Despite inflation contributing to the rise in prices of most items in the basket of products for Brazilians, rent is one of the few expenses that may decrease in the coming months and generate relief in the pockets of renters. This is what a projection of Fundação Getúlio Vargas (FGV), led by professor and economist Alberto Ajzental, indicates.
According to him, the Broad Consumer Price Index (IPCA), adopted as the country’s official inflation, measured by the Brazilian Institute of Geography and Statistics (IBGE), is influenced by the result of the General Price Index – Market (IGP- M), created by FGV to monitor market variations. However, the indicator became the basis for the readjustment of rental contracts, but the two show divergent behavior, which anticipates a downward trend.
“Rent has been stronger because it is applying the IGP-M, which is higher than the IPCA. The IGP-M accumulated 12 months was 37.06% in May last year, against an IPCA of 8.06% on the same date. This has been pushing up rental prices. However, in May of this year, the 12-month accumulated IGP-M came in at 10.70%. Below the IPCA, with an accumulated 11.77%, which has not occurred since April 2018. With a lower readjustment rate, the tendency of rent readjustments is to cool down, exerting less pressure on contracts”, says Ajzental.
The economist points out that rent is one of the main items that make up the total costs of the IPCA housing category. But the expert points out that this category does not include expenses such as property tax, condominium, electricity and gas cylinders, costs necessary for housing. Therefore, the reduction in the ICMS rate for electricity and the green flag, which came into effect on April 16, do not impact lease agreements.
“For the person to live, to inhabit, they need to buy the property or rent the property. Then she needs water, energy, pay the condominium fee. There are a series of expenses that are more specific for those who are residents”, points out Ajzental.
Entrepreneur and economist working in the real estate sector, Delair Dumbrosck highlights that the scenario of uncertainties in the economy, aggravated by the instabilities caused by the proximity of the electoral period, contributes to an environment of stagnation or reduction of the values of current contracts.
“Many tenants are already managing to reduce contract values or, at the very least, maintain the value. The tenant rents what he can rent, for 30 months, but plans to buy or move to a better property, with more comfort for the family. But when you see an economy with rising prices, indicators, and political uncertainty, the tendency is that you try to hold on to where you are”, assesses Dumbrosck.
The main legislation related to urban rent in Brazil is the so-called Tenant Law, from 1991. It determines that tenants have the right to readjust the amount paid for the rent annually, starting one month after the contract expires.
However, the law does not define that the 12-month accumulated variation of the IGP-M must be used as the value for the adjustment. In fact, the choice is up to the lessee, also involving negotiation with the tenant.
*With information from João Pedro Malar
Source: CNN Brasil
