Despite the fact that tenants always have the possibility of raising the rent of the properties in line with inflation, the fees in recent years have risen below that due to the fact that owners and tenants have reached agreements due to the difficult economic situation resulting from of the pandemic.
For this 2023, in which the urban housing canons it may increase by a maximum of 13.12 percent, the highest increase in 23 years, it is expected to continue with this dynamic. In an interview with EL TIEMPO, Karina Reyes, president of Fedelonjas, said that there is a lag in the increase due to the pandemic and what people should take into account to raise this year.
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How many families currently live for rent in Colombia?
The Dane Quality of Life survey indicates that 38.6 percent of Colombian households live on rent or sub-lease. This percentage is very similar to that of the owners, since 39.3 percent of the households live in their own roof that has already been paid or is in the process of being paid.
What is the composition of property owners in the country by strata?
85 percent of the owners who rent belong to the strata 1, 2 and 3 and, in the absence of a pension or other additional income, they earn their support from said rental fees.
How has the evolution of the increase in rents been in recent years?
For 2020, the authorized increase was 3.8 percent; however, the real increase was less than the maximum allowed, of 1.97 percent. This has happened every year.
For 2021, tenants could raise it by 1.51 percent but the actual increase was 1.51 percent. And for 2022 the maximum allowed was 5.62 percent; however, the average increase in residential rental fees was 2.94 percent.
This means that, even in the post-pandemic, homeowners and renters reached agreements to increase the fees in accordance with regional economic conditions and within the home and the needs of the owner himself.
Year Authorized increase Effective increase
2020 3.8% 1.97%
2021 1.61% 1.51%
2022 5.62% 2.94%
So it could be said that there is a lag in the increase in residential rental fees due to the pandemic?
The national economic situation from the pandemic (March 2020), without a doubt, affected market decision-making. In the case of the residential leasing market, the decisions that were made regarding the increase in fees between landlords and tenants took into account the economic conditions of the home (among others) and the profitability needs of the investor, creating agreements in which it established a smaller increase compared to what was allowed and even in several cases frozen the increases or the cancellation of some months of rent.
As is evident, these agreements reduced the average growth of rental fees compared to what was expected (limit allowed Article 20 of Law 820 of 2003), reducing the growth of the sector. The fees have risen but well below inflation as they are just beginning to recover.
And how much is the maximum allowed for this 2023?
By 2023, the urban housing rental fees it may be increased up to 13.12 percent. However, they do not go up automatically in January, but rather when the contract completes 12 months of commitment or from the last renewal or extension. In addition, the increase must not exceed 1 percent of the commercial value of the property or the part of it that is leased, respecting the maximum of 2 percent of its cadastral value.
It is also important to remember that this readjustment does not apply to housing contracts signed before July 10, 2003 or in the case of rental of real estate for commercial use.
How is the adjustment in the case of premises or offices?
In uses such as premises, warehouses, medical offices, offices and those other than housing, both the value and the increase amount must be agreed between the parties or according to what was consigned in the lease.
What to do if the owner raises more than legal?
In case of non-compliance with the provisions of the regulation, the lessee can go to the control entities of each municipality to request the adjustment of their rental fee, which may imply economic sanctions for the lessor or the owner.
How much does the increase in rents weigh on inflation for the year?
By December 2022, according to the information published by Dane, the contribution of residential rental fees to the CPI at the end of the year (13.12 percent) was 0.37 percent. Likewise, the participation of residential rental fees with respect to inflation in 2022 was 2.82 percent.
Example of increase:
If you pay one million pesos for the rent of your home + 150,000 pesos for administration and you wrote the contract on June 1, 2022, the increase would be as follows:
Increase when the year ends, that is, May 31, 2023, from the beginning of the new term, that is, June 1, 2023, would pay:
$1,000,000 + $131,200 of the increase = $1,131,200 to be paid when the contract year expires; on the other hand, the monthly Administration fees ($150,000) will rise to what the assembly authorizes as of January 1 of each year or when indicated by the assembly as provided in each co-ownership. In other words, the administration fees are increased at a different time than the value of the lease fee.
