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The index for updating rent according to the previous law fell sharply: what will be the adjustment percentage in February? - Infobae
Source:
www.infobae.com
January 28, 2025
For those who have contracts governed by the 2020 law, repealed at the end of 2023, the update based on the Lease Contract Index (ICL) will still be double digits, but much lower than the 265% it had reached last July.
By Jose Luis Cieri
The Lease Contracts Index fell by 91% from its peak in July 2024 (Illustrative image Infobae)
The Rental Contract Index ( ICL ), a tool designed at the time by the Central Bank of the Argentine Republic to calculate adjustments to rental contracts within the framework of the repealed Rental Law, experienced a sharp decline. The year-on-year increase that will apply from February 2025 will be 174.41% ; this figure represents a drop of 91 percentage points compared to its highest peak, recorded in July 2024 , when adjustments reached 265%, an absolute record.
Although the index still reflects high adjustments, the results show a marked tendency towards deceleration. Since last July, the ICL has decreased steadily, in line with the deceleration of inflationary levels recorded in Argentina in recent months.
Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, told Infobae that “the reason for the decline is the slowdown in inflation.” While the last months of 2023 and January 2024 accumulated an inflationary increase of 46%, “between March and December 2024 inflation practically remained at levels similar to that accumulated figure,” he explained.
The reduction in the ICL followed a strong downward pattern since September 2024, when it fell for the first time in 50 months. “In that month, the decline was 4.4%; but the adjustments deepened towards the end of the year with falls of 18.5% in December and 18% in January 2025.”
The forecast for February is a further decline of 16.3% and “it appears that this trend will continue over the coming months with less pronounced declines.”
However, this adjustment is considerably lower than that faced by those who updated their contracts in December 2024, where the index reached 208.67%, and they raised rents from $100,000 to $308,670, for the first time, the new adjustments begin to be lower than those registered months ago .
For new contracts covered under the Government's DNU regulations, updates under quarterly, four-monthly or half-yearly terms also reflect significant percentages.
Lisandro Cuello , a real estate market expert who operates in several neighborhoods in the northern area of CABA, explained that the quarterly adjustments will be 12.17%, four-monthly adjustments will be 17.48%, and half-yearly adjustments will be 30.47%, all based on the ICL .
However, these values exceed the adjustments that the Consumer Price Index ( CPI ) would indicate in those same periods, which has led some tenants to prefer other mechanisms.
Cuello said that “uncertainty surrounding rental contracts and constant changes in regulations generated economic pressure for tenants despite the drop in the index.”
Braña said: “If I am a tenant, it is clearly better for me to continue with a contract with annual adjustment for a while longer,” considering that the new dynamics of the rental offer lead in most cases to quarterly or four-monthly adjustments.
Braña also pointed out that the current differences between annually adjusted rents and market values are lower than those recorded during the law's validity.
The option to terminate annual contracts to renegotiate under current conditions is possible, but requires meeting certain administrative requirements, such as establishing a new written agreement and reviewing existing guarantees.
On this subject, Braña explained to Infobae that “ if there was a proprietary guarantee, the owners must re-sign the contract ; while, in the case of surety bonds, a new policy must be processed with additional costs.”
“In 2024, studio-, one- and two-bedroom apartments in CABA were adjusted by an average of 54.33%, while inflation reached 137%,” he said. These figures, he reiterated, reflect that rents advanced “more than 80% below the annual inflation rate.”
The sector also highlights that there are still tenants who have not managed to recover the drop in wages compared to inflation over the last 20 months. However, with the DNU, there is greater negotiation between owners and tenants , and they are looking for a meeting point that satisfies both parties.
Due to economic factors, Cuello concluded: “Despite the greater supply and rental adjustments well below inflation, thousands of tenants continue to feel the economic pressure due to the instability of values and constant adjustments .”
www.buysellba.com
Source:
El índice para actualizar el alquiler según la ley anterior bajó con fuerza: cuál será el porcentaje de ajuste en febrero
Para quienes tienen contratos regidos por la ley de 2020, derogada a fin de 2023, la actualización en base al Índice de Contratos de Locación (ICL) será todavía de dos dígitos, pero muy inferior al 265% a que había llegado en julio pasado
www.infobae.com
January 28, 2025
For those who have contracts governed by the 2020 law, repealed at the end of 2023, the update based on the Lease Contract Index (ICL) will still be double digits, but much lower than the 265% it had reached last July.
By Jose Luis Cieri
The Lease Contracts Index fell by 91% from its peak in July 2024 (Illustrative image Infobae)
The Rental Contract Index ( ICL ), a tool designed at the time by the Central Bank of the Argentine Republic to calculate adjustments to rental contracts within the framework of the repealed Rental Law, experienced a sharp decline. The year-on-year increase that will apply from February 2025 will be 174.41% ; this figure represents a drop of 91 percentage points compared to its highest peak, recorded in July 2024 , when adjustments reached 265%, an absolute record.
Although the index still reflects high adjustments, the results show a marked tendency towards deceleration. Since last July, the ICL has decreased steadily, in line with the deceleration of inflationary levels recorded in Argentina in recent months.
Alejandro Braña , a real estate expert and member of the Buenos Aires Real Estate Association, told Infobae that “the reason for the decline is the slowdown in inflation.” While the last months of 2023 and January 2024 accumulated an inflationary increase of 46%, “between March and December 2024 inflation practically remained at levels similar to that accumulated figure,” he explained.
The reduction in the ICL followed a strong downward pattern since September 2024, when it fell for the first time in 50 months. “In that month, the decline was 4.4%; but the adjustments deepened towards the end of the year with falls of 18.5% in December and 18% in January 2025.”
The forecast for February is a further decline of 16.3% and “it appears that this trend will continue over the coming months with less pronounced declines.”
Impact on prices of current and new agreements
Starting in February, those who must annually adjust the rent of current contracts under the Rental Law for the ICL and currently pay $100,000 per month, for example, will pay $274,410, an increase of 174.41%, until January 2026.However, this adjustment is considerably lower than that faced by those who updated their contracts in December 2024, where the index reached 208.67%, and they raised rents from $100,000 to $308,670, for the first time, the new adjustments begin to be lower than those registered months ago .
For new contracts covered under the Government's DNU regulations, updates under quarterly, four-monthly or half-yearly terms also reflect significant percentages.
Lisandro Cuello , a real estate market expert who operates in several neighborhoods in the northern area of CABA, explained that the quarterly adjustments will be 12.17%, four-monthly adjustments will be 17.48%, and half-yearly adjustments will be 30.47%, all based on the ICL .
However, these values exceed the adjustments that the Consumer Price Index ( CPI ) would indicate in those same periods, which has led some tenants to prefer other mechanisms.
Cuello said that “uncertainty surrounding rental contracts and constant changes in regulations generated economic pressure for tenants despite the drop in the index.”
Renegotiate or maintain contracts tied to the ICL
Despite the high adjustments, continuing with contracts governed by the repealed Rental Law may be beneficial for some tenants.Braña said: “If I am a tenant, it is clearly better for me to continue with a contract with annual adjustment for a while longer,” considering that the new dynamics of the rental offer lead in most cases to quarterly or four-monthly adjustments.
Braña also pointed out that the current differences between annually adjusted rents and market values are lower than those recorded during the law's validity.
The option to terminate annual contracts to renegotiate under current conditions is possible, but requires meeting certain administrative requirements, such as establishing a new written agreement and reviewing existing guarantees.
On this subject, Braña explained to Infobae that “ if there was a proprietary guarantee, the owners must re-sign the contract ; while, in the case of surety bonds, a new policy must be processed with additional costs.”
Increased supply and relative relief in the market
One year after the repeal of the Rental Law, the real estate market is showing signs of change. The supply of rental properties in CABA has tripled compared to 2023. According to Braña, this phenomenon has led to a decrease in real rental values compared to accumulated inflation.“In 2024, studio-, one- and two-bedroom apartments in CABA were adjusted by an average of 54.33%, while inflation reached 137%,” he said. These figures, he reiterated, reflect that rents advanced “more than 80% below the annual inflation rate.”
The sector also highlights that there are still tenants who have not managed to recover the drop in wages compared to inflation over the last 20 months. However, with the DNU, there is greater negotiation between owners and tenants , and they are looking for a meeting point that satisfies both parties.
Due to economic factors, Cuello concluded: “Despite the greater supply and rental adjustments well below inflation, thousands of tenants continue to feel the economic pressure due to the instability of values and constant adjustments .”
www.buysellba.com
