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Historical record: What is the increase in rents in February for current contracts and how to calculate it - La Nacion Propiedades
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Récord histórico: cuál es el aumento de los alquileres en febrero para los contratos vigentes y cómo calcularlo
Los contratos firmados antes del DNU del presidente Javier Milei siguen vigentes hasta su vencimiento y quienes tengan en febrero el ajuste anual por ICL afrontarán entre un 147% y un 166% de aumento
www.lanacion.com.ar
January 30, 2024
The contracts signed before the DNU of President Javier Milei remain valid until their expiration and those who have the annual adjustment by ICL in February will face between 147% and 166% increase
The ICL addresses both inflation and wages, but since there is a two-month lag in the data, those who adjust rents in February will do so based on December inflation and wage figures.
With the purpose of deregulating fundamental sectors of the economy, President Javier Milei repealed the Rental Law through a Decree of Necessity and Urgency (DNU). In this way, new rental contracts signed as of December 29 are now governed by the National Civil and Commercial Code with some important changes.
The new regulations stand out for being flexible in the duration of the contracts, allowing adjustments in rental prices by agreement between the parties (both the index and the time period) , and allowing contracts in pesos, dollars or another agreed currency. It is important to clarify that this revocation does not affect existing contracts, which will continue to be adjusted according to the Rental Contract Index (ICL) or the Own House coefficient until their expiration, depending on the date on which the contract was signed.
The first half of February will have a new record in adjustments with an increase of 147%.
This change generated uncertainty about how rental prices will evolve in the first months of the year . In January 2024, tenants with contracts signed one or two years ago, subject to annual adjustments according to the ICL, experienced an increase of 137% at the beginning of the month, while those who updated during the second week of January the adjustment was of 140%, according to the index.
Although the increases have been in triple digits for some time, the figure for the first half of February exceeds that recorded the previous month and a new record in adjustments is projected with an increase of 147%. This means that those who update their rent next month and paid $100,000 will have to allocate $247,110 per month until January 2025 if their adjustment is annual due to ICL.
The ICL prepared by the Central Bank addresses both inflation and salaries, but presents a two-month lag in the data. Therefore, those who adjust rents in February will do so based on December inflation and salary figures . This implies that the increases will reflect the highest inflation in recent decades , when it reached 25.5% in the last month of last year.
February's increases will reflect the highest inflation in recent decades, reaching 25.5% in the final month of last year.
Federico González Rouco, an economist specialized in the real estate market, clarifies that the ICL experiences daily variations, so the increase changes depending on the time of the month in which it is calculated. This means that, towards the second half of February, González Rocuo estimates a variation that could reach a 166% increase in rents . In other words, contracts that began on February 1, 2023 will see a 147% increase, increasing progressively each day until reaching approximately 166% by the end of February.
“Every month since August has increased more than the previous month. In March, increases of 183% are expected for the middle of the month, ending at 190% . These forecasts are given in the context of an economy that, for the third month of 2024, is projected to increase year-on-year inflation by more than 200%,” says the economist.
On the other hand, those who have signed a rental contract between October 19 and December 29 will experience their first semi-annual update, at the earliest, next April . This update will be linked to the Own Home Index instead of the ICL, which is used by the Ministry of Territorial Development and National Habitat in the Procrear II plans. The aforementioned formula takes into account the lowest index between salary variation and inflation in the last year.
How to calculate rent increase
Rentals
With an automatic calculator
There are several websites that have calculators designed to know the increase in rents . One of them is, for example, that of the City Housing Institute. To consult the index, the steps are as follows:- Enter the website of the City Housing Institute that contains a calculator specifically designed to know the increase in rents: https://vivienda.buenosaires.gob.ar/calculadora_alquiler
- First of all, you must enter the date on which the contract was signed, to know what the index was at that time.
- Then you must select the contract update date.
- Finally, the user must indicate the initial amount of the contract without points to separate the tens of thousands.
These data will help calculate the amount to be paid during the next year and the percentage increase that corresponds to said period. In short, the formula that is applied consists of the total rent divided by the index dated when the contract was signed, multiplied by the index of the day on which the increase is applied to it. The value returned by that account will be the amount of rent that the tenant must pay during the next year, until the new update.
Those who update the rental contract in February based on the Rental Contract Index will pay 147.11% more than the previous year.
To arrive at that number, the following data should be entered into the calculator:
- 01/01/2023 on Contract Start Date.
- 01/01/2024 on Contract Update Date.
- 99290 in Initial Contract Amount (write without periods or commas).
Increase in supply
The number of properties for rent in the city of Buenos Aires increased 50% in the first 20 days of the year.
With regard to new contracts signed as of December 29, the flexibility that the parties involved have to apply various indices and adjustment periods , as well as the freedom to choose the contract period that best suits their needs had a direct impact on supply. Less than a month after the implementation of the DNU, the number of properties for rent in the city of Buenos Aires increased 50% in the first 20 days of the year.
In concrete numbers, the supply went from 5,495 units on January 2 to 8,253 on the 23rd of this month on real estate portals . Among the typologies, the two rooms led the increase with 68% , followed by the studio apartments with an increase of 60%. The three rooms experienced an increase of 48%, the four rooms 28%, and units with five or more rooms grew by 5%, according to data analyzed by Soledad Balayan, owner of Maure Inmobiliaria, based on Zonaprop publications.
The landlord can now get a better price than in the future, where there will be more competition, and where the tenant will be in a position to demand more conditions.
“We experienced a notable increase, going from zero rentals to a total of 11, with three of them in an advanced process. In some cases, we had to reduce prices in pesos due to the lack of enough visits ,” says the real estate agency. It is important to note that January is not a favorable month for searching for rentals, since most people are on vacation. “Although supply grew in the first weeks of the year , demand has not yet reached the same level,” says Balayan.
Specialists talk about the opportunity to seize the moment . In this sense, Enrique Abatti, president of the Chamber of Property Owners of the Argentine Republic, anticipates that the greatest increase in supply will only “be seen in approximately six or seven months.” This is why the owner can now get a better price than in a while , where there will be more competition, and where the tenant will be in a position to demand more conditions.
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