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Apartment Rental Less pressure on tenants: How much will the April adjustment be for current contracts under the Rental Law? - Infobae

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Less pressure on tenants: How much will the April adjustment be for current contracts under the Rental Law? - Infobae


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March 18, 2025


The slowdown continues. What factors explain the decline, and what are the quarterly and four-monthly updates to contracts signed after the Decree repealing the 2020 regulation?



By Jose Luis Cieri





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While the reduction in the ICL is noticeable, housing prices remain high for wage earners who have not yet recovered from the decline in their income over the past three years (Illustrative Image: Infobae)



The rental market in Argentina is showing a slowdown in annual adjustments to current contracts under the Rental Law, which was repealed at the end of 2023.



According to the Lease Contract Index (ICL) of the Central Bank of the Argentine Republic (BCRA), the expected increase for April 2025 will be 116.85%, which represents a significant reduction compared to the peak of 265% recorded in July 2024.



Factors that explain the decline in the ICL

The decrease is primarily due to the drop in inflation in recent months. The ICL is calculated based on the variation in the Consumer Price Index (CPI) and the Average Taxable Compensation of Permanent Workers (RIPTE).



Therefore, lower inflation and lower growth in formal wages directly impact this indicator.

Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, stated that "the lower increase in the ICL in April represents partial relief for tenants, although values remain high relative to income."



He also emphasized that "economic measures, such as the repeal of the Rental Law, helped normalize the market, boosting the supply of properties and adjusting prices to less than half of the accumulated inflation rate during this period."



Comparison between ICL adjustments and terms

Following the repeal of the Rental Law in 2023, new contracts adopted more frequent adjustment schemes, such as quarterly, four-monthly, and half-yearly adjustments based on the Consumer Price Index (CPI).

When comparing these adjustments with the ICL, the following differences are observed for contracts executed after the DNU:



  • ICL (BCRA): Quarterly: 8.73%. Quarterly: 13.41%. Half-yearly: 23.33%.
  • CPI (INDEC): Quarterly: 7.30%. Quarterly: 9.70%. Half-yearly: 15.90%.


CPI-based adjustments result in smaller increases compared to the ICL, reducing the financial burden on tenants.

Mariano Lo Valvo , a real estate agent operating in the northern part of Buenos Aires, said: "Adjustments to new rental contracts vary depending on the update frequency chosen by the parties. Currently, those adjusted by the CPI register smaller increases compared to the ICL."







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Without the Rental Law, the supply expanded; there are currently about 14,000 apartments for rent in different neighborhoods of Buenos Aires (Illustrative Image Infobae)



For a $200,000 lease, the quarterly adjustment represents a 7.30% increase, bringing the rent to $214,600 until the next quarterly increase. “For a four-monthly increase, the increase is 9.70%, reaching $219,400 per month. Finally, those who opted for a semiannual adjustment will face a 15.90% increase, bringing the rent to $231,800,” Lo Valvo explained.





Rental Market Outlook

The rental property market in Buenos Aires peaked at 19,000 a few months ago, but has since dropped by 25%, reaching approximately 14,000 units.

The majority of the supply remains concentrated in apartments in buildings with expenses (96%), while only 4% corresponds to PH and houses.

"In terms of prices, rentals are 31% behind the general price level of the economy. This lag is even greater than that of other sectors with regulated prices, such as public transportation (-16%) and electricity and gas services (-28%)," Braña highlighted.

Regarding prices, according to Cabaprop, the website of the Buenos Aires Real Estate Association, a studio apartment averages $400,000, a two-bedroom apartment $500,000, and a three-bedroom apartment is $600,000 per month.

Demand for rentals remains strong. Despite the return of mortgage lending since mid-2024, which has allowed some tenants to become homeowners, financing remains a minor part of total transactions.

In 2024, mortgage loans accounted for 15% of sales, a figure that increased to 26% in January due to seasonal factors.





Distortion correction

Decree 70/23, which repealed the Rental Law, sought to correct distortions in the real estate market. During the law's validity, the supply of rental properties declined and prices increased due to long contracts and annual adjustments based on the ICL (Income Tax), which were unsustainable for landlords in a context of high inflation.

The elimination of these regulations allowed for greater flexibility in contract negotiation, which increased supply and stabilized prices.

Braña concluded that "the repeal of the 2020 regulations allowed the market to adjust more efficiently to current economic conditions, benefiting both landlords and tenants." However, he cautioned that "it is essential to maintain a balance that guarantees the stability and accessibility of the rental market in the long term."



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