Since October 18, new rental contracts are governed by the Own House index (CP) to update them. In turn, those who maintain a prior formal agreement in force must maintain the Index of Lease Contracts (ICL), that of the previous law. November is the first month that already begins with both indices coexisting. For specialists, the CP index It benefits tenants but will generate greater losses for owners than with the ICL. They warn again about the lack of properties on offer.
Here’s a brief review of how each update index works. Firstly, Casa Propia can be applied up to twice a year, that is, semi-annually. To calculate it, It is based on the lowest indicator between the average inflation during the last year and 90% of the salary variation during the same period. According to the Government, the intention is to align the evolution of salaries and the ability to rent, which is not impeded by the increase in prices. On the other hand, the ICL is made up of equal parts between the monthly variations of the consumer price index (CPI) and the average taxable remuneration of stable workers (RIPTE).
The method of increasing the value of rentals has been bifurcated since the approval of the new Rental Law that governs the sector, which also includes the prohibition of publishing departments in dollars and a minimum term of three years.
For Federico González Roucohousing economist, The current index “is quite advantageous for the tenant for the variables it takes and how it takes them.” And he adds: “Obviously the semiannual update causes the rent to rise every six months instead of the annual update, but even so, over the three years it represents less money than the annual update with ICL.”
For the same reasons, the economist understands that the new index For the owner it will not be so advantageous, although the increases are carried out in two sections. That is why González Rouco warns: “If this ends up causing less supply, it will not work for the tenant.. “If you intervene too much in a price, there may not be something for everyone.”
Returning to the comparison between indices, Mariano Malbran, president of the Argentine Chamber of Real Estate Services Companies (CAMESI), indicates that the ICL increased 115% in one year, while “the Casa Propia index will give approximately 100% every twelve months.” For the specialist, the losers are the owners since “the value of the rentals will even be below the ICL, which in itself did not cover inflation.”
Different is the look of Juan Pablo Acostaeconomist at the Center for Argentine Political Economy (CEPA), who assures that Casa Propia is “Solomonic” since it “protects the tenant in an adverse context and the owner by updating it every six months.”since the liquefaction due to a one-year rent freeze for one year was too much.
Due to the composition of Casa Propia, the rental values will be mostly linked to salaries, so, according to Malbrán, “it makes sense for the tenants and gives predictability when it comes to being able to pay them, but the owners will try not to rent and put the property for sale or temporary rental.” Or, they will also choose to rent informally, updating the contracts in more limited times and based on inflation, as the head of Grouped Tenants warns, Gervasio Muñoz: “Faced with a situation like the one we are in, a semi-annual increase is better so that the market weakens, but without intervention from the State it is the same because nothing is accomplished.”
According to Muñoz’s numbers, There are 3 million rental contracts, but so far only 140,000 have been registered. “The State does not know under what conditions people rent in Argentina,” he lamented. Perhaps that explains why most rentals did not respect the ICL variation, rather they exceeded it. According to the Scalabrini Ortiz Study Center (CESO), the median of the one-room apartments offered in the Federal Capital is $180,000, the median for two-room apartments is $230,000, and the median for three-room apartments is $300,000. These numbers reflect annual increases of 205.1%, 233.3% and 215.8% respectively. All three are above year-on-year inflation (138.3%) and the variation of the dollar (135.8%).
Source: Ambito
