RENT INDEXATION AND REGIONAL DIFFERENCES IN EPC
Rent indexation rules in Belgium are dynamic, with recent changes clarifying the link between energy performance certificates (EPC) and rent indexation options. Since the end of 2023, most restrictions based on EPC scores have been relaxed or removed, although nuances and correction factors may still apply by region. These adjustments, introduced in response to falling inflation, are specific to residential leases and do not apply to commercial leases or common law contracts.
AN OVERVIEW
Rent indexation in Wallonia
In the Walloon Region, restrictions on housing rental indexation expired on November 1, 2023. Previously, differentiated indexing based on the EPC category applied until that date:
- EPC A, B or C: 100% indexing
- EPC D: 75% indexing
- EPC E: 50% indexing
- EPC F, G or unknown: No indexing for one year
From Nov. 1, 2023, rent can again be fully indexed, regardless of the EPC certificate. However, a revised calculation method will be applied.
Rent indexation in the Brussels-Capital Region
In the Brussels Capital Region, the EPC-linked indexing restrictions have been lifted as of Oct. 14, 2023. Until that date, the rules were as follows:
- EPC A, B, C or D: 100% indexing
- EPC E: 50% indexing
- EPC F, G or unknown: No indexing
From Oct. 14, 2023, full indexation will be possible again, but a correction factor will be applied. This is to prevent owners from fully recovering the missed indexing from the restricted period.
Rent indexation in the Flemish Region
EPC-related restrictions on rent indexation were also lifted in the Flemish Region as of Oct. 1, 2023. Before this date, the rules were:
- EPC A, B or C: 100% indexing
- EPC D: 50% indexing
- EPC E, F or unknown: No indexing for one year
As in Brussels, a correction factor is applied in Flanders to avoid owners fully recovering the lost indexation.
Impact of a missing EPC certificate.
If a property does not hold a valid EPC certificate, the strictest rules apply to properties with an EPC F or G. It is important to note that since Nov. 1, 2011, it has been a legal requirement to hold an EPC for rental properties.
A specific note applies in Brussels: if the property has an EPC E label, the indexation will only be calculated from Oct. 14, 2023, and does not take into account the possibility of retroactive indexation.
LOOKING FOR GOOD SOFTWARE TO HELP YOU MANAGE THESE THINGS?
- User-friendly
- Future-proof and business-secure
- Affordable software
- Ready-to-use solution
- Very modern
- Tailored rental
- Ready-made
- Each department
- Customizable
- Can be expanded
- Many extra apps available
Source reference:
[1] Flemish, Walloon and Brussels Housing Decree. Regional Regulations Regarding Linking Rent Indexation to EPC Score (After September 2022). [2] Federal Public Service Economy (FPS Economy). Official Indexes and Rent Index Calculation Basis (Health Index). [3] Academic Legal Journal (Belgium). Analysis of the Legal Validity and Enforceability of Regional Indexation Restrictions. [4] Flemish Energy and Climate Agency (VEKA) / Walloon counterpart. Specifications on the EPC Score and Criteria for Energy Efficiency in Rental Housing. [5] Royal Federation of Belgian Notaries (notaris.be). The Legal Consequences of an Insufficient EPC Score on Rent and Indexation. [6] Real Estate Sector Report. Market Analysis: The Impact of a Low EPC on the Rental Value and Yield of Real Estate by Region. [7] Deloitte or PwC (Belgium). Fiscal and Accounting Impact of Renovation Obligation on Landlords’ Cash Flow. [8] Banking and Credit Institutions. Analysis of the Correlation between EPC Score, Green Loans and Borrowing Costs. [9] Specialized Law Firm in Rental Law. Case Law on Disputes Regarding the Correct Application of Indexation Restrictions. [10] European Union (EU Directive). The Role of European Directives in Determining National and Regional Energy Requirements (EPBD). [11] Municipal or Provincial Regulations. Any Additional Regional or Local Premiums for EPC Improving Renovation.