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Small relief for tenants: for the first time in 50 months, the rate of rent adjustment has slowed - Infobae
Source:
www.infobae.com
August 20, 2024
In September, contracts will have to be updated with a rise of 243%, when in August the Lease Contracts Index (ICL) had climbed 247% annually. It is the first time since it was created, in 2020, that it shows a slowdown.
By Jose Luis Cieri
With the arrival of another month, tenants who have contracts in force under the Rental Law repealed at the end of the year will have to update their amount until August 2025 (Illustrative image Infobae)
Tenants who have contracts in force under the Rental Law and who must update them in September will have a small relief. For the first time in 50 months, the Rental Contract Index (ICL) slowed its increase and climbed 243.16%, when in August it had risen 247.56%. Therefore, a family that paid $100,000 in August, and for a year, next month will pay $343,160 for the next 12 months.
This change is unprecedented since the creation of the ICL. The index was established on June 19, 2020 with the sanction of the regulation, which was finally repealed by the current Government at the end of the year through a DNU.
Despite this reduction, the update is still expensive for those who have to pay month by month for their home, added to the sharp increase in expenses that last July marked a record of 101.6% so far in 2024 .
The month-on-month decline from August to September 2024 in the adjustment of contracts in force from 2022 to date marks a turning point in a period of more than four years, during which the index has not stopped rising, accompanying the uncontrollable growth of inflation, which only three months ago began to decline sharply.
“We were going from record to record month after month, with the unstoppable rise of the ICL prepared by the Central Bank. That was the headline every time the bank issued the statement where it reported the daily coefficient of this index that we use to adjust rents with contracts in force since July 2020,” Alejandro Braña , Real Estate expert and member of the Colegio Inmobiliario Buenos Aires, told Infobae.
The ICL takes data from 60 days back in its preparation. That is why this drop is only now occurring and the decline that has been observed in the real estate market for some months is reaching the index.
The rent increase for those who have contracts in force under the repealed law is calculated based on the ICL, which takes into account the variation in inflation (according to the Consumer Price Index, CPI, of INDEC) and salaries, according to the Average Remuneration of Stable Workers (RIPTE).
Braña added: “The decline in the ICL goes hand in hand with the decline in inflation, which has only just begun to decline.
There is now more property supply in all districts of the country (Illustrative Image Infobae)
Verónica Pagola , CEO of Century 21 Argentina, highlighted that “the different regulations and the limitations on the freedom of contracting have caused a shortage of rental properties. With this legislation repealed, those involved now mostly choose the Consumer Price Index (CPI) as a way to update contracts.”
Braña commented that the option of adjusting by ICL continues to be the preferred option for adjusting semi-annual, four-monthly and quarterly contracts because both tenants and owners, as well as real estate agents who mediate in housing rentals, “consider it a more user-friendly adjustment index.”
The majority of landlords want their tenants to be able to make payments on a monthly basis, avoiding situations that lead to legal action or the vacating of the property, in order to avoid the process of offering and selecting a new tenant who meets the income and guarantee conditions.
A one-bedroom apartment in CABA costs an average of $450,000 per month (Illustrative Image Infobae)
Although the ICL was created for the law repealed on December 29, 2023, it continues to be used in many contracts. “We hope that it will not be discontinued, since almost all leases would be inclined to the INDEC CPI, which is generally higher than the ICL. Income and collective bargaining adjustments, with few exceptions, have been lagging behind inflation for some time,” Braña said.
Until the end of 2023, the real estate market showed slight growth due to surpluses in pesos, low construction costs and negative interest rates. This trend continued this year with the recovery of income in dollars and the announcement of mortgage loans .
"If macroeconomic stabilization continues, a promising future could be expected for real estate in general, not just in the rental market. The economic recovery and access to mortgage loans present a favorable scenario that could boost greater dynamism in the sector, facilitating both the purchase and rental of properties," added Pagola.
www.buysellba.com
Source:
Pequeño alivio para los inquilinos: por primera vez en 50 meses, se desaceleró el índice de ajuste de los alquileres
En septiembre, los contratos deberán actualizarse con una suba de 243%, cuando en agosto el Indice de Contratos de Locación (ICL) había trepado 247% anual. Es la primera vez desde que fue creado, en 2020, que muestra una desaceleración
www.infobae.com
August 20, 2024
In September, contracts will have to be updated with a rise of 243%, when in August the Lease Contracts Index (ICL) had climbed 247% annually. It is the first time since it was created, in 2020, that it shows a slowdown.
