Nationwide limitation on indexation of rents, based on the EPB score

It will come as no surprise to read that due to the current economic situation, more and more Belgian households are having difficulty paying their energy bills. Inflation has reached new highs and is having a direct impact on the indexation of rents. In August, the consumer price index reached 9.94%, which represents an increase of about €50 or even €100 per month for every household. Some real estate properties with EPB scores of F or G, however, were already experiencing a dramatic monthly rise in the amounts charged to tenants for gas and electricity. Gas and electricity prices have been rising for months, but it is still obvious that having homes with an EPB score of B, for example, would allow the occupants to consume less energy and avoid unpleasant surprises at the end of the month.

The Government was aware that many Belgians could have got into financial difficulty due to indexation, so it decided to take action to limit or prohibit rent increases on the basis of a home’s EPB score.

What does this measure involve?

First of all, the rent cannot be indexed if the residential lease has not been registered and/or if an EPB certificate has not been issued to the tenants. So it makes no difference whether the property has been well insulated and recently renovated; this needs to be proven legally, by means of energy certification. If both of these tests are met, the score shown on the certificate must then be considered. The impact of this can be summarised as follows:

• Indexation is therefore prohibited throughout Belgium for EPB scores of F and G.
• Flanders also prohibits indexation for EPB certificates graded E.
• After this, it depends on the region. The best way of understanding this is to refer to the table. In Wallonia, for example, an EPB of D can only be indexed at 75%, while in Brussels it can be indexed at 100%.

What happens if the owner has not issued the tenant with an EPB certificate and/or does not have one?

It is still possible to have the property certified by an expert, even during the term of the lease. Nevertheless, the owner will not be able to benefit from indexation for preceding years.

Belgium is therefore expecting a possible backlog of future requests for EPB certification, because a very large proportion of homes have not yet been certified. As a reminder, an EPB certificate must be less than 10 years old to be valid, and normally it should be issued when signing the lease. If the certificate is issued after taking possession, