Argentina's Rental Market Adapts: Calculating Inflation Increases Post-Law Repeal

Argentina's rental market is navigating a new landscape after the repeal of the Rental Law via a Decree of Necessity and Urgency by Javier Milei in December 2023. This change has opened up flexibility in how rental contracts are updated, moving away from previous rigid regulations.

Currently, a common practice involves owners and tenants agreeing on two-year contracts denominated in pesos. These agreements often include inflation adjustments, typically occurring every three or four months. While some contracts still reference the old Index of Rental Costs (ICL) or are fixed in dollars, the trend is towards inflation-linked adjustments in local currency.

The primary reference for these inflation adjustments is the Consumer Price Index (IPC), published monthly by INDEC, Argentina's national statistics agency. The frequency of these adjustments, whether quarterly, semi-annually, or annually, is a key point of negotiation within the contract.

Enrique Abatti, president of the Chamber of Owners, advises that during periods of high inflation, such as late 2023 and early 2024, quarterly or semi-annual adjustments are more beneficial. He notes that in earlier times, semi-annual adjustments were more common. The article provides examples of how to calculate these increases, both manually and using online automatic calculators, emphasizing the importance of using cumulative inflation figures rather than simple addition of monthly rates.

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When there is high inflation, like that which marked the end of 2023 and the beginning of 2024, it is advisable for indexing to be quarterly or semi-annual. In previous times, indexing could be semi-annual.