By Jose Luis Cieri
With the arrival of another month, tenants who have contracts in force under the Rental Law repealed at the end of the year will have to update their amount until August 2025 (Illustrative image Infobae)
Tenants who have contracts in force under the Rental Law and who must update them in September will have a small relief. For the first time in 50 months, the Rental Contract Index (ICL) slowed its increase and climbed 243.16%, when in August it had risen 247.56%. Therefore, a family that paid $100,000 in August, and for a year, next month will pay $343,160 for the next 12 months.
This change is unprecedented since the creation of the ICL. The index was established on June 19, 2020 with the sanction of the regulation, which was finally repealed by the current Government at the end of the year through a DNU.
Despite this reduction, the update is still expensive for those who have to pay month by month for their home, added to the sharp increase in expenses that last July marked a record of 101.6% so far in 2024 .
The month-on-month decline from August to September 2024 in the adjustment of contracts in force from 2022 to date marks a turning point in a period of more than four years, during which the index has not stopped rising, accompanying the uncontrollable growth of inflation, which only three months ago began to decline sharply.
“We were going from record to record month after month, with the unstoppable rise of the ICL prepared by the Central Bank. That was the headline every time the bank issued the statement where it reported the daily coefficient of this index that we use to adjust rents with contracts in force since July 2020,” Alejandro Braña , Real Estate expert and member of the Colegio Inmobiliario Buenos Aires, told Infobae.
The ICL takes data from 60 days back in its preparation. That is why this drop is only now occurring and the decline that has been observed in the real estate market for some months is reaching the index.
The rent increase for those who have contracts in force under the repealed law is calculated based on the ICL, which takes into account the variation in inflation (according to the Consumer Price Index, CPI, of INDEC) and salaries, according to the Average Remuneration of Stable Workers (RIPTE).
Braña added: “The decline in the ICL goes hand in hand with the decline in inflation, which has only just begun to decline.
Lawless
The rental market has seen significant movement in recent months, mainly due to the repeal of the Rental Law, which discouraged those owners who wanted to earn an income from the lease agreement, according to sources in the sector.
There is now more property supply in all districts of the country (Illustrative Image Infobae)
Verónica Pagola , CEO of Century 21 Argentina, highlighted that “the different regulations and the limitations on the freedom of contracting have caused a shortage of rental properties. With this legislation repealed, those involved now mostly choose the Consumer Price Index (CPI) as a way to update contracts.”
Examples
Currently, properties are still being offered with adjustments through the ICL. Below are some specific examples in CABA and how this index affected the values of current contracts compared to previous months:- Villa del Parque, 1-bedroom apartment : Paid in the last 12 months: $160,000. New rate starting August 2024 (next 12 months): $571,200.
- Mataderos, 2-bedroom apartment : Payment for the last 12 months: $120,000. New rate starting in August 2024 (next 12 months): $428,400.
- Villa Lugano, 3 bedrooms (house) : Payment for the last 12 months: $160,000. New rate starting August 2024 (next 12 months): $571,200.
- Parque Patricios, 1 furnished bedroom : First quarter payment: $290,000. New rate starting August 2024: $497,600.
- Almagro, 1 bedroom : First quarter payment: $250,000. New rate starting August 2024 (second quarter): $395,800.
- Recoleta, 1 bedroom : First quarter payment: $300,000 New rate starting August 2024 (second quarter): $475,000.
Braña commented that the option of adjusting by ICL continues to be the preferred option for adjusting semi-annual, four-monthly and quarterly contracts because both tenants and owners, as well as real estate agents who mediate in housing rentals, “consider it a more user-friendly adjustment index.”
The majority of landlords want their tenants to be able to make payments on a monthly basis, avoiding situations that lead to legal action or the vacating of the property, in order to avoid the process of offering and selecting a new tenant who meets the income and guarantee conditions.
Future expectations
The sector's expectations are that the ICL will continue its deceleration process in the next quarter and will show declines in the inter-monthly comparison.
A one-bedroom apartment in CABA costs an average of $450,000 per month (Illustrative Image Infobae)
Although the ICL was created for the law repealed on December 29, 2023, it continues to be used in many contracts. “We hope that it will not be discontinued, since almost all leases would be inclined to the INDEC CPI, which is generally higher than the ICL. Income and collective bargaining adjustments, with few exceptions, have been lagging behind inflation for some time,” Braña said.
Until the end of 2023, the real estate market showed slight growth due to surpluses in pesos, low construction costs and negative interest rates. This trend continued this year with the recovery of income in dollars and the announcement of mortgage loans .
"If macroeconomic stabilization continues, a promising future could be expected for real estate in general, not just in the rental market. The economic recovery and access to mortgage loans present a favorable scenario that could boost greater dynamism in the sector, facilitating both the purchase and rental of properties," added Pagola.
www.buysellba.com
