By current law, rents this year adjusted 81.4% in January; 85.8% in February; 89.5% in March; 92.6% in April; and 95.9% in May. Now in June it will be at least 100% after the latest inflation data.
How is the rent increase calculated?
National Law 27,551 determines that rental contracts will be valid for 3 years, updated every 12 months. This came to order a situation that in the market had been established with adjustments mainly every 6 months, and even every 3.
The norm orders these adjustments “using an index made up of equal parts by the monthly variations of the Consumer Price Index (IPC) and the Average Taxable Remuneration of Stable Workers (RIPTE).”
In other words, the increases are halfway between what general inflation and the wages of workers registered in a dependency relationship have advanced in the last year, 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 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).
Rents: how much will they increase in June 2023?
The BCRA has already published the ICL values for the first half of June. Therefore, the calculation can now be done, with this procedure:
- Find out the ICL -on the BCRA website-, from the day the contract started or from 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.
- 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.
- 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.
Calculators to know how much you will pay for rent
There are some online calculators that allow you to know how much your rental contract will be adjusted when it is renewed. 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.
Three calculators that can be used are:
- Cabaprop.com.ar. It is a development linked to the Sole College of Capital Real Estate Brokers (Cucicba).
- Indexcontractalquiler.com.ar. It is the one recommended by the organization Inquilinos Agrupados.
- IVC calculator. It is the official option of the Buenos Aires government, created by the City Housing Institute.
rental market
The rental market shrank in the Buenos Aires Metropolitan Area (AMBA) during the first quarter of the year, while more than half of the available properties are offered in dollars, according to a report prepared by Mercado Libre and developed together to the University of San Andrés (UdeSA).
The analysis revealed that of the total real estate offers displayed on the platform, only 6% correspond to properties for rent, while 94% are for sale. In the last year, the supply of 1 and 2-room apartments for rent registered a 30% drop.
Regarding the values presented by the real estate, the report showed that prices have been increasing above year-on-year inflation. “These were driven by a lower supply and greater dollarization of rental prices,” said the Mercado Libre report.
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The average for 1 room in the City as of March was around $90,000, so the increase reaches 138% year-on-year, compared to the same month in 2022. Those with 2 rooms are at 120,000 pesos, with a rise of 144 %, and those with 3 rooms average 210,000 pesos, with an increase of 144%.
On the other hand, the study detailed that the offer of rentals published in dollars in Mercado Libre increased in the AMBA, where it already exceeds 50% of the total. In the same period of the previous year, the percentage was 32% of the total number of advertisements published. Of the current offer of rentals in dollars within the platform, 77% corresponds to houses and 34.5% to apartments.
The predominance of offers in US currency notoriously affects the access to rentals by tenants, who are also harmed by the growing modality of temporary rentals. According to an investigation by the Center for Metropolitan Studies, there are almost 30,000 active offers of temporary rentals in the 22 Argentine cities, while CABA concentrates 15,000 properties.
In the City, this alternative has evolved over the years, since the units available in 2019 under this format were 9.33.
8In this way, in just four years it grew 62%. In Ushuaia they increased 100% and in Bariloche 220% between October 2021 and February 2023, while in Puerto Iguazú they tripled in less than two years, between 2018 and 2020.
Rentals: the most demanded neighborhoods
The most sought after neighborhoods in the City were Caballito, Palermo, Belgrano, Recoleta, Villa Urquiza, with a greater choice in two-room apartments, followed by studio apartments.
In the Northern area of Greater Buenos Aires there was a greater increase in apartments with two and three rooms, which represents 146% more than the previous year.
In the western zone of Greater Buenos Aires, meanwhile, the demand for apartments with the same rooms increased by 95%, compared to 2022.
Unlike these areas, in the South of Greater Buenos Aires the search for one-room apartments increased by 114%.
Source: Ambito
