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How much will tenants who still have a contract based on the previous Rental Law pay in April - Infobae
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Cuánto pagarán en abril los inquilinos que todavía tienen un contrato en base a la Ley de Alquileres anterior
Aquellos contratos firmados bajo la Ley de Alquileres de 2020, que ajustan el precio anualmente, experimentarán un aumento sin precedentes a partir del próximo mes. ¿Cómo calcularlo?
www.infobae.com
March 22, 2024
Those contracts signed under the 2020 Rental Law, which adjust the price annually, will experience an unprecedented increase starting next month. How to calculate it?
By José Luis Cieri
Due to the April increase, tenants will have a significant impact on the budget among those who maintain rental contracts under the previous legislation (Illustrative Image Infobae)
Tenants who have contracts signed under the 2020 Rental Law, repealed by the Decree of Necessity and Urgency (DNU) still in force (although the Senate rejected its validity), will face a significant increase in April . These contracts, which are updated once a year through the Rental Contract Index (ICL), will register an increase of 196.7% , a record since this scheme has been in force for housing rental contracts.
As a result of this measure, those tenants who paid $100,000 (until this month) will now have to start paying about $296,700 until March 2025, while those who paid $200,000 will have to pay $593,400, also until March of next year.
The ICL is an indicator prepared by the Central Bank that is made up of the variation in the price and wage index. To calculate the annual update in a rental contract, the current rental price must be taken as a reference and divided by the value of the index corresponding to the start date of the contract. Subsequently, this result is multiplied by the index corresponding to the date on which the rent adjustment will be made. This index is available on the official website of the bank.
Alejandro Braña , Real Estate expert and member of the Real Estate Professional Association, told Infobae that inflationary inertia is maintained to update the signed agreements. “The ICL still reflects data from previous months, including the quarter between December 2023 and February 2024, which recorded inflation of approximately 60%. This increase was higher than the annual inflation for all of 2019, which was 54%, marking a new inflation record.”
The sector estimates that this trend could only begin to moderate by the second half of this year.
Diego Migliorisi , of Migliorisi Propiedades, explained: “Inflation has been decreasing and is expected to reach single digits in the next two months. This will have a direct impact on slowing future increases.”
How to calculate the increase
To calculate the new rental amount starting in April, the previous amount up to this month must be multiplied by the corresponding coefficient, according to the contract update date.There are two options to make this adjustment based on the ICL. The first option is to access the index on the official website of the Central Bank. Simply go to the “Statistics” tab and then to “Main Variables”. The second alternative is to use the calculator available on the portal of the Buenos Aires Real Estate Professional Association (Cabaprop).
In both options, it is essential to enter the date the contract was signed to determine the rate at that time. Subsequently, the contract update date is selected and the initial contract amount is indicated without points to separate the tens of thousands. The user must specify the start and end dates of the period they wish to consult.
Current outlook
The DNU issued that repealed the law that had been modified in October 2023 gives the parties the freedom to choose the preferred indexation rate. This provision meant that, since December, new contracts opted to be updated using the Consumer Price Index (CPI) and the ICL was maintained in most of the agreements.
In just a few clicks you can find out how much the rent increase will be (Photo: Getty)
Braña commented: “The majority of contracts are carried out through ICL (approximately 55%), according to several private studies and surveys carried out by different entities in the sector, such as the Federal Council of Real Estate Associations of the Argentine Republic (CoFeCI) and the Federation Real Estate Agency of the Argentine Republic, involving brokers and auctioneers from all over the country. The trend indicates that the majority of contracts are made in pesos, with a duration of 24 months.”
Regarding the frequency of adjustments, approximately 60% are carried out every four or six months according to both entities.
Advice to tenants
Ideally, the adjustment should be based on the percentage of the tenant's salary update. Although the CPI reflects indisputable inflationary activity.Migliorisi recommended: “It is key to ensure that the agreed period is not less than 24 months and, above all, verify the ownership of the property. With the decrease in inflation, it is possible that these aspects will no longer be a cause of conflict between the parties in the near future.”
Greater offer and prices
Since the entry into force of the DNU, the rental supply has increased to record levels. In January 2024, it already reached 70%, and in February it continued to rise, reaching an increase of 105%, according to data from the Buenos Aires Real Estate Professional College and the Statistical Observatory Table.
The majority of new contracts (around 70%) have a duration of 24 months (Photo: Getty)
“Currently, the offer has risen up to 120%, despite the rejection of the DNU in the Senate. In contrast, demand is selective due to the diversification of supply, with more than 13,000 properties available for residential rental in CABA,” said Braña.
Now there are homes in pesos in almost all Buenos Aires neighborhoods.
Migliorisi warned: “If the DNU is maintained (it will be discussed in Deputies), it is likely that this increase will continue and will be able to satisfy demand. However, if it is reverted to the previous regulations, it would represent a setback that would seriously affect millions of people.”
Some reference values are published below along with the adjustment method and period:
Studio apartment in Almagro (Av. Rivadavia and Virrey Liniers) $250,000 per month with quarterly adjustment by ICL.
Furnished 2-room apartment in Parque Patricios (Av. Caseros at 2400) $290,000 with quarterly adjustment by ICL.
2-room apartment in La Paternal (Juan B. Justo and San Martín Avenues) $170,000 with quarterly adjustment by ICL.
2-room apartments in Parque Chacabuco (JM Moreno at 1600) $250,000 with quarterly adjustment by ICL.
3-room apartment in Caballito (Acoyte and Av. Rivadavia) $250,000 with semiannual adjustment by ICL.
3-room apartment in Palermo (Av. Santa Fe and Salguero) $400,000 with quarterly adjustment by ICL.
3-room apartment in Monte Castro (Bermúdez and Av. Álvarez Jonte), PH on the ground floor with patio and terrace $350,000 with quarterly adjustment by ICL.
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