After the increase in the General Price Index - Market (IGP-M), commonly used for the annual readjustment and rents, and the consequent flood of lawsuits and out-of-court negotiations on the application or not of the index, the Getúlio Vargas Foundation (FGV), through its Brazilian Institute of Economics, launched a new monthly indicator for furniture rentals, the IVAR (Residential Rental Variation Index).
The IVAR will be released monthly, using information from rental contracts brokered by property managers in some states.
This new indicator aims to measure the evolution of prices and fill a gap in the national statistics of the sector. As a calculation basis, the index considers the rental price negotiated and the property's characteristics instead of advertisement data.
According to Paulo Picchetti, IPC Brazil coordinator at Ibre/FGV: “This is clearly not an ideal method because we know that the asking price is not necessarily the value of the actual transaction; the value is what is in the contract, after negotiations”.
This new index allows for a more effective measurement of the average variation of rents over time, better reflecting the supply and demand scenario.
Currently, the IGP-M is the most used index in rent contracts, but in 2021 it accumulated a high of 17.78% and, in 2020, of 23.14%, which led to the search for a new index.
According to the Foundation, in December 2021, the IVAR rose 0.66%, a slight drop when compared to the 0.79% registered in November. The accumulated for 12 months was -0.61% in December/21.
For FGV, the negotiations between landlords and tenants show the drop in family income, also affected by the economic crisis generated by the global pandemic of COVID-19.
The opportunity to adjust contracts to avoid future disputes is open!