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How much the rent will increase in December and January for tenants and how much landlords will lose
December 1, 2023
Tenants who have their annual lease adjustment this month will see a more than double increase; how much they are going to pay and how much the owners will lose with the new law
By Mercedes Soriano
The rental price will increase by approximately 128% in December for signed contracts that remain under the law passed in 2020
Whether due to an update or a new contract, today it is almost utopian to rent an apartment for less than $200,000. A year ago, owners of two-room apartments were asking for around $93,000 in the city of Buenos Aires, according to Zonaprop.
The tenants who at that time signed a three-year rental contract for this price under Law 27,551 enacted in 2020, agreed to update the value once a year. In the first days of December, the rental price will be adjusted by 128%, which would leave the value frozen for one year at $212,040 for those who started paying $93,000.
This adjustment percentage applies to contracts that are updated in the first days of the last month of the year. If they have to make the adjustment earlier in December, they will face increases that could reach up to 136%, according to estimates by economist Federico González Rouco. Looking ahead to next year, he estimates that the adjustments could reach 145% by the end of January.
The calculation of ongoing contracts started before October 2023 is made based on the Lease Contract Index (ICL) , an indicator formulated by the Central Bank that takes as a reference in equal parts the Consumer Price Index (CPI) and the Average Taxable Remuneration of Stable Workers (RIPTE). A significant fact is that the formula for said index is outdated because it uses data from two months ago. That is to say, to update contracts in December, the index is prepared with inflation and salary data for October.
The odyssey of searching for an apartment
Although they will pay more than double, the situation is even more complicated for those who, due to emancipation or simply moving, go out to look for a new rental . A context where scarcity puts the formal rental market in danger of extinction, with less than 1,000 units published. “During October, anyone looking to rent or change their current location in Buenos Aires could only find 158 studio apartment options, 262 two-bedroom apartments, 103 three-bedroom apartments, and just nine four-bedroom apartments, throughout the entire geography of the city.”, analyzes a November report from the Real Estate Report that surveys the entity's own databases.This lack of supply drives prices above inflation and the ICL, making the access barrier increasingly higher and more difficult to cross.
Last month there were less than a thousand properties published for rent in the City of Buenos Aires
In the last year, from November 2022 to November 2023,” the accumulated increases were 275% for Buenos Aires studio apartments, 300% for two-bedroom units and 261.9% for three-bedroom units, in all cases. exceeding the interannual inflation that rose to 142.7% in October, according to the National Institute of Statistics and Censuses (Indec),” said a report released by the Scalabrini Ortiz Center for Economic and Social Studies (CESO).
In that sense, the entity specified that the current average price for units in the city are:
- Studio apartments: $225,000
- Two rooms: $280,000
- Three rooms: $380,000
Apartment rental prices in the city of Buenos Aires registered increases of between 21.7% and 26.7% monthly in November , depending on the location and the number of rooms, according to the survey
The CESO highlighted that "in the city of Buenos Aires, high prices prevent a large part of the population from renting even an average studio apartment , pushing them towards areas with lower quality infrastructure and services."
The publication price of two-room apartments increased 300% in the last year, according to the CESO
A cumbersome panorama for the owner
The panorama of increases expands when the new modification to the rental law comes into play, sanctioned in October 2023. It provides that contracts be adjusted every half year based on the Casa Propia coefficient , the same one used to the Procreate program.Daniel Bryn, creator of the real estate monitor Invertire , shows the loss that the new formula for adjusting rents will generate for the owner. As at the beginning of the note, he takes as a reference a rental made on December 1, 2022 and analyzes how much it would be updated to today, using a rental of $100,000 as a reference.
- If it were updated by the Central Bank's ICL, the price would be $219,495.
- If adjusted for inflation (Indec), it would rise to $242,660.
- If it were updated according to salaries (Indec), the monthly fee would rise to $232,034
- If it were adjusted by the Wholesale Price Index (INDEC), the price would become $241,689
- If it were updated by Casa Propia , as contracts signed after October 2023 will do starting in April, the new amount would be $184,401.
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