SANTO DOMINGO- The proposal made by the Ministry of Housing, Habitat and Buildings (MIVHED), to the draft of the General Law on Rental of Real Estate and Evictions, regarding the control of rental prices, could have a rebound effect that would lead to a reduction in the supply of housing, considered lawyer Maridalia Rodríguez.
“Regarding the proposals referred to by MIVHED, especially those related to rent control, it should be taken into account that international experience indicates that this practice usually has a rebound effect that leads to a reduction in the housing supply,” the expert explained.
In the proposal sent to the Chamber of Deputies, this State entity proposes to stipulate that the rental price of a home does not exceed 1.5% of the commercial value of the property and that in all cases the price is regulated by the MIVHED, using references to construction inputs, changes in macroeconomic conditions and the minimum wage.
Similarly, the Ministry of Housing intends to implement regulations to define annually the percentage value of price adjustments, according to the purpose of the rental contracts.
Rodríguez believes that if the requested modifications were to progress, it would infringe upon the freedom of contract that the legislative piece seeks to achieve.
According to the scholar of the subject, the bill approved in its first reading last May by the Chamber of Deputies, "considers some positive aspects, starting with the fact that it seems to be based on the principle of freedom of contract, where the parties enjoy the right to assert their contractual will.".
“In that same sense, a delimitation of the scope of application is made, although it suffers from a definition or separation by types of housing (social, usual, second home or vacation, etc.) so that the object of regulation itself (article 1 of the proposal) generates ambiguity in relation to the rental of real estate in the tertiary sector (offices, commercial premises and industrial buildings),” he explains.
It adds that, on the other hand, causes for termination of the rental contract are established according to the Dominican jurisprudence and the novelty of the management of the deposits delivered as a guarantee is added, which is the responsibility of the Reserve Bank of the Dominican Republic.
“Although it is not very clear who will be the real beneficiary of the interest generated by these deposits and what the purpose of depositing these funds with this bank will be (it does refer to the interest generated by the delay in depositing the sums given as a guarantee),” says Rodríguez.
The project will be submitted to public hearings on June 27th so that the various sectors linked to the industry can express their considerations on the legislative piece.
