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Rentals: Contracts updated in April will have a record increase - La Nacion Propiedades
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Alquileres: los contratos que se actualicen en abril tendrán un aumento récord
Los contratos de locación que fueron firmados bajo la ley de alquileres -ya derogada- se actualizan una vez al año de acuerdo al Índice de Contratos de Locación (ICL) hasta que llegue su vencimiento
www.lanacion.com.ar
March 22, 2024
The rental contracts that were signed under the rental law - already repealed - are updated once a year according to the Rental Contract Index (ICL) until they expire.
Contracts that are updated in April will suffer a significant increase
A few days before the beginning of April, owners and tenants began to wonder how the sharp price increases will impact the updates to their rental contracts . Although President Javier Milei repealed the Rental Law in December 2023 by DNU - whose validity is currently under discussion -, all agreements signed until October 18, 2023 maintain the conditions established by the rule: three years contract and an annual adjustment updated by ICL. From that date on, the adjustment is semiannual by the Casa Propia index due to the changes that were introduced to the law until its final repeal in December of last year.
This means that the rental price of the rental contracts that were signed under the law at the beginning of April 2022, as well as those that were signed in the same month of 2023, will register an interannual increase of almost 200% (196.7 % as of April 1) , according to the latest update of the Lease Contract Index (ICL) . That is, if a tenant pays a rent of $100,000, starting in April with the adjustment they will have to pay $296,703, while the one who pays $200,000 will pay $593,407 per month.
What will be the increase in current rental contracts?
How is the increase in the rental price of contracts signed under Law 27,551 calculated?
Owners and tenants must consult the ICL published by the Central Bank of the Argentine Republic (BCRA) on the official website. This is an indicator that includes in equal parts the variation in inflation (according to the CPI measured by INDEC) and salaries, according to the average remuneration of stable workers (Ripte). Therefore, the increase in interannual inflation, which was 276.2% in February 2024 , directly impacted the update percentage.Now, there is also the case of rentals that end in April of this year - as long as an extension has not been established. These were signed in the same month of 2021 and must agree on a new agreement, with the particularity that they will no longer be governed by any law, but return to the Civil and Commercial Code with absolute freedom between the parties as long as the DNU governs - which was rejected in the Senate on March 14 and must be discussed in Deputies.
This means that the term of the contracts will be the one that the parties have established , there will be no minimum legal term, but if it is not clarified, it will be two years. In addition, they may arrange the adjustment of the value of the rentals and the use of any index , public or private, expressed in the same currency in which the rentals were agreed will be valid. They will also be able to agree on how often to update the rental price.
A phenomenon that generated the repeal of the norm is that the owners once again made their properties available on the market and, almost three months after the repeal of the rental law, this can be clearly seen: the offer of Homes for rent in the city of Buenos Aires increased by 106% in just two and a half months -since the end of December 2023- . Publication prices also slowed down and the increases recorded in recent months were below inflation. Despite this, those who must start a new contract today will find values on average above the ICL adjustment: new publications accumulate a year-on-year increase of 286.7% . Although it must be considered that in this case February numbers are being compared because the data on the increases for March and April are not yet known.
In numbers, the average rent for a two-bedroom apartment in the City of Buenos Aires is $416,991 per month , while last year the value was $107,835.
On the other hand, it is also worth noting that rental contracts signed between October 18, 2023 and December 29 - the date on which the DNU came into effect - are updated semiannually based on the Casa Propia coefficient . These contracts will begin to be updated as of April 18, when six months have passed since their signing under standard 27,737, which was modified from the original, 27,551.
What will be the increase in current rental contracts?
How to calculate the increase in the contract with ICL
With an automatic calculator
There are several websites that have calculators designed to know the increase in rents . One of them is, for example, that of the City Housing Institute . To consult the index, the steps are as follows:- Enter the website of the City Housing Institute that contains a calculator specifically designed to know the increase in rents: https://vivienda.buenosaires.gob.ar/calculadora_alquiler
- First of all, you must enter the date on which the contract was signed, to know what the index was at that time.
- Then you must select the contract update date.
- Finally, the user must indicate the initial amount of the contract without points to separate the tens of thousands.
These data will help calculate the amount to be paid during the next year and the percentage increase that corresponds to said period. In short, the formula that is applied consists of the total rent divided by the index dated when the contract was signed, multiplied by the index of the day on which the increase is applied to it. The value returned by that account will be the amount of rent that the tenant must pay during the next year , until the new update.
For example, in April 2023 the rent for a two-bedroom apartment in the City of Buenos Aires averaged $128,584, according to Zonaprop. If that tenant had started the contract on April 1, 2023, on April 1, 2024 he would have to start paying the updated increase of $381,512.97.
Those who update the rental contract in April based on the Rental Contract Index will pay 196.70% more than the previous year
With the BCRA website
Another option is to consult the official website of the Central Bank where the entity updates the index every day. This possibility does not have an automatic calculation, but rather has to be done manually by the person following these steps:- Find the index: go to the Central Bank website ( bcra.gob.ar ), go to the “statistics” tab and then “main variables”. At the end of the list, in the last option, there is the item that allows you to view the “Index of Lease Contracts”. These steps can be shortened if you go directly to the shortcut: https://www.bcra.gob.ar/PublicacionesEstadisticas/Principales_variables.asp and search for “Index for Lease Contracts”.
- Define the index value when the contract began and the current one: the user must select the start dates of the contract and the date on which the amount has to be updated. Then you must press the blue “consult” button that will display a table with the index value in all the months of the consulted period. In that table, the first value is the index when the contract started and the last is the index value currently.
- To know how much the rent will increase, the following calculation must be made: take the current index and divide it by the value of the index from when the contract began. That figure must be multiplied by the rental value and will result in the amount the tenant will have to pay over the next year until it is updated again.
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