There are renters all over the country who will soon face a high-impact increase in the pocketbook. They are the ones who signed a contract under the new rental law, have been paying the same for 12 months and have the mandatory annual adjustment.
From June 2023, these families will have to pay for housing at least double what they paid in May. For the first time, the percentage increase will be three figures instead of two.
Such a jump, already confirmed, is due to the fact that according to the current norm the monthly rental amount must be updated each year reflecting to a large extent the evolution of the inflation index. And that indicator recently soared to levels not seen in more than 30 years.
For many tenants, the Juneannual adjustment will be the first of their lease. For others it will be the second and last, in case they have started their rental in the sixth month of 2021.
In any case, the wayto calculate the new amount - the one that will apply for the next 12 months - is the same. And it is key to know it well.
Each increase currently translates into several tens of thousands of pesos. Photo: Archive.
How should the percentage of annual rent increase be defined, according to the current law?
The controversial national law 27,551 – still in force despite rumors of changes – mandated that contracts must last at least three years. And it established that, during that period, on the monthly price "only annual adjustments can be made" with a certain formula.
The rule orders these adjustments "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)."
That is, the increases are at a midpoint between what general inflation has advanced in the last year and the wages of workers registered in a dependency relationship, always according to official data.
The Central Bank of the Argentine Republic (BCRA) is the entity that prepares and publishes this index, called the Index for Lease Contracts (ICL). The current value of the ICL and all previous ones, day by day, can be consulted on the BCRA website (www.bcra.gob.ar).
From this emerges, for example, that in July 2020 the ICL had started at 1.0; that in June 2022 (almost a year ago) it was already 2.09; and that June 2023 will start it at 4.18. That is, in less than three years it accumulated an advance of 318%.
By the application of the index, in June the amount of many contracts will double. Photo: Andrés D'Elía.
Step by step, how do I calculate what increase my rent will have if the annual adjustment falls in June 2023?
In the last hours the BCRA published the values of the ICL for the first half of June. Therefore, the calculation can already be carried out, with this procedure:
Step 1: Find out the ICLs. It is necessary to consult here, on the one hand, what was the ICL of the day on which the contract was started or of the day of the last update (if one has already been 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 new adjustment.
For example, on June 1, 2022 the ICL was 2.09 and on June 1, 2023 the ICL will be 4.18.
Step 2: Calculate the variation. The current ICL (of the date of the adjustment) must be divided by the ICL of one year ago (that of the day of the start of the contract or the first adjustment). The number obtained represents the variation of the index during the last year of rental.
In the example, you will have to make the count 4.18divided 2.09. As a result, a value of 2.00 is obtained. That implies that the rate doubled and that a 100% increase 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 was being paid for rent each month. The result will be the updated amount.
In the example, if since June 2022 they had been paying $ 80,000 per month, we will have to multiply that by 2.00. The account yields $ 160,000: that will be the monthly rent that must be paid between June 2023 and May 2024 inclusive.
On the other hand, if the update should be applied not on the first day but in the middle of the month, for example on June 16, the increase will be higher: 101.39% (because the initial ICL is 2.16 and the final 4.35).
Thus, for example, a rent of $ 70,000 will go to $ 140,972; and one of $ 110,000, at $ 221,528.
How to do the calculation automatically?
Different entities linked to rentals offer free online calculators that allow tenants and owners to make these accounts in a few seconds.
They are easy to use. The start date of the contract and the monthly amount that was paid during the first year are entered, and with the push of a button the system informs how much the rent passes for the next 12 months.
One of the tools available online to know how much each rental will increase. Image: Capture.
Three calculators that can be used are:
-Cabaprop.com.ar. It is a development linked to the Unique College of Real Estate Brokers of Capital (Cucicba).
-Indicecontratoalquiler.com.ar. It is the one recommended by the organization Tenants Grouped.
-IVC calculator. It is the official option of the Buenos Aires government, created by the Housing Institute of the City.
If you have to move or renew your contract, how much are the prices in the market now?
According to a report by the specialized portal Zonaprop, in the City of Buenos Aires the average rental value of a studio apartment is $ 105,613 per month for the first year of the contract.
Likewise, a two-room apartment already costs about $ 128,584 per month and a three-room unit rents at $ 169,000 per month on average.
These prices, surveyed in April, mark that rents in Capital increased by 126.3% in the last 12 months.
MDG
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