Commercial Rent Increases in Colombia (Cost of Leasing)

While housing and residential leasing in Colombia is a highly regulated field bound by unbreakable legal caps and maximums, the realm of commercial leasing belongs to the principle of autonomía de la voluntad (freedom of contract) under the Commercial Code (Decree 410 of 1971, effective January 1, 1972).

If you rent out corporate or retail commercial premises in Colombia, be fully prepared to master the guidelines of Article 518 and 519 of the Commercial Code.

The Myth of the "CPI Increase" in Commercial Leases

The most unforgivable error for an owner of productive assets is assuming that the Consumer Price Index (CPI/IPC) rule—dictated by Law 820 strictly for apartments—interferes with or limits their commercial real estate business.

There is no government-imposed limit. The Colombian state explicitly removes caps in commercial law. The parties have total autonomy to foresee a different agreement or formula during the pre-contractual signing phase. (For example, tying the annual rise to the Legal Minimum Wage increase + 3 points, or a fixed guaranteed CPI + 5%).

However, if the renewal date arrives exactly at the two (2) consecutive years of occupancy with the same business establishment, the tenant gains the Right to Renewal (Derecho de Renovación) under Article 518. If the rent increase is not tied explicitly to a firm written percentage, the parties must negotiate the new rate based on the property's current market valuation.

What Happens if There is No Agreement? The Appraisal Process

The Right to Renewal (Article 518) confers a binding shield to the merchant, effectively allowing them to stay in the premises after 2 years of continuous productive work. It is important to note that in Colombian law, a renovación (renewal) technically results in a new contract, whereas a prórroga is an extension of the existing one.

If the landlord demands a 30% increase and the tenant counters with a 5% offer, and no agreement is reached, Article 519 is categorical: Any differences that occur between the parties at the time of renewal of the lease contract shall be decided by a proceso verbal (verbal procedure), with the intervention of experts (peritos).

• While the dispute is settled, operations continue legally, but the renewal will eventually formalize a new contractual bond.
• An expert appraiser (perito) is summoned. According to Article 226 of the General Code of Process (CGP), the expert must demonstrate idoneity and experience, providing a clear and detailed report justifying the market valuation based on technical and scientific foundations.
• The fair market value determined through this judicial process becomes mandatory and retroactively compliant for both parties once ratified.

Preventing Renewal (Article 520)

If a landlord intends to prevent the renewal for specific legal reasons (such as needing the premises for their own residence or substantial repairs), they must provide at least six (6) months' notice (desahucio) prior to the expiration of the contract, as mandated by Article 520.

Strategic Contractual Forecasting of Collections

The absolute last thing both corporations want is to squander 8 to 12 months losing their operational flow to cumbersome lawsuits and legal costs. The original pact signed must always be drafted contemplating the long haul with projected steps: "Increase Year 1, Year 2 and following by CPI + a 2% margin, and a mutually agreed direct appraisal for Year number 5". In this way, you perfectly prevent possible fissures when re-establishing the bond under renewal. This shields the economic certainty of your corporate budget without generating wear and tear from disputes.

Achieve clear algorithmic traceability and consistently communicate all missives and relative acts of corporate rent increases-tied to or detached from the CPI-using a single platform fully automated for Colombia's commercial rules: Landager.

Back to the Commercial Leases in Colombia OverviewPreview unavailable.

How Landager Helps

Landager tracks lease terms, automated rent reminders, and document expiration - making it easy to stay compliant with Colombia regulations.

Back to Colombia Landlord-Tenant Laws OverviewPreview unavailable.