The Federation of Real Estate Markets (Fedelonjas) explained that urban housing rental fees may be increased up to 13.12% and according to the inflation caused in 2023, as established in article 20 of Law 820 of 2003.
(Rentals in Colombia: what is true and false about the increase for 2023).
As stated by Karina Reyes, president of Fedelonjas, “This increase is of great interest to the Colombian population since more than 34% of the homes in the country are rented. The increase in the canon affects not only the families that live in rent but also the owners of the homes that in 85 % belong to strata 1, 2 and 3 and, in the absence of a pension or other additional income, they earn their living from said rents”.
“The rental market amounts to 27.12 trillion pesos annually and most rental homes are concentrated in strata 1, 2 and 3”added the president of Fedelonjas who also recalled that “Many owners are just beginning to recover because, although during the pandemic they lowered fees, they had to pay their obligations such as credits, taxes and usual expenses such as taxes and repairs.”
However, he clarified that “Leases do not necessarily increase automatically in January, but rather when the contract is 12 months after it was signed or after the last renewal or extension and that the defined increase is legal as long as “it does not exceed 1% of the commercial value of the property. or of the part of it that is leased, respecting the maximum of 2% of its cadastral value”.
(This would be the increase in rents for 2023: this is how you should calculate it).
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. 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 contract.
Fedelonjas recommends taking into account the following points by landlords and tenants:
• The increase is applicable only at the time of renewal or extension of the lease and always with prior written communication by the landlord.
• The notification of the increase in the value of the fee and the date on which it will begin to be applied must be made in writing and through authorized postal mail or through the notification channel provided in the contract.
• The landlord is free to apply the percentage by which the fee increases or to refrain from doing so, respecting the established limits.
• In the event 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 his lease canon, which may imply economic sanctions for the lessor.
• Always choose a real estate professional with a recognized track record who draws up contracts with all the legal conditions, safeguards the rights of the parties and helps you choose the most profitable property.
If you pay one million pesos for the rent of your home + 150,000 pesos for administration and you signed 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 at the end of the contract year; on the other hand, the monthly Administration fees ($150,000) will rise to what the assembly authorizes as from 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.
(Inflation in Colombia closed 2022 at 13.12% in its annual variation).
If there are doubts in cases with housing contracts signed before July 10, 2003 or for commercial uses or other than housing, we recommend seeking the advice of a real estate agent you trust because the applicable legislation is different.
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