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The price of rentals, amid record increases: How much will the increase be in December and how to calculate it
November 29, 2023
Under the June 2020 legislation, housing contracts undergo annual adjustments. These are updated through the Lease Contract Index, regulated by the Central Bank.
By José Luis Cieri
Young people examine the usual household expenses. The December rent payment will increase sharply for those who have current contracts through the update of the ICL (Illustrative image Infobae)
Next month, tenants who must adjust their rent will receive worrying news. Those who update the amount of their contract compared to December 2022 will face an increase of 128% year-on-year, which means that a 3-room apartment in the city of Buenos Aires, which until November was rented for $120,000, will cost $273,600 until 2024.
For those who formalized residential rental agreements one or two years ago, subject to annual updates through the Rental Contract Index (ICL), said contracts remain valid until their expiration.
It must be remembered that the increases are determined based on the ICL, which is prepared by the Central Bank and considers two variables: Indec inflation and the Average Taxable Remuneration of Stable Workers (Ripte).
The rents were the subject of intense debates for several months, aggravated by the recent legal reform that came into force on October 18. This modification made by the National Congress maintained three-year contracts, adjusted by the Casa Propia coefficient. However, Infobae highlighted, the regulations could be repealed, as announced by the president-elect , Javier Milei, returning to agreements regulated by the Civil and Commercial Code of the Nation. However, any changes will be pending until after December 10.
Unstoppable
According to the ICL, an unprecedented increase in rents is recorded for contracts that renew on December 1, 2023, reaching an impressive 128% compared to the previous year.This value exceeds the 119.5% increase observed in November, consolidating a three-digit trend that is far from being reversed as long as inflation does not drop drastically.
Aside from the values that continue to rise strongly month after month, the most complex thing continues to be the lack of supply for those looking for an apartment or house in Argentina.
In Buenos Aires neighborhoods such as Almagro or Flores, the supply of 3-room apartments through real estate agencies is limited, with less than 12 options available. The most affordable rentals start at $250,000 per month, to which are added expenses that average $40,000 per month.
How to know how much should be paid
To determine the rental amount starting next month, the procedure involves multiplying the current rental rate until November by the corresponding coefficient, depending on the contract update date.
Calculating the new rental price can be done with a few clicks. But the number will increase sharply and will cause a bad impression (Photo: Getty Images)
Regarding the application of the adjustment based on the Lease Contract Index (ICL), interested parties can consult the index on the Central Bank website. The information is available under the “Statistics” tab and then in “Main variables”.
Furthermore, another alternative to anticipate the increase in rent is to use the calculator available on the portal of the Buenos Aires Real Estate Professional Association (CPI), which is located on its website (cabaprop.com.ar).
And there is also the option of the City Housing Institute (IVC) through https://vivienda.buenosaires.gob.ar/calculadora_alquiler#top
In all three cases, the date on which the contract was signed must be entered, to know what the index was at that time; select the contract update date and indicate the initial contract amount without points to separate the tens of thousands.
To perform the query, the user must select the start and end dates of the desired period. For example, if a contract of $120,000 for a 3-room apartment in CABA expires next December 1, the monthly payment will increase to $273,600 starting in the last month of the year, representing an increase of 128% year-on-year.
Increases above that value
In the sector they affirm that those who must sign a new contract, now under the Own House coefficient (since the Rental Contract Index only applies to agreements concluded until October 17), face increases that exceed 200%; Those who paid $120,000 until last month could pay $360,000 per month or more when renewing their contract for another three years in the same home.Alejandro Braña, Real Estate analyst and member of the Buenos Aires CPI, told Infobae that “if President-elect Milei promotes the repeal of the regulations, from our sector we consider that it would be great news for the housing rental market and for the parties. involved, tenants and owners. This law proved to be harmful, as evidenced by the historic drop in the supply of housing rentals, which now represents only 2% in CABA of what was available before the law was passed (20,000 properties in 2019 compared to less of 400 today).
On the other hand, the number of apartments offered in dollars in CABA continues to increase, exceeding 19,000, intended for temporary agreements.
“If two-year contracts were returned, it is likely that many owners would choose to offer them in pesos, facilitating a faster recovery of their homes. In this way, they would perceive a smaller discrepancy with inflation and domestic economic reality,” Cintia Azpiazu , from Gustavo De Simone Soluciones Inmobiliarias, concluded to Infobae.
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