Buenos Aires Real Estate

Much to the displeasure of property developers, the government of Buenos Aires Province has created a polemic new law that is set to shake up the Buenos Aires real estate market.
The law stipulates that any plot of land purchased, which exceeds 5,000 m2, in the Province of Buenos Aires will be forced to donate 10% of the land to the government. The land that is appropriated by the government will be used as a site to build government social housing. If property investors are not willing to donate this percentage then they have the option of paying a fee which amounts to the equivalent value of 10% of their purchased land. The law is basically creating a tax on commercial and property investors.
There is no denying that Argentina is currently suffering under the strain of urban, over-population, a steep rise in immigration rates and general lack of sustainable housing. Social and political unrest has been caused by the lack of popular housing, with parks even being used as camps for newly arrived immigrants. It’s a very serious problem that the government needs to address, but is this the best way to tackle the problem?
One argument against the law is that the property and construction industries will be badly affected. The construction and Buenos Aires real estate market are important pillars whose growth greatly benefits the Argentine economy and government. By adding this stealth tax onto their already challenging costs it may negatively impact the industry and economy. Furthermore, the establishment of a minimum plot size will surely increase the value of properties in Buenos Aires that are under this size. Investors will be more attracted to lots of land that measures less than 5,000 metres squared, which would probably result in a distortion of land values.
Let’s not forget that the government is asking property buyers to donate 10% of their property, which is a large proportion to pay considering that they are already supposedly paying taxes to the government.
The system does also seem to be quite complex which could result in bureaucracy and the ubiquitous corruption that seems to plague Argentine history, politics and economy. Investors may be asking themselves whether their philanthropic gift of 10% will ever actually reach its intended benefactors.
Another question that arises from the debate is why the government has to rely on taking land from buyers when there are in fact plenty of available spaces in which to build social housing projects. Argentina is a huge country with plenty of terrain that could be transformed into homes.
The province of Buenos Aires still remains the area that has the highest amount of slums and informal, illegal, precarious housing. However, when implementing a solution to the problem, such as this ‘take from the rich and give to the poor’ Robin Hood method, it’s important to consider the needs and rights of everyone.