Step by step, how to calculate how much your rent will increase with the new law

Martin Grosz

09/03/2021 6:00 AM

• Clarín.com

• Services

Updated 09/03/2021 6:00 AM

The new Rental Law

established that contracts must last at least

three years

and defined how payments should be adjusted over time.

Before, the frequency and percentage of all raises were agreed at the beginning, in advance.

Now, change, they arise each time from 

a calculation

 that can be somewhat complex and that allows you to immediately know the new monthly amount.

In recent years the most common thing was to negotiate

semi-annual increases

, but law 27,551 ordered that on the monthly rental price "only

annual adjustments

can be

made

."

The rule came into effect on

July 1, 2020

and is applicable only to contracts signed thereafter.

For this reason, the first updates with the new method began to be made

a year later

, in July 2021. At the beginning, it was with adjustment levels of

41%

.

As the months go by, more and more tenants are reaching their 

first increase

, as their contracts reach one year.

These days the system already shows them an 

increase of 47%

, which they will have to face in the following 12 months.

Before the adjustment mechanism was agreed by the parties in the contract, now it is determined by law.

Photo: Archive.

How is the annual percentage increase defined?

The law indicates that the adjustments must be made "using an index made up of

equal parts

by the monthly variations of the Consumer Price Index (CPI) and the Average Taxable Remuneration of Stable Workers (RIPTE)".

In other words, the increases should be in the

middle point

between what the general inflation has advanced in a year and the

salaries

of the workers registered in a dependency relation.

The Central Bank of the Argentine Republic (BCRA) is the entity in charge of preparing and publishing this index, which they called the 

Index for Rental Contracts

(

ICL

).

The current value of the ICL and all the previous ones can be 

consulted

 on this BCRA website.

From there it arises, for example, that in July 2020 the ICL started at

1.0;

 that in January 2021 it was already 

1.14

;

and that in September it reached

1.51

.

From the beginning it advanced 51%.

The owner decides at what value to rent the first year, but then the adjustments are defined by an official index.

Photo: Emmanuel Fernández.

How to calculate how much increase my rent will have?

Step 1: find out the ICLs

.

You have to check here, on the one hand, which was the

ICL

on the day

the contract started

;

and on the other hand, the value of the ICL exactly

one year later

, that is, when it is time to make the first update.

For example, on September 1, 2020 the ICL was

1.02

and on September 1, 2021 the ICL was

1.50

.

Step 2: calculate the variance

.

The current ICL (of the adjustment date) must be

divided

by the ICL of the day of the start of the contract.

The number obtained represents the exact variation of the index during the first year of rental.

In the example, we will have to count 

1.50 divided by 1.02

.

As a result, a value of

1.470588

is obtained

.

That implies that there will be an 

increase of 47.06%

.

Step 3: calculate the new amount

.

What remains is to take the variation value and

multiply it

by the amount in pesos that had been paid for rent each month.

The result will be the updated amount.

For example, if since September 2020 they have been paying

$ 40,000

per month, it will be necessary to multiply that by

1,470588

.

The account shows

$ 58,823

: that will be the monthly rent that must be paid between September 2021 and August 2022 inclusive.

How to do the calculation automatically?

In recent months, various rental stakeholders have developed

free online calculators

that allow tenants and owners to carry out these accounts in a

few seconds

.

They all work in the same way: you enter the start date of the contract and the amount that had been paid, and with the press of a button the system informs

how much

the rent

goes

for the next 12 months.

One of the online tools to quickly know how much the rent will increase.

Image: Capture.

Two

 simple

calculators

that can be used are:

• Indicecontratoalquiler.com.ar.

  It is the one recommended by the

  Inquilinos Agrupados

  organization

  .

  
  

• Cabaprop.com.ar.

  It is a development linked to the Unique College of Capital Real Estate Brokers (

  Cucicba

  ).

How are contracts signed before the new law adjusted?

Tenants who live in properties they rented before July 1, 2020, that is, when law 27,551 was not yet in force, are still subject to the

previous rules

.

With which, they will have to pay the probably semi-annual increases that they have agreed with the owner in the signed contract.

It will be like this until it is finished and they have to

renew it

.

MG

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