Understand how rent is after the unexpected drop in the IGP-M – 06/29/2023 – Market

With the fall of the IGP-M (General Price Index – Market) released this Thursday (29), the contracts that celebrate their anniversary in June corrected by the index may not increase. However, no discount either. Due to a routine clause, the price is not adjusted downwards in case of a negative index.

It is common for the parties to determine a period of 12 months for updating the rent. As the tenancy law does not define which index of correction should be used, landlord and tenant with contracts expiring this month can reach an agreement on which index to adopt to make the readjustment.

Another index that can be used in rent readjustments, the IPCA (National Index of Broad Consumer Prices), continues in positive variation.

Although tenants expect a reduction in rent with the drop in the IGP-M, in reality, the value should be maintained, with the possibility of new negotiations.

“The contract is an instrument that regulates all aspects of the correction of lease values. Normally there is no retroactive balance. Reductions in value can also be freely negotiated between the parties”, says Cyro Naufel, director of Lopes real estate.

WHAT IS THE CONTENT OF YOUR CONTRACT?

A survey carried out by DataZAP+ at the end of 2022 points out that 36% of people with current contracts do not know how their rent adjustment works. Still according to the survey, 58% of those looking for rental properties did not know which index could be applied in the contract.

Larissa Gonçalves, an economist at DataZAP+, says that important variations in indexes can considerably change the final rental price, so research is essential.

ASK DOUBTS ABOUT RENT CORRECTION

1) With the negative IGP-M, can I ask to lower my rent price?

In general, a clause in the lease contract provides for the readjustment only when the index is positive, maintaining the previously agreed amount if the index is negative. Therefore, even contracts that would be updated in June should only maintain rental prices for the next cycle.

Reductions in the value and revision of the chosen index, however, can be freely negotiated as the property owner.

Attention! All changes made must be included in a contract amendment.

2) What calculation does the lessee have to make to know the value of the readjustment?

To find out what the adjustment value will be, you must first check the month in which the lease contract was closed. For example, if you have a contract that celebrates its anniversary in July 2023, the rent adjustment, according to the June IGP-M, will be -6.86%.

The index value multiplied to the rent value will result in the amount that will be added to the rent.

Example: to update a rent of 1.5000, which was in effect until June 2023, multiply by the readjustment factor 0.9314. The result is BRL 1,397.10. This would be the amount to be paid at the end of this month of June or at the beginning of July.

3) IGP-M or IPCA? Which index is better to fix the rent?

According to experts, there is no index that is always lower than another. If it points to any significant difference, free negotiation between the parties will always be the best way to converge interests.

In general, the choice of index occurs in the definition of the lease agreement before handing over the keys. However, as the readjustment of the rent value is usually done in 12-month cycles, which is the most common period, it is possible in this case that both parties agree to a review of the chosen index.