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Rental contracts based on the repealed law will be updated in October with a 238% increase - Infobae
Source:
www.infobae.com
September 18, 2024
This is the second time that the Lease Contracts Index (ICL) has shown a slowdown since it was created in 2020. In the previous month it had climbed 243% annually
By Jose Luis Cieri
For the second time in 51 months, those who have contracts under the Rental Law will adjust their price with a small respite compared to the upward dynamic that had been recorded until last August (Illustrative image Infobae)
Tenants who have contracts in force under the Rental Law, repealed at the end of 2023 by a government decree, and who must update them in October, will have a small respite compared to those who did so in previous months. For the second time in 51 months, the Rental Contract Index (ICL) showed a slowdown in the increase, in line with the same trend shown by inflation. The ICL registered a rise of 238%, 5% less compared to those who updated their value in September.
Thus, a family or person who was paying $100,000 until this month will now pay $338,000 until September 2025.
The 238% year-on-year increase marks a slight decrease compared to September and August, when the percentages stood at 243% and 247%, respectively. Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, highlighted to Infobae that “the gradual decline in the ICL is mainly due to the composition of the index, which uses data with a delay of between 60 and 90 days. This lag shows the effects of the drop in inflation recorded in recent months, especially since December 2023 and January 2024, when monthly inflation was 25% and 20%, respectively. Currently, inflation has decreased to a fifth of those peaks, thus impacting the ICL.”
The slowdown is not only linked to the decline in the Consumer Price Index (CPI) , but also to an improvement in income through the Index of Taxable Remuneration of Stable Workers (RIPTE) , which is also computed to establish the ICL regulated by the Central Bank.
“These factors provide some relief to tenants, although they also reflect the vulnerability of the economic recovery. The stability of the ICL could encourage greater predictability in rental costs, promoting confidence in the negotiations of new contracts,” explained Mariano García Malbrán , president of the Chamber of Real Estate Services Companies (CAMESI).
However, costs remain high, often accounting for more than 50% of tenants' income, making it challenging to maintain a home today.
García Malbrán said: “The decrease in the ICL is a reflection of an economy that is going through a period of recession, where the margin for new price increases is limited due to the drop in sales and the general contraction of consumption. At the same time, wage increases have been moderate, which also contributed to the stabilization of the RIPTE.”
“There are situations where it is advisable to change the index for a certain period – quarter or four months – to make the rent amount more bearable for the tenant. There are owners who make discounts and bonuses so that the rent amount is similar to the current market value and does not skyrocket. In this way, they do not lose the tenant they already have and who fulfills their obligations. The conditions of the real estate market are leading to adjustments that seek to maintain healthy and stable relationships despite economic fluctuations,” said García Malbrán.
Although the offer has expanded by 180% since the DNU came into force, a two-room apartment costs no less than $300,000 per month in CABA.
Supply has increased but rental costs remain high for tenants (Illustrative Image Infobae)
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Source:
Los contratos de alquiler basados en la ley derogada se actualizarán en octubre con una suba del 238%
Es la segunda vez que el Índice de Contratos de Locación (ICL) muestra una desaceleración desde que fue creado en 2020. En el mes anterior había trepado un 243% anual
www.infobae.com
September 18, 2024
This is the second time that the Lease Contracts Index (ICL) has shown a slowdown since it was created in 2020. In the previous month it had climbed 243% annually
By Jose Luis Cieri
For the second time in 51 months, those who have contracts under the Rental Law will adjust their price with a small respite compared to the upward dynamic that had been recorded until last August (Illustrative image Infobae)
Tenants who have contracts in force under the Rental Law, repealed at the end of 2023 by a government decree, and who must update them in October, will have a small respite compared to those who did so in previous months. For the second time in 51 months, the Rental Contract Index (ICL) showed a slowdown in the increase, in line with the same trend shown by inflation. The ICL registered a rise of 238%, 5% less compared to those who updated their value in September.
Thus, a family or person who was paying $100,000 until this month will now pay $338,000 until September 2025.
The 238% year-on-year increase marks a slight decrease compared to September and August, when the percentages stood at 243% and 247%, respectively. Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, highlighted to Infobae that “the gradual decline in the ICL is mainly due to the composition of the index, which uses data with a delay of between 60 and 90 days. This lag shows the effects of the drop in inflation recorded in recent months, especially since December 2023 and January 2024, when monthly inflation was 25% and 20%, respectively. Currently, inflation has decreased to a fifth of those peaks, thus impacting the ICL.”
The slowdown is not only linked to the decline in the Consumer Price Index (CPI) , but also to an improvement in income through the Index of Taxable Remuneration of Stable Workers (RIPTE) , which is also computed to establish the ICL regulated by the Central Bank.
“These factors provide some relief to tenants, although they also reflect the vulnerability of the economic recovery. The stability of the ICL could encourage greater predictability in rental costs, promoting confidence in the negotiations of new contracts,” explained Mariano García Malbrán , president of the Chamber of Real Estate Services Companies (CAMESI).
However, costs remain high, often accounting for more than 50% of tenants' income, making it challenging to maintain a home today.
García Malbrán said: “The decrease in the ICL is a reflection of an economy that is going through a period of recession, where the margin for new price increases is limited due to the drop in sales and the general contraction of consumption. At the same time, wage increases have been moderate, which also contributed to the stabilization of the RIPTE.”
Current supply and dynamics
The supply and demand of rental properties do not influence the behaviour of the CPI. For new contracts, however, the CPI is often used as an update tool.“There are situations where it is advisable to change the index for a certain period – quarter or four months – to make the rent amount more bearable for the tenant. There are owners who make discounts and bonuses so that the rent amount is similar to the current market value and does not skyrocket. In this way, they do not lose the tenant they already have and who fulfills their obligations. The conditions of the real estate market are leading to adjustments that seek to maintain healthy and stable relationships despite economic fluctuations,” said García Malbrán.
Although the offer has expanded by 180% since the DNU came into force, a two-room apartment costs no less than $300,000 per month in CABA.
Supply has increased but rental costs remain high for tenants (Illustrative Image Infobae)
Current examples
Braña provided some specific examples of housing offered for rent within CABA with ICL adjustments, but for shorter adjustment periods than the annual ones agreed upon with the repealed rental law:- Studio apartment in Almagro, at the intersection of Mario Bravo and Avenida Rivadavia: $220,000 with quarterly adjustment by ICL.
- Studio: Cabildo and Mendoza Avenue, in Belgrano: $400,000, quarterly adjustment by ICL.
- One-bedroom apartment in San Nicolás, in Tucumán at 1600: $300,000 with quarterly adjustment by ICL.
- Two-bedroom apartment in Flores, on Bogotá 2000: $330,000, with quarterly adjustments by ICL.
- Three-bedroom apartment in Caballito, on Chirimay 100: $600,000 with semi-annual adjustment by ICL.
- Three-bedroom apartments in Recoleta, at Peña 2800, near Av. Santa Fe: $450,000 with quarterly adjustment by ICL.
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