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Rent: Contracts that make their adjustment in May will have a record increase - La Nacion Propiedades
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Alquiler: los contratos que hacen su ajuste en mayo tendrán un aumento récord
En mayo se actualizarán tres tipos de contratos de locación, dependiendo el momento en el que fueron firmados: los que se ajustan por ICL, los que lo hacen por el coeficiente CasaPropia y los que aumentan por inflación (IPC)
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May 1, 2024
In May, three types of rental contracts will be updated, depending on the moment in which they were signed: those that are adjusted by ICL, those that are adjusted by the CasaPropia coefficient and those that increase due to inflation (CPI).
Contracts adjusted by ICL will have a record increase in May
Tenants who signed their rental contracts under the rental law in May 2022 or 2023 will be subject to a new adjustment in the value of their apartments this May . Since, even though the regulations were repealed after the DNU signed by Javier Milei came into force on December 29, 2023, all agreements signed until October 18, 2023 maintain the conditions established by the law : three years of contract and an annual adjustment updated by the Lease Contract Index (ICL) . While, from that date the adjustment is semiannual by the Casa Propia index due to the changes that were introduced to the law until its repeal.
This means that the value of the rentals of the rental contracts agreed at the beginning of May 2022 and 2023 will suffer an interannual increase of 221% (as of May 1, 2024) according to the latest update of the ICL, breaking a new record. In concrete numbers, if a tenant pays a rent of $100,000, starting this month he will have to pay $321,000 , while the one who pays $200,000 will pay $642,000 per month.
One thing to keep in mind is that the ICL varies daily, so the increase will depend on the date on which the contract was signed .
The contracts that will be updated by ICL in May will suffer an increase of 221%
In addition, it should be noted that in the fifth month of the year the rental agreements that were agreed upon under the update of the law will also be adjusted - from October 17 to December 29, 2023. These are adjusted semiannually and based on the Casa Propia coefficient , which in May will be 52.44%.
For example, in November 2023 the rent for a two-bedroom apartment in the City of Buenos Aires averaged $282,389, according to Zonaprop. If that tenant had started the contract on November 1, 2023 under the law, on May 1, 2024 he would have to begin paying the updated Casa Propia increase of $430,476.
But also, those that were signed after the repeal of the regulations , which will be done depending on the index and the period agreed between the parties; The most used is the Consumer Price Index (CPI) , which is adjusted directly for inflation and quarterly : 51.54% if the contract was signed in February 2024.
For example, if a quarterly adjustment was agreed upon, for a rent of $405,000 started in February 2024 that must be adjusted in May, the last index published by Indec is from March 2024. In this case, the three-month period of January 2024 to March 2024. Given that the accumulated inflation in that period was 51.54%, the amount to be paid would be $613,722.06 per month.
How is the increase in the rental price determined in current contracts under the now repealed law?
Owners and tenants must consult the ICL published by the Central Bank of the Argentine Republic (BCRA) on the official website. This is an indicator that includes in equal parts the variation in inflation (according to the CPI measured by INDEC) and salaries, according to the average remuneration of stable workers (Ripte). Therefore, the increase in interannual inflation, which was 287.9% in March 2024 , directly impacted the update percentage.Now, there is also the case of rentals that end on April 30 or during May of this year - as long as an extension has not been established. These were signed in the same month of 2021 and must agree on a new agreement, with the particularity that they will no longer be governed by any law, but return to the Civil and Commercial Code with absolute freedom between the parties as long as the DNU governs - which was rejected in the Senate on March 14 and must be discussed in Deputies.
This means that from 2024 the term of the contracts is the one established by the parties , there is no minimum legal term, but if it is not clarified, it is two years. In addition, the period for adjusting the value of the rentals can be agreed upon and the use of any index , public or private, expressed in the same currency in which the rentals were agreed is valid. They can also agree on the currency in which it will be paid.
Contracts finalized on April 30, 2024, must agree to a new agreement, with the particularity that they will no longer be governed by any law.
How to calculate the increase in the contract with ICL
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.
With the BCRA website
Another option is to consult the official website of the Central Bank where the entity updates the index every day. This possibility does not have an automatic calculation, but rather has to be done manually by the person following these steps:- Find 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 view the “Index of Lease Contracts”. These steps can be shortened if you go directly to the shortcut: https://www.bcra.gob.ar/PublicacionesEstadisticas/Principales_variables.asp and search for “Index for Lease Contracts”.
- Define the index value when the contract began and the current one: the user must select the start dates of the contract and the date on which the amount has to be updated. Then you must press the blue “consult” button that will display a table with the index value in all the months of the consulted period. In that table, the first value is the index when the contract started and the last is the index value currently.
- To know how much the rent will increase, the following calculation must be made: take the current index and divide it by the value of the index from when the contract began. That figure must be multiplied by the rental value and will result in the amount the tenant will have to pay over the next year until it is updated again.
In May, three types of contracts will be updated: those signed by ICL, those signed by CasaPropia and those signed by IPC.
How to calculate the rent increase with Casa Propia
As mentioned previously, contracts signed under Law 27,737 (in force from October 17, 2023 to December 29, 2023, date on which Javier Milei's DNU came into effect) are updated every six months based on the coefficient Own house . To know the exact increase, depending on the date the agreement was signed, there is a calculator on the internet: arquiler.com . In this way, to make the calculation, the following steps must be followed:- Enter the website arquiler.com which contains a calculator specifically designed to know the increase in rents
- First, you must enter the initial rental amount that was agreed upon when the contract was signed.
- Then the contract start date must be added.
- 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, the amount to be paid during the next six months and the percentage increase that corresponds to said period can be calculated .
How to calculate the rent increase according to inflation (CPI)
With an automatic calculator
On the Internet there are multiple options for automatic accumulated inflation calculators that take the data published by Indec as a reference. One of them is Checked, 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 going out” enter the rent amount that must 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 at the beginning of May you wanted to make a quarterly update, the period from January to March should be considered.
- 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 you decide to adjust manually, it is important to highlight that the inflation of each of the months should not be added but rather the inflation variations of each month should be multiplied and multiplied between these and the rental value, given which is the accumulated inflation of the period.First, you have to know what the inflation was for the period for which you intend to adjust the rent. The steps to follow would be the following:
- Access the Indec CPI report, from the Indec page ( indec.gob.ar ), then go to the “Statistics” tab, click on “Prices” within the Economy section and then select the “ Consumer Prices (CPI)”. It can also be accessed directly from this link .
- Click on 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 variation rate in the desired period will be calculated.
Once the data is located, the steps to create the account are as follows:
- First you must calculate separately the inflation value of each month divided by 100 and add 1. For example, January inflation was 20.6% and divided by 100 gives 0.206, plus 1 gives 1.206. So on with each of the months that enter 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: the value of the rent x (inflation first month/100 + 1) x (inflation second month/100 + 1) x (inflation third month/100 + 1) = updated value of the rent.
In a specific example, if a rental contract was signed on February 1 for $405,000 with a quarterly adjustment for inflation, this should be adjusted for the first time in May. Given that the Indec report is released in the middle of the month, the data for January, February and March would be available on the first day of May, but not yet for April.
The value of the monthly variation of inflation in those months was 20.6% in January, that of February was 13.2% and that of March was 11%.
After dividing each by one 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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