The inflation rate will be key for everyone who owns a rental property; that’s right, they will surely demand that the official figure, as in previous decades, exceeds double digits or more, and that the Bank of Mexico (Banxico) never meet its target of keeping inflation at 3 percent, with a margin of one percentage point above or below, since this figure will determine how much they can increase their rents each year.
And this Wednesday, the full Supreme Court of Justice of the Nation (SCJN), presided over by Hugo Aguilar, unanimously agreed to validate that the annual increase in rent for properties in Mexico City should not exceed the year’s inflation rate; that’s right, goodbye to increases of more than 10, 20, or 50 percent from one year to the next for those who rent in the capital governed by Clara Brugada.
This is because they resolved an appeal filed by Urbanhub Mexico, which challenged the constitutionality of the measure. And who is the plaintiff? None other than the largest rental housing operator in the nation’s capital.
According to the Court, preventing rent increases above inflation in the following year does not violate the rights of property owners, as it does not prevent them from making a profit. Instead, it establishes a reasonable and proportional limit in line with inflation. The Court recognized the legal change as a measure to protect the right to decent housing and to combat gentrification. That’s right, if there is demand for the rental property they have, they will not be able to raise the rent above inflation for the same tenant. However, as they correctly point out, this will mean rentals or contracts will only last a maximum of one year, after which new tenants or contracts will be offered at higher rates.
For now, the discussion of landlords’ obligation to register lease agreements in a Digital Registry managed by the Mexico City Government was postponed until the next session within the same case file, as most justices expressed concern about data privacy. A new draft of the bill will be presented, and therefore the vote is pending.
It should be recalled that in August 2024, the Mexico City Congress unanimously approved that rent increases in Mexico City cannot exceed the inflation rate reported by the Bank of Mexico, eliminating from the Civil Code the provision that allowed increases of up to 10% annually.
The housing issue is now a central focus for investors and those acquiring property with the goal of “living off the rental income,” because it’s important to remember that at the beginning of the month, the Supreme Court postponed discussion of Justice María Estela Ríos González’s draft ruling on evictions in Mexico City: an action of unconstitutionality focused on the legality of evictions, and a contradiction of criteria related to the seizure of property without prior judicial authorization. This postponement came in response to pressure from groups arguing that arbitrary evictions would be legalized and the right to housing would be violated, although nothing was said about the rights of legitimate occupants.
Incidentally, with the new Supreme Court, what is already being described as a personnel purge continues, this time targeting the members of the now-defunct Justice Alberto Pérez Dayán’s panel, who were distributed among the other panels, with two to four people assigned to each. The three lawyers assigned to Lenia Batres’s case were summoned by the secretaries and informed that they would be working from home the week of February 2-6, a common practice at the Court. To their surprise, upon arriving the following Friday, these operational-level employees were notified by a court clerk that they were being dismissed for missing an entire week.
The affected individuals were rank-and-file staff, so they went to the Union; however, the Minister refused to meet with the union representatives. We’ll see what happens next, and who will follow.
Source: elfinanciero
