MEXICO CITY, (EFE) .- The Banamex economic analysis area warned about the risks that would lead to implementing a frozen income regime in Mexico City, a policy similar to that applied between 1942 and 2001 that caused significant distortions in the real estate and urban deterioration.
In a special note, the financial institution recalled that for almost six decades the freezing of income caused the depopulation of the capital Historic Center, a reduction in the supply of housing for rent and a marked decrease in the maintenance of real estate, generating physical deterioration and social conflicts.
The analysis details that initially, in 1942, the measure had a temporary character during World War II to protect tenants against an inflation of 10.4%.
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However, the indefinite prolongation of this policy caused that in the 90s some rents were as low as between 0.40 and 10 pesos per month, compared to increasing maintenance and tax costs, which increased an average of 10% annually between 1970 and 2000.
Banamex emphasizes that the measure, inadvertently eliminated in 2001, when Andrés Manuel López Obrador was head of government of Mexico City then allowed a reactivation of the real estate market with an average annual growth of 2.8% under construction between 2001 and 2010, as well as a revitalization process of the historic center.
Currently, the head of government, Clara Brugada, has presented side 1 ‘by a habitable and affordable city with local identity and roots’, a strategy that seeks to control the increase in income by increments related to the annual inflation reported officially.
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“Proposals such as limiting income increases should consider the lessons of the past,” emphasized the study, which indicates possible negative effects such as the increase in informality in leases, erosion of the cadastral value and reduction of fiscal collection.
Banamex warned that a poor design could again discourage private investment, which in 2024 represented 85% of housing construction in the capital.
“We consider the implementation of complementary policies, such as fiscal incentives for the maintenance of real estate and direct subsidies to low -income tenants very relevant, to balance social justice with economic sustainability,” said the bank in its report.
In addition, it was mentioned that clear details are still missing on key concepts of this new strategy, such as ‘real estate tension zones’ and the ‘Ombudsman’s Ombudsman’, necessary to fully evaluate the viability and impact of the proposal.
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“The frozen income already experienced Mexico City are a clear example of the non -deliberate effects of public policies that can be well intentional,” said Banamex.
He added that although they protected a segment of the population, they distorted the real estate market, deteriorated the housing park and contributed to the depopulation of the urban center.
“This historical episode leaves us the important lesson that some public interventions must be designed with defined deadlines, continuous monitoring and adjustment mechanisms because, otherwise, they can derive in negative externalities of relevant magnitude and structurally deteriorates scarce active active for society,” he concluded.
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