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Hit to the pocket: rents updated in August will have a record increase - La Nacion Propiedades
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www.lanacion.com.ar
July 26, 2024
The rents will be subject to a new update, depending on the time at which they were signed: those that are adjusted by ICL, those that are adjusted by CasaPropia and those that increase due to inflation.
By Candle Contreras
In August, rents will see a record increase
Rentals are one of the largest markets, along with mortgage loans, that account for access to housing for 90% of the population of any country . In this sense, despite the fact that the rental law was repealed at the end of last year by the DNU signed by Javier Milei, all the agreements that were previously agreed upon maintain the conditions established by the “old ” regulations: three years of contract and an annual adjustment updated by the Rental Contracts Index (ICL), the index prepared by the Central Bank; and its subsequent update: semi-annual adjustments based on the Casa Propia index. Therefore, in August they will suffer a new increase in the values of the contracts.
In this way, in the eighth month of the year, the rental contracts agreed in the eighth month of 2022 and 2023 will suffer a year-on-year increase of 247.56% (as of August 1, 2024) according to the latest ICL update, breaking a new record, since in July the adjustment had been 244.4%. In concrete numbers, if a tenant pays a rent of $100,000, starting this month he will have to pay $347,094 , while the one who pays $200,000 will pay $694,188 per month. A key fact to keep in mind is that the ICL varies on a daily basis, so the increase will depend on the day of the month in which the contract was signed .
The agreements that will be adjusted based on the Casa Propia coefficient , which in August will be 63.34%, will also break a record after the 59.89% adjustment in July. For example, taking as a reference that in February 2024 the rent for a two-room apartment in the City of Buenos Aires averaged $ 416,991 per month , according to Zonaprop, a tenant who began their contract on the first of that month under the updated law, will receive the first update on August 1, 2024 and will go on to pay $681,123 (for the update indicated by the Casa Propia index).
Three types of signed contracts will suffer a new increase in the value of the amount they pay every 30 days Shutterstock
For example , if a quarterly adjustment was agreed upon , for a rent of $440,072 started in May 2024, which must be adjusted in August, the last index published by Indec is for June 2024, the value to be paid would be $521,857.63 .
“In recent years, up until December, we had contracts that were adjusted every year based on the ICL, which generated the automatic reaction of trying to cover ourselves and, consequently, inflating the initial prices a lot. Today, the scheme is more consistent with the Argentine economic reality: more periodic updates that mean that this need for coverage, of putting money into uncertainty, is no longer there ,” analyzed Federico González Rouco, an economist specializing in housing.
However, he explained that the great challenge lies in the possibility of paying such rents: “The average rent in the city of Buenos Aires compared to the average income today represents 50%. It is still well above the average of 40% of the last few years, but well below what was the worst moment, when it reached more than 70% ,” he pointed out. “Wages still have room to grow above rents, not because rents are falling but because wages still have a lot of room to grow given the low starting point,” he concluded.
This data will help calculate the amount to be paid during the next year and the percentage of increase that corresponds to that period. In short, the formula that is applied consists of the total rent divided by the index with the date when the contract was signed, multiplied by the index of the day on which the increase is applied to it. The value that this account yields will be the amount of rent that the tenant must pay during the next year , until the new update.
Rental contracts signed in August 2022 and 2023 will have a year-on-year increase of 247.56% Google Maps Screenshot
With this data, it will be possible to calculate the amount to be paid during the next six months and the percentage increase corresponding to that period .
Rental contracts signed under the Casa Propia index, which in August will have an increase of 63.34%Emily Salzmann Real Estate
First, you need to know what the inflation rate was for the period for which you want to adjust the rent. The steps to follow are as follows:
Once the data has been located, the steps to create the account are as follows:
In a concrete example, if a rental contract for $405,000 was signed on February 1st with quarterly adjustment for inflation, this would have to be adjusted for the first time in May. Since the Indec report is released in the middle of the month, on the first day of May the data for January, February and March would be available but not yet for April.
The value of the monthly variation in inflation in those months was 20.6% in January, 13.2% in February and 11% in March.
