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On August 28, a reform was published in the Official Gazette of Mexico City (“CDMX”) regarding limits to increases in the cost of housing rent in Mexico City. The reform, which amends Articles 1 and 59 of the Mexico City Housing Law, will take effect three months after its publication. The changes focus on beginning to close the gap between the pace of inflation and the pace of income increases.
What is the purpose of the reform?
Legislative authorities indicate that the reform generally seeks to:
Ensure the existence of government programs focused on the construction of affordable housing for disadvantaged sectors of minors.
Extend the coverage of agreements between the private and social sectors, as well as agreements, to benefit a greater number of people in accessing decent housing.
Provide legal certainty to the parties involved in lease agreements.
Seek solutions so that the general population can access adequate housing, without this representing an excessive economic burden that limits their personal and social development.
What changes are proposed?
Determine limits to income growth.
The reform establishes that the increase in income cannot exceed the inflation rate according to the index published by the Bank of Mexico for the previous year. This modifies the current regulation, which allowed an increase of up to 10% in incomes, now limiting this increase to the inflation rate.
Digital registration of lease agreements.
The new regulations create a digital record for lease contracts that will be mandatory, with the objective of increasing control and transparency in the real estate market. The landlords will have a period of 30 days after the signing of the contract to carry out such registration.
Housing Production.
It ensures the production of public housing, that is, housing built with public resources to be rented at affordable prices. Mechanisms are established that prioritize workers, single mothers and other vulnerable groups to access this housing.
Conclusion.
The approved reforms will impact the way in which lease renewals are managed. It should be noted that the approach of these proposals considers only price increases that are the result of inflation and does not consider other determining factors that may have a significant impact on price increases.
For any additional questions, you can consult our specialists in contractual matters:
Marco A. Zavaleta Guerra
Partner
Karen B. Hernández Nolasco
Associate
We will be in touch to address your request.
