Inflation has soared to the highest level in more than
three decades
, and that will hit tenants hard when it comes to their
next annual lease adjustment
.
Specifically, those who have a rent in progress governed by the new law and have been
paying the same for 12 months
will have to face an increase of close to
90%
in March
2023
.
Such a jump,
already confirmed
, is due to the fact that the regulation in force since 2020 established that the monthly payment must
be updated each year,
largely reflecting the evolution of the
inflation index
.
For many tenant families, the March 2023
annual adjustment
will be the first in their lease.
For others it will be
the second and last
, in case they have started their rental in the third month of 2021.
In any case, the way
to
calculate the new amount
- the one that will apply for the next 12 months - is the same.
And it is key to know it in detail.
Now the owner decides at what value to rent the first year and then the adjustments are calculated with an official index.
Photo: Emmanuel Fernandez.
How should the annual rent increase percentage be defined, under current law?
The controversial
national law 27,551
defined that contracts must last at least
three years
.
And he established that, during that period, on the monthly price "only annual adjustments
can be made
" with
a certain formula
.
The regulation details 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 remain at a
midpoint
between what general
inflation
and the
wages
of workers registered in a dependency relationship have advanced in the last year.
The Central Bank of the Argentine Republic (BCRA) is the entity in charge of preparing and publishing this index, called
the Index for Rental Contracts
(
ICL
).
The current value of the ICL and all the previous ones, day by day, can be
consulted
on the BCRA website (www.bcra.gob.ar).
From there it arises, for example, that in July 2020 the ICL had started at
1.0;
that in March 2022 (almost a year ago) it was already
1.82
;
and that March 2023 will start at
3.45
.
That is to say, that in only
2 years and 5 months
it accumulated an advance of
245%
.
Applying the index, since March many contracts will have increases close to 90%.
Photo: File.
Step by step, how to calculate what increase my rent will have if the annual adjustment falls in March 2023?
In recent days, the BCRA
published the
ICL values for the first half of March.
Therefore, the calculation can now be done, with this procedure:
Step 1: Find out the ICLs
.
You have to check here, on the one hand, what was the
ICL
of the day
the contract started
or the day of the
last update
(if one was already made).
And on the other hand, what will be the value of the ICL exactly
one year later
, that is, the day on which it will be time to make the next adjustment.
For example, on March 1, 2022 the ICL was
1.82
and on March 1, 2023 the ICL will be
3.45
.
Step 2: Calculate the variation
.
The current ICL (of the adjustment date) must be
divided
by the ICL of a year ago (the day of the start of the contract or the first adjustment).
The number obtained represents the variation of the index during the
last
rental year.
In the example, it will be necessary to calculate
3.45
divided by 1.82
.
As a result, a value of 1.8956
is obtained
.
This implies that an
increase of 89.56%
will have to be applied .
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.
In the example, if since March 2022 you have been paying
$80,000
a month, you will have to multiply that by
1.8956
.
The account shows
$151,648
: that will be the monthly rent that must be paid between March 2023 and February 2024 inclusive.
For its part, if the update should be applied not on the first day but in the middle of the month, for example on
March 16
, the rise will be even higher:
91.89%
.
In this way, for example, a rent of $70,000 will go to $134,324;
and one for $110,000, at $211,081.
How to do the calculation automatically?
Different entities related to rentals have developed
free online calculators
that allow tenants and owners to carry out these calculations in a
few seconds
.
They are easy to use.
The start date of the contract and the monthly amount paid during the first year are entered, and with the push of a button the system informs
how much
the rent increases for the following 12 months.
One of the tools available online to find out how much each rent will increase.
Image: Capture.
Three calculators
that can be used are:
-IVC calculator.
It is the official option of the
Buenos Aires government
, created by the City Housing Institute.
-Cabaprop.com.ar.
It is a development linked to the Sole College of Capital Real Estate Brokers (
Cucicba
).
-Indicecontratoalquiler.com.ar.
It is the one recommended by the organization
Inquilinos Agrupados
.
If you have to move or renew the contract, how much are the prices now?
According to a report from the specialized portal Zonaprop, in the City of Buenos Aires the
average
rental value of a
studio apartment
is
$82,437
per month for the first year of the contract.
Likewise, a two-room
apartment
already costs about
$99,290 per month and a
three-room
unit
rents for
$133,558
per month on average.
These prices, surveyed in January, show that rents in the Capital increased by
104%
in the last
12 months
.
MDG
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