After dividing each one by a hundred and adding one, the account would be: 405,000 x 1,206 x 1,132 x 1.11 = $ 613,722.06
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Source:
Golpe al bolsillo: los alquileres que se actualicen en agosto tendrán un aumento récord
Los alquileres sufrirán una nueva actualización, dependiendo el momento en el que fueron firmados: los que se ajustan por ICL, los que lo hacen por CasaPropia y los que aumentan por inflación
www.lanacion.com.ar
July 26, 2024
The rents will be subject to a new update, depending on the time at which they were signed: those that are adjusted by ICL, those that are adjusted by CasaPropia and those that increase due to inflation.
By Candle Contreras
In August, rents will see a record increase
Rentals are one of the largest markets, along with mortgage loans, that account for access to housing for 90% of the population of any country . In this sense, despite the fact that the rental law was repealed at the end of last year by the DNU signed by Javier Milei, all the agreements that were previously agreed upon maintain the conditions established by the “old ” regulations: three years of contract and an annual adjustment updated by the Rental Contracts Index (ICL), the index prepared by the Central Bank; and its subsequent update: semi-annual adjustments based on the Casa Propia index. Therefore, in August they will suffer a new increase in the values of the contracts.
In this way, in the eighth month of the year, the rental contracts agreed in the eighth month of 2022 and 2023 will suffer a year-on-year increase of 247.56% (as of August 1, 2024) according to the latest ICL update, breaking a new record, since in July the adjustment had been 244.4%. In concrete numbers, if a tenant pays a rent of $100,000, starting this month he will have to pay $347,094 , while the one who pays $200,000 will pay $694,188 per month. A key fact to keep in mind is that the ICL varies on a daily basis, so the increase will depend on the day of the month in which the contract was signed .
The agreements that will be adjusted based on the Casa Propia coefficient , which in August will be 63.34%, will also break a record after the 59.89% adjustment in July. For example, taking as a reference that in February 2024 the rent for a two-room apartment in the City of Buenos Aires averaged $ 416,991 per month , according to Zonaprop, a tenant who began their contract on the first of that month under the updated law, will receive the first update on August 1, 2024 and will go on to pay $681,123 (for the update indicated by the Casa Propia index).
Three types of signed contracts will suffer a new increase in the value of the amount they pay every 30 days Shutterstock
What happens to contracts signed after the repeal of the law?
A separate analysis is required for those who closed their rental agreement after the repeal of the regulations, that is, after December 31, 2023. In these cases, the situation is different: freedom was established between the parties when defining the index and the term of the contract. In any case, most of the negotiations were closed with updates every three months based on the Consumer Price Index (CPI) , which is directly adjusted for inflation : in this case, the increase compared to May will be 18.58%.For example , if a quarterly adjustment was agreed upon , for a rent of $440,072 started in May 2024, which must be adjusted in August, the last index published by Indec is for June 2024, the value to be paid would be $521,857.63 .
“In recent years, up until December, we had contracts that were adjusted every year based on the ICL, which generated the automatic reaction of trying to cover ourselves and, consequently, inflating the initial prices a lot. Today, the scheme is more consistent with the Argentine economic reality: more periodic updates that mean that this need for coverage, of putting money into uncertainty, is no longer there ,” analyzed Federico González Rouco, an economist specializing in housing.
However, he explained that the great challenge lies in the possibility of paying such rents: “The average rent in the city of Buenos Aires compared to the average income today represents 50%. It is still well above the average of 40% of the last few years, but well below what was the worst moment, when it reached more than 70% ,” he pointed out. “Wages still have room to grow above rents, not because rents are falling but because wages still have a lot of room to grow given the low starting point,” he concluded.
How to calculate the contract increase with ICL
With an automatic calculator
There are several websites that have designed calculators to find out the increase in rents . One of them is, for example, the one from the Housing Institute of the City . To consult the index, the steps are as follows:- Visit the website of the City Housing Institute, which contains a calculator specifically designed to determine the increase in rents: https://vivienda.buenosaires.gob.ar/calculadora_alquiler
- First, you need to enter the date on which the contract was signed, so you know what the rate 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.
This data will help calculate the amount to be paid during the next year and the percentage of increase that corresponds to that period. In short, the formula that is applied consists of the total rent divided by the index with the date when the contract was signed, multiplied by the index of the day on which the increase is applied to it. The value that this account yields will be the amount of rent that the tenant must pay during the next year , until the new update.
Rental contracts signed in August 2022 and 2023 will have a year-on-year increase of 247.56% Google Maps Screenshot
With the BCRA website
Another option is to consult the official website of the Central Bank, where the entity updates the index on a daily basis. This option does not have an automatic calculation, but must be done manually by the person following these steps:- Finding the index: Go to the Central Bank website ( bcra.gob.ar ), go to the “statistics” tab and then “main variables”. At the end of the list, in the last option, there is the item that allows you to see the “Lease Contracts Index”. These steps can be shortened by going directly to the shortcut: https://www.bcra.gob.ar/PublicacionesEstadisticas/Principales_variables.asp and searching for “Lease Contracts Index”.
- Define the index value when the contract started and the current value: the user must select the start dates of the contract and the date on which the amount must be updated. Then, he or she must press the blue “consult” button, which will display a table with the index value for all months of the consulted period. In this table, the first value is the index when the contract started and the last is the current index value.
- To find out how much the rent will increase, the following calculation must be done: take the current index and divide it by the index value when the contract began. That figure must be multiplied by the rent value and will result in the amount the tenant will have to pay over the next year until it is updated again.
How to calculate the increase in rent with Casa Propia
As mentioned above, contracts signed under Law 27,737 (in force from October 17, 2023 to December 29, 2023, the date on which Javier Milei's DNU came into force) are updated every six months based on the Casa Propia coefficient . To find out the exact increase, depending on the date on which the agreement was signed, there is a calculator on the internet: arquiler.com . Thus, to make the calculation, the following steps must be followed:- Visit the website arquiler.com which contains a calculator specifically designed to find out the increase in rents
- First, you must enter the initial amount that was agreed upon for rent when the contract was signed.
- Then you must add the contract start date
- Then you must select how often it is updated (in the case of contracts signed under this law, they are updated every 6 months)
- Finally, the user must choose the update index (in this case, “Casa Propia”)
With this data, it will be possible to calculate the amount to be paid during the next six months and the percentage increase corresponding to that period .
Rental contracts signed under the Casa Propia index, which in August will have an increase of 63.34%Emily Salzmann Real Estate
How to calculate rent increases based on inflation (CPI)
With an automatic calculator
There are multiple options for automatic accumulated inflation calculators on the Internet that take the data published by Indec as a reference. One of them is Chequeado, which is the one that will be used as a reference in the following procedure:- Go to https://chequeado.com/inflacionacumulada/
- Where it says “To buy something that was coming out” enter the rental amount that needs to be updated.
- Where it says “at the beginning of”, enter the month in which the period from which you want to adjust begins. For example, if you wanted to do a quarterly update at the beginning of May, you should consider the period from January to March.
- Where it says “at the end of”, enter the month in which the period from which you want to adjust ends.
- Where it says “you would need the sum of” the new rental value will appear.
Manually
In the event that it is decided to adjust manually, it is important to note that the inflation of each month should not be added, but rather the inflation variations of each month should be multiplied and multiplied by these and the rental value, since this is the accumulated inflation of the period.First, you need to know what the inflation rate was for the period for which you want to adjust the rent. The steps to follow are as follows:
- Access the Indec CPI report from the Indec website ( indec.gob.ar ), then go to the “Statistics” tab, click on “Prices” in the Economy section and then select the “Consumer Prices (CPI)” button. It can also be accessed directly from this link .
- Click the “read report” button.
- On the fourth page of the document, see the second graph “Monthly variations in the general level of the CPI”. There you can see the inflation for each month, with which the rate of variation in the desired period will be calculated.
Once the data has been located, the steps to create the account are as follows:
- First, you have to calculate the inflation value for each month separately, divided by 100 and adding 1. For example, January's inflation was 20.6% and divided by 100 gives 0.206, plus 1 gives 1.206. And so on for each of the months that fall within the update period.
- Then you have to multiply the current rental value by those individual inflation values.
- The result will be the new rental value to be paid for the next quarter.
- In other words, the formula would be: rental value x (first month inflation/100 + 1) x (second month inflation/100 + 1) x (third month inflation/100 + 1) = updated rental value.
In a concrete example, if a rental contract for $405,000 was signed on February 1st with quarterly adjustment for inflation, this would have to be adjusted for the first time in May. Since the Indec report is released in the middle of the month, on the first day of May the data for January, February and March would be available but not yet for April.
The value of the monthly variation in inflation in those months was 20.6% in January, 13.2% in February and 11% in March.
After dividing each one by a hundred and adding one, the account would be: 405,000 x 1,206 x 1,132 x 1.11 = $ 613,722.06
www.buysellba.com
