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There will be another sharp jump in rents: In the midst of historical highs, how to calculate the annual update - Infobae
December 26, 2023
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Habrá otro fuerte salto de los alquileres: en medio de máximos históricos, cómo calcular la actualización anual
Los contratos de viviendas sujetos a ajustes anuales influyen en la dinámica y planificación financiera de los inquilinos. La herramienta para dicha actualización es el Índice de Contratos de Locación, cuya regulación recae en el Banco Central
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It will be given in January and is for contracts that were signed between the months of November 2020 and 2023. The tool for this update is the Lease Contract Index, whose regulation falls on the Central Bank
By Jose Luis Cieri
Those who must adjust the price of their rent next January will receive bad news: an increase of 137.5% year-on-year (Photo: Getty Images)
Next month, tenants who must adjust the amount of their rent will find themselves with a 137.5% year-on-year increase.
In practical terms, this means that a 3-room apartment in the city of Buenos Aires, whose rent amounted to $150,000 until December, will experience an increase that will place it at $356,250 until 2025.
It is for those tenants who formalized residential rental contracts one or two years ago, which are subject to annual updates through the Rental Contract Index (ICL). These are agreements that remain in force until their expiration date.
Although President Javier Milei repealed the 2020 law through a Decree of Necessity and Urgency (which is not yet in force) , it is important to highlight that this measure does not have retroactive effects.
Consequently, current contracts will continue to be adjusted according to the ICL. Only those contracts that have started since last Thursday will be exempt from this regulation and may be adjusted in accordance with what was agreed between the parties. However, this situation could change in the coming days, since the Permanent Bicameral Commission for Legislative Procedure of Congress will evaluate the DNU and decide whether to approve it in its original form.
Increases by ICL
Thus, for this group of tenants, 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).
In their hands, a couple holds a miniature house, reflecting the current challenges in rentals and real estate. The image captures the essence of housing in times of inflation (Illustrative Image Infobae)
Regarding the unprecedented increase of 137.5% year-on-year for January, Alejandro Braña, , member of the Buenos Aires Real Estate Professional Association and specialist in Real Estate, explained to Infobae that “this extraordinary figure is due to the persistent inflationary escalation of recent times. The disparity between salaries, which fail to keep pace with inflation, largely explains this situation.”
Currently, a two-room apartment in CABA has a price that ranges around $300,000; values rose sharply prior to the presidential runoff and after the devaluation during the first days of the national administration that took office on December 10.
There are Buenos Aires neighborhoods where values rose 35% in just 20 days. And for a two-bedroom apartment they ask for $300,000 on average, as in Villa Crespo, Palermo, Saavedra, Chacarita or Caballito, among other areas.
Regarding the repeal of the regulations, Braña said that “there was relief and hope that the real estate market would react favorably. Both tenants and owners have been having a very bad time for more than 3 years with the law imposed in June 2020 and even worse since last October 17, when legislators achieved what seemed impossible, worsening the rule by reforming it.”
How to calculate it
Calculating the next rental amount involves multiplying the current rate, valid until December, by the corresponding coefficient. This coefficient varies depending on the date on which the contract is updated.Regarding the application of the adjustment based on the Lease Contract Index (ICL), interested parties can consult the index on the Central Bank's 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. There is also the option of the City Housing Institute (IVC).
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.
In just a few clicks you can find out how much the rental price adjustment will be through the Lease Contract Index
To perform the query, the user must choose the start and end dates of the desired period. As an example, if a contract for a 3-room apartment in CABA, with a current amount of $150,000, expires on December 31, the monthly payment will increase to $356,250 starting in the first month of 2024.
Differences
Although the contracts subject to the ICL adjustment remain valid, the repeal of the law generated discontent among tenant defense groups.Mauricio Retamar, representative of the Entrerrianos Tenants Association, highlighted that the DNU is not yet in force. “We consider it to be illegal and unconstitutional. We are actively responding to inquiries about contracts that renew in December. At the national level, various tenant groups filed lawsuits against the DNU. “We will seek to protect the previous legislation, we believe it establishes a balance in the relationship between landlords and tenants,” he said.
In contrast, real estate chambers maintain that the repeal will provide certainty. Virginia Manzotti, president of the Federal Council of Real Estate Associations of Argentina (Cofeci), stated: “The previous law was not effective; The shortage of supply and the withdrawal of homes for traditional rentals were evident. We now observe that several owners across the country intend to re-list their properties for housing contracts of up to 2 years maximum.”
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