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Rents: The reason why tenants who have the annual increase in September will have good news - La Nacion Propiedades
Source:
August 22, 2024
How much will the contracts adjusted by ICL increase?
How much will rental contracts increase in September?
For the first time in more than four years, tenants will experience a slight respite in their rent adjustments . Although the rental law was repealed at the end of last year by the Decree of Necessity and Urgency (DNU) signed by President Javier Milei, the contracts that were agreed under the regulations for a period of three years, continue to be regulated by the previous conditions : the adjustment is annual based on the Rental Contract Index (ICL) , prepared by the Central Bank. Therefore, in September they will suffer a new increase in the values of the contracts.
Since it came into effect, the ICL has been characterized by a constant increase , driven by high inflation. However, September brought a change of trend : for the first time in more than four years, the increase in the adjustment due to which rental agreements must increase has slowed down .
In this way, in the ninth month of the year, the rental contracts agreed under the law repealed in September 2022 and 2023 will suffer a year-on-year increase of 243.16% (as of September 1, 2024), according to the latest ICL update, after an increase of 247.56% had been registered in August. In concrete numbers, if a tenant pays rent of $200,000, starting next month and for the next 12 months he will have to pay $686,312 , while the one who pays $400,000 will pay $1,372,624 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 .
In September, rental contracts signed under ICL will suffer a rise of 243.16%
What happens to contracts signed after the repeal of the law?
A separate analysis is required for those who closed their rental agreement after the repeal of the regulations, that is, after December 31, 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 updates every three months based on the Consumer Price Index (CPI) , which is directly adjusted for inflation : in this case, the increase compared to April will be 13.34%.For example , if a quarterly adjustment was agreed upon , for a rent of $400,000 started in June 2024, which must be adjusted in September, the last index published by Indec is for July 2024, the value to be paid would be $453,344.14 .
“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 on 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.
Rental contracts signed under the Casa Propia index will increase for the second time at the end of October
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 September, you should consider the period from May to July.
- 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.
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