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Another record-breaking rent update is coming in August: how much will they go up? - Infobae
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Viene otra actualización récord para los alquileres en agosto: cuánto subirán
Los contratos firmados bajo la derogada Ley de Alquileres continúan con la actualización anual. El incremento de julio había sido de 244,4 por ciento
www.infobae.com
July 25, 2024
The contracts signed under the repealed Rental Law continue with the annual update. The increase in July had been 244.4 percent
By Jose Luis Cieri
Those who have contracts in force with the repealed Rental Law will face a harsh adjustment in the price of housing for next month (Illustrative image Infobae)
Current rental contracts signed under the Rental Law repealed at the end of the year, which contemplated annual updates, must face a record increase by August 2024. The increase in the cost of maintaining housing will be 247.56%, which represents another hard blow to tenants' pockets.
The increases are applied through the Rental Contract Index (ICL). Thus, for example, a rental of $200,000 signed while the old law was in force, starting next August, will have a value of $694,000 over the next 12 months.
The increase is calculated based on the ICL carried out by the Central Bank, which takes into account the variation in inflation (according to the Consumer Price Index, CPI, of INDEC) and salaries, according to Ripte (average remuneration of stable workers).
Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, stated that in previous years, when the ICL made an annual update on current contracts, even if the rental value doubled, it was still below the market value. “This value, out of date, was frozen again for another similar period of 12 months. Now, in the last two months, the 250% jump in the values of these same contracts takes them to values higher than those of the market, regardless of the possibility of payment of the new value by the tenant,” he said.
The current situation is different from previous years. The annual ICL update, which previously left rents below market value, now results in increases that exceed market values, creating new challenges for tenants and landlords.
Diego Migliorisi , from Migliorisi Properties, added: “Clearly, the repeal of the Rental Law inspired great confidence in the owners and all those who were frightened by the controversial law that generated one of the biggest disasters in the history of the Argentine real estate market returned. It was an extremely successful measure to resolve a crisis that was very deep in terms of the housing supply.”
More increases
Those who signed a contract after the DNU in February or in April with a semi-annual or quarterly adjustment through the ICL will also have to pay an increase.
A contract signed in February was updated quarterly in June, increasing 30% above the market value and becoming difficult for the tenant to pay (Illustrative Image Infobae)
Today, a contract that started in February with a semiannual adjustment and an initial value of $250,000, adjusted for August, jumps to $525,830 (an increase of 110.33% through the ICL). On the other hand, a contract that started in April with a quarterly adjustment and an initial value of $250,000, adjusted for August, increases to $395,833 (an increase of 58.33%).
The reduction in inflation, which has only slowed down in the last two months, is expected to result in lower increases for the next adjustments before the end of the year in the case of quarterly or four-monthly updates. This is because the ICL measurement uses data with a 60-day lag.
For example, a contract signed in February of this year with an initial value of $300,000, when updated for the first time every four months in June, rose to more than 500,000 pesos. This represented 30% above the market value at that time, making it practically unaffordable for the tenant.
Braña commented: “This year, we have seen that rent increases are becoming unsustainable for tenants with quarterly or half-yearly adjustments. Real estate agents mediate so that owners and tenants can reach an agreement. In most cases, reductions in values were made because owners prefer to renegotiate rather than lose their tenants and return the property to the market.”
Although there is a significant difference compared to the previous period, it must be considered that there is a large supply (in CABA more than 16,000 apartments) and everything is subject to negotiation.
“If the rent increases too much, there are more attractive alternatives for the tenant. In that case, he terminates the contract and moves to another place, possibly cheaper and of better quality,” Migliorisi added.
Although contracts are updated by ICL, the CPI predominates. Quarterly adjustments are frequent, but there are negotiation alternatives. The DNU allows various types of adjustments, provided they are explicit and signed by both parties.
“Furthermore, mortgage loans will play a very important role in the coming months and years for those who are renting, as they may have the possibility of accessing their own home,” he said.
Proposals and prices
The real estate sector claims that monthly inflation below 5% will benefit both parties in terms of rents.“In my opinion, the problem is not the rental prices, but the very low and low incomes and salaries of everyone. Prices, compared to many other things, are low. For example, just look at what is happening with expenses , which in a short time will reach an average of $200,000 in CABA and in many cases exceed 50% of the rental value,” said Braña.
Below are some examples of prices and departments in the Buenos Aires offer that are adjusted by quarterly or four-monthly ICL:
- Palermo: 1 room, Av. Santa Fe and Araoz, $350,000.
- Belgrano: 1 room, Whitewashed and Molds, $350,000.
- Caballito: 2 rooms, Rosario and Av. La Plata, $400,000.
- Almagro: 2 rooms, Rio de Janeiro at 300, $350,000.
- Palermo: 2 rooms, Malabia and Charcas, $380,000.
- Villa Devoto: 3 rooms, Desaguadero and Cantilo, $400,000.
- Mataderos: 3 rooms, Basualdo and Remedios Passage, $400,000.
- San Telmo: 3 rooms, Tacuarí and H. Primo, $500,000.
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