The rental contracts that were signed in April 2022 and April 2021 will suffer an increase of 92.06 percent from next month, according to the update index that was released yesterday. The percentage weights inflation and wage increases. In this way, it is getting closer and closer to three digits and is a shock for tenants.
In turn, it does not leave the owners satisfied, if one takes into account that the interannual rise in inflation reported by the Institute of Statistics and Censuses (Indec) was 102 percent if February of this year is measured with the same month of last year.
Local auctioneers point out that with these indices chaos arises in the real estate market. Gisela Agostinelli remarked that “despite the very high update rates that are known month after month, tenants pay punctually what the law establishes. There are very few, practically isolated, cases in which they state that they cannot face such updates. There is practically no conflict.”
The auctioneer also remarked that “in the event that a tenant may raise a reduction, the owners comply with the law and leave no room for negotiation.”
From different sectors of the real estate activity, they indicate that even in this context there is a minimum offer for the rental market, and in the face of sustained demand, each property that enters the market is occupied immediately.
One of the auctioneers consulted said that “as soon as an apartment or a house is published, there are people who call to make a reservation, sometimes without seeing it in detail.”
Since Law 27,551 came into force, the index had practically no brake on the upward pace that it took in the fourth or fifth month of application. It started just over 40 percent in July 2021, since January 2022 it climbed to 50 percent and this year it started above 80 percent annual update. At this rate, it is expected that it will soon reach three digits of increase.
Agostinelli stated that “the contracts with the previous law were overdue and when they expire when a new contract is going to be made, it does not drop below 100 percent, to keep up with the increases that the sector had with the rental law and inflation that the country had.
As this newspaper published, new rental contracts begin with an increase of 100 to 110 percent, average. This means that at the end of a contract the rental price that was paid a year ago is taken, the price of the new rental starts with three digits.
For her part, the auctioneer Mariana Valverde provided another perspective on the subject: “The positive side that we observe is that more properties are entering for rent. Situation that did not happen months ago. Although they are 10 points below inflation, the index becomes more realistic and therefore the landlords trust that the annual adjustments will be reasonable and that causes a gradual increase in the offer”.
With great uncertainty, what will be the response of the market is awaited when the three-year contracts that were signed with the new law in June-July 2020 end. We will have to wait for the path that is adopted: if the index is taken into account that it be published in the Central Bank of the Argentine Republic at that time of the year or if it is taken as a new contract and what percentage will be applied.
Another fact that adds greater concern is whether the rental law will remain as such or there will be some modification, so delayed in the National Congress. Experts in the real estate market point out that in an election year it could be difficult for a decision to be made in this regard, although millions of people in the country await a response on this issue.
National law 27,551 defined that contracts must last three years. And it established that, during that period, on the monthly price “only annual adjustments can be made” with a certain formula.
Annual adjustments or updates must be made “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)”.
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.
With inflation rates so high and equal that they try to match prices, an unstoppable snowball is formed, describe different professionals who specialize in rentals.
UP TO 250% UP
According to the latest calculations published days ago, the rents for 2020 that are governed by the current law had more than 200 percent at this time, and some reached 250 percent, depending on the month of annual update that touched them.
It should be noted that in our city, both the Real Estate Professional Forum and the La Plata District Association of Auctioneers report the rate applied to rental contracts every month.