE DISTRESS to the population. Everything the government does is done poorly, no my compatriots this law is for one and for another enough with trying to distress the people. Something else don't you see how they're building houses all over, sign up to see if you can get one of them. To the victory always we will live and we will prevail

  17. francisca quintero 08/18/2012

    IF YOU ONLY KNEW I AM A PROFESSIONAL PUBLIC SERVANT AND UP TO NOW I HAVE WRITTEN TONS OF LETTERS TO THE PRESIDENT FOR HELP WITH HOUSING AND IT'S ALL BEEN FOR NOTHING AND THE WORST THING IS THAT I WAS PAYING RENT TO SOMEONE WHO HAD TAKEN OVER A GOVERNMENT OWNED PROPERTY NOW SHE'S HARASSING ME ALL THE TIME TO GET ME TO LEAVE I HAVE REPORTED HERE I HAVE TWO SMALL CHILDREN AND THE GOVERNMENT AND THE GOVERNMENT ENTITIES DO NOTHING MY FRIEND. WHAT DO YOU THINK THERE ARE A LOT OF US LIKE YOU AND EVEN WORSE OFF IF I WERE TO TELL YOU ABOUT ALL THE HARASSMENT I GO THROUGH YOU WOULD CRY AND WOULD BE SHOCKED AND I LIVE IN PARADISE. HOW ABOUT IN A ROOM IN A CUL-DE-SAC THAT I'VE TOLD YOU BELONGS TO THE GOVERNMENT BECAUSE I VERIFIED THIS SO THE ONLY THING WE HAVE LEFT TO DO IS OFFER IT UP TO I DON'T KNOW WHO BECAUSE IT SEEMS THAT GOD HAS TOO MANY REQUESTS ALREADY I WISH YOU THE BEST OF LUCK AND THAT YOU GET HOUSING TAKE GOOD CARE OF YOUR FAMILY BECAUSE STAYING CLOSE TO YOUR CHILDREN AND PARTNER IS WHAT GIVES YOU STRENGTH

  18. Lex839 08/14/2012

    This is the consequence of a terrible policy. An individual with some savings wants to invest it in something solid like real estate; but the government happily believes it can take over private property as if we lived in Cuba, and the result is a huge problem for anyone who needs a house to live in with their family...

  19. guillermo 08/13/2012

    Those things are what violence unleashes anywhere in the world. But that is what GOD stated in Jeremiah CHAPTER 1 TO CHAPTER 7 , WHAT IS MISSING . REPENT BECAUSE THE Kingdom OF THE HEAVENS IS CLOSER TO ALL MEN, Jesus is the savior of the world. John 3:16

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