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Two Easy Methods to Calculate Rent Increase
December 4, 2023
Rents are updated once a year according to an index prepared and published daily by the Central Bank
By Mercedes Soriano
Rents are updated once a year according to an index prepared and published daily by the Central Bank and two different ways of knowing the new price.
In October 2023, a new rental law was passed that establishes three-year contracts that must be updated every six months based on the Casa Propia coefficient. However, the first contracts to be signed under the new standard will have to use the new update methodology only starting in April 2024, that is, six months after its start.
For their part, contracts signed under the law passed in 2020 will maintain annual updates until they end . Taking into account that contracts were signed until days before the sanction of the new law, the regulation of the price indexed to the ICL will last until their completion, that is, until October 2026.
These cases adjust the rental price once a year during the 36 months of the contract, that is, twice in total. These increases are regulated by the Index for Rental Contracts (ICL) prepared by the Central Bank, which establishes how much the value of the rental contract should increase in its annual update.
The rents that have been signed under the 2020 law are adjusted once a year according to the Rental Contract Index prepared by the Central Bank
An important fact is that the fact that current rents are adjusted once a year according to the ICL represents a disadvantageous scenario for tenants and landlords, since owners must now anticipate annual inflation when setting a value when the lease begins. contract and tenants have to face high sums in the first months of the year that are not in line with the economy of the moment.
Below is a month-by-month detail of how much current contracts were updated during the last 12 months, according to the ICL.
- November 2022: 73.12%
- December 2022: 77.58%
- January 2023: 81.40%
- February 2023: 85.88%
- March 2023: 92.06%
- April 2023: 95.43%
- May 2023: 100%
- June: 104.05%
- July: 109.4%
- August: 113.01%
- September: 115%
- October: 119%
- November: 128%
How to calculate rent increase
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, a year ago the rent for a two-room apartment in the City of Buenos Aires averaged $93,000, which is the average rental price for a two-room apartment at that time, according to Zonaprop. If that tenant had started the contract on December 1, 2022, on December 1, 2023 he would have to start paying the updated increase of $212,344.
December begins with adjustments of 128% and would end with updates of 136%
To arrive at that number, the following data should be entered into the calculator:
- 12/01/2022 on Contract Start Date.
- 12/01/2023 on Contract Update Date.
- 93000 in Initial Contract Amount (write without periods or commas to separate hundreds).
The rent adjustment can be calculated with an automatic calculator or manually based on information published by the Central Bank
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 option does not have an automatic calculation but must 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
- 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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