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Rentals: how much will the contracts updated in October increase? - Infobae
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Alquileres: cuánto aumentarán los contratos que se actualizan en octubre
Durante el décimo mes del año 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 el coeficiente CasaPropia y los que aumentan por inflación (IPC)
www.lanacion.com.ar
September 26, 2024
During the tenth month of the year, rents will undergo a new update, depending on the time at which they were signed: those that are adjusted by ICL, those that are adjusted by the CasaPropia coefficient and those that increase by inflation (CPI).
Rentals: how much will contracts increase in October? Shutterstock
For the second time in more than four years , tenants who signed their contracts in October 2022 and 2023, under the law repealed - by the Decree of Necessity and Urgency (DNU) signed by President Javier Milei - at the end of last year, will receive a slight respite in the adjustments to their rents. It should be clarified that these agreements are those that were agreed upon under the regulations (before the update at the end of October 2024), which are valid for a period of three years and continue to be regulated by the previous conditions : the adjustment is annual based on the Rental Contracts Index (ICL) , prepared by the Central Bank.
Since it came into effect, the ICL has been characterized by a constant increase , driven by high inflation. However, last month brought a change of trend and for the first time in more than 50 months, the increase in the adjustment due to which rental agreements must increase slowed down; a situation that will be repeated in October .
In this way, in the tenth month of the year , the contracts agreed in October 2022 and 2023 will have a year-on-year increase of 237.9% (as of October 1, 2024), according to the latest ICL update , around 5% less than those who had to update in September (243.16%). In concrete numbers, if a tenant pays a rent of $ 200,000, starting next month and for the next 12 they will have to pay $ 675,801, while the one who pays $ 400,000 will pay $ 1,351,601 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 to apply the corresponding adjustment.
It should be noted that the contracts signed between October 18 and December 29, 2023 were agreed upon under the modification of the law in force at that time under the Casa Propia coefficient . These will only receive their second update starting October 18, 2024.
Rental contracts signed in October 2022 and 2023 will see a 237.9% increase
The case of contracts signed after the repeal of the rental law
A separate analysis is required for those who closed their rental agreement after the repeal of the regulations, that is, after December 29, 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 quarterly updates based on the Consumer Price Index (CPI) , which is directly adjusted for inflation : in this case, the increase compared to May will be 12.89%.For example , if a quarterly adjustment was agreed upon , for a rent of $400,000 started in July 2024, which must be adjusted in October, the last index published by Indec is for August 2024, the value to be paid would be $451,562 .
“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.
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 in 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.
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 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.
The contracts that were signed after the repeal of the rental law were agreed upon under contractual freedom
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 , the inflation rate for each month must be calculated separately, divided by 100 and adding 1. For example, inflation in June was 4.6% and divided by 100 gives 0.046, plus 1 gives 1.046. 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 July 1 with quarterly adjustment for inflation, this would have to be adjusted for the first time in October. Since the Indec report is released in the middle of the month, on the first day of October the data for June, July and August would be available but not yet for April.
The result does not always match the calculation made using the automatic calculator (chequeado.com), since the figures published monthly by INDEC are rounded (the number may contain a greater number of decimals, which when considered in the account may vary between 50 and 100 pesos more).
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