Housing at Risk

VenEconomy: The National Assembly has the first debate of the bill for Standardizing and Controlling Property Rentals on its agenda. This is the first piece of legislation that has come from the "Legislator People," a new mechanism that permits the country’s citizens to draft bills and submit them to the National Assembly for approval.

Unfortunately this bill came into being with a number of handicaps.

The first, and the basis of all the excesses contained in the bill, is that it was drafted without consultation and unilaterally by one of the parties affected by the bill, which, in turn, is protected by the government. As a result, the outcome is a bill that ignores the rights of the other parties -- the builders and owners of the houses and apartments -- who are precisely the ones who invest and risk their effort and capital.

Moreover, it is a bill that is being promoted by the government for electoral reasons, with its eye on the 2012 presidential elections. The government is perfectly aware that millions of Venezuelans are desperate because they do not have a home and will grasp at any promise that might offer a solution to their problem, no matter how empty.

But the fact of the matter is that, if this bill becomes law, instead of solving the housing crisis, it will make it worse, as the few houses and apartments that are available for rent will disappear.

Here are just some of the nonsensical things the bill proposes:

Private builders will have to allocate 25% of new housing units they build to be put up for rent. It also establishes the contractual obligation that builders sell the house or apartment to the tenant after 10 years have elapsed, at a price to be set by the government.

The government and the National Tenancy Bureau will be empowered to set the selling prices, with discounts of up to 25% if the buyer is the tenant.

Eviction from the house or apartment, even when this is for causes attributable to failures by the tenant to abide by the terms of the lease, may only be carried out when the tenant has somewhere else to live.

The maximum profit that can be made on residential properties will be between 1% and 4% a year, depending on the value of the property, and this value will decrease based on parameters that will be decided by the Executive.

The rented property will be expropriated, if the landlord commits three offenses, as established in the bill, and also owns more than five rented properties.

In its present form, this bill will adversely affect both tenants and landlords and will also have a negative impact on the construction of housing for sale. No one will risk investing their money when, apart from not being able to make a profit, they could well end up without their property.

The Venezuelan President ... insensitive or cynical?

VenEconomy: One of President Chavez' strengths during these 12 long years in power has been his ability to connect with the population, rich and poor, town dwellers and country folk, men and women alike.

On March 30, he announced from Montevideo that Venezuela (read Chavez) had donated US$10 million to the Faculty of Medicine at the University of Montevideo.

This is a slap in the face for the nurses from several of the country's states who have been on hunger strike outside the Embassy of Brazil since March 23 in protest at the low wages paid health workers in the public health system, the deplorable state of the public hospitals, and the Ministry of Health's inadequate budget.

This donation is also an affront to the students who held a 30-day hunger strike, with successful results, to protest at the strangling of the autonomous universities whose budgets today are less than five years ago in current bolivars, as if the President were totally unaware that in Venezuela there is spiraling inflation.

Medicine and university, two birds with one stone.

There are two possible interpretations to this donation by President Chavez. One is that he has simply become totally insensitive to his people's needs and concerns; that he no longer understands, neither is he aware of their desires and sufferings.

Donating US$10 million at a time when there are clear budgetary restrictions is, of itself, an offense for those who are waiting desperately for the government to release the funds for building homes, repairing power stations, fixing roads and freeways or attending to any other of the many needs that have been ignored over the past ten years. But the fact that those US$10 million have been donated precisely to a medical faculty goes beyond being offensive, for some analysts, it is proof that the President is losing his cool.

Then there are others who think that what the President is saying goes something like this:

Gentlemen, No one's going to twist my arm. I have other priorities that do not include giving the nurses substantial salary increases, much less the survival of the autonomous universities, which are constantly putting stumbling blocks in the way of the Revolution.

In other words, the President, a communicator par excellence, has sent a message.

Regardless of which interpretation is the right one, the fact is that this donation, sadly, bodes ill for the Venezuelan people.

On Sunday, Foreign Minister Nicolas Maduro tried to repair the damage and, among other things, said that the donation was made five years ago so that Venezuelan students could study at the Universidad de Montevideo. From what he said it would seem that there have been two donations for equal amounts, one in 2005 and the other last week.

Explanations like that, far from clarifying the situation, simply muddy the waters still further.