RENT INDEXATION IN FLANDERS SINCE OCTOBER 2023

Since October 1, 2023, the EPC-related restrictions on rent indexation have been lifted in the Flemish Region. This means that rents in Flanders may be re-indexed regardless of the energy performance of the property, as previously prescribed. Nevertheless, a modified calculation method, including a correction factor, has been introduced for properties with an EPC label D, E, F or for properties without a valid EPC certificate. This measure is designed to prevent landlords from fully reclaiming revenue from missed indexations.

EXPLANATION AND DIGITAL TOOLS

Historical perspective: Indexing rules before Oct. 1, 2023

Before Oct. 1, 2023, rent indexation in Flanders was directly linked to the home’s EPC certificate. The former rules were as follows:

• EPC A, B or C: Full (100%) indexing was allowed.
• EPC D: Only 50% indexing was possible.
• EPC E, F or unknown: Rents were not allowed to be indexed for one year.

These restrictions were lifted effective Oct. 1, 2023.

The new calculation method for rent indexation in Flanders

The revised method of rent indexation in Flanders takes into account the rent excluding costs, the health index and a specific correction factor. The correction factor depends on the property’s EPC label and the anniversary of the lease.

The general formula is:

New indexed rent = New indexed rent without restriction x Correction Factor

The “new indexed rent without restriction” is calculated as follows:

New indexed rent without restriction = (Base rent x New index) / Base index

You can access the latest health indexes through a current index table.

Application conditions for the adjusted indexation with correction factor

Indexing with the adjusted formula (correction factor) can be applied if:

• The home is rented as a primary residence (social housing and student dormitories are excluded from indexation).
• The lease took effect before Oct. 1, 2022.
• The house has an EPC D, E, F, or if no EPC certificate is present.

These features are consistent with the conditions that applied during the rent freeze until Sept. 30, 2023.

Specific correction factors by EPC category and contract anniversary:

Below is a detailed overview of correction factors depending on the EPC label and contract anniversary:

Exporting to Spreadsheets

Explanation:

• “Index 2021” refers to the health index for the month prior to the anniversary of the lease in 2021.
• “Index 2022” refers to the health index for the month prior to the anniversary of the lease in 2022.
• “Index 2023” refers to the health index for the month prior to the anniversary of the lease in 2023.

Calculation example for a house with EPC D (anniversary between 01/01/2023 and 30/09/2023):

Suppose:

• Basic rent: € 500
• Lease start: March 2019
• Base index (February 2019): 108.78
• New index (February 2023): 126,86
• Index 2022 (February 2022): 118.74

Step 1: Calculate the indexed rent without restriction

• New rent = (€500 x 126.86) / 108.78 = €583.10

Step 2: Calculate the correction factor and adjusted rent

• Calculation of correction factor:
• Correction factor = 0.5 x [(118.74 + 126.86) / 126.86] = 0.9680
• Calculation of adjusted rent:
• Corrected rent = €583.10 x 0.9680 = €564.44

In this example, the owner can charge €564.44 per month (excluding fees) as new rent.

Time of indexing and notification

In Flanders, as in the rest of Belgium, rent can be indexed up to once a year on the anniversary of the lease. The landlord must notify the tenant in writing of the indexation, including the calculation and the new rent amount. Without this notification, the tenant is not obliged to automatically adjust the rent.

If the landlord is negligent, the indexation can be corrected retroactively for up to three months.

Efficient rental management with digital tools

To avoid forgetting indexations and avoid calculation errors, property management programs can help. Software such as Offimac can notify landlords as soon as a lease is indexable. These tools perform the calculations automatically, taking into account factors such as the EPC label, the type of lease, the region and applicable legislation. In addition, notifications to the tenant (via email, letter or registered mail) can be generated and sent automatically, significantly streamlining the management process.

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Source reference:

[1] Flemish Housing Decree (Amendments 2023). The Legal Basis of the Indexation Formula and the Specific Rules Relating to the EPC Score. [2] Flemish Energy and Climate Agency (VEKA). Official Guide: The EPC Score and its Direct Influence on the Indexing Options of Leases. [3] Federal Public Service Economy (FPS Economy). Publication of the Official Health Indexes and their Use in the Flemish Indexation Formula. [4] Specialized law firm in Rental Law (Flanders). Analysis of Case Law: The Enforcement of Indexation Restrictions and the Consequences of Non-Conformity. [5] Royal Federation of Belgian Notaries (notaris.be). The Legal Obligation to Notify New Rent and Retroactive Claim. [6] Real Estate Sector Report (Flanders). Market Analysis: The Financial Impact of EPC Coupling on the Yield of Rental Housing. [7] Tenant and Landlord Associations (e.g., VJHP or Tenants Union). Practical Guide: Roadmap for Landlords to Apply Indexation Correctly. [8] Academic Legal Journal (Belgium). Interpretation of Rules for Re-Letting and Indexation of Leases after the Expiration of Restrictions. [9] Local Governments (Municipal Services). Information on Mandatory Lease Registration and EPC attestations. [10] Deloitte or PwC (Belgium). Tax and Accounting Impact of Limited or Deferred Indexation on Rental Income. [11] Common Rental Law (Federal Legislation). Distinction between Indexation Rules for Residential Rent and Common Law Rent in Flanders.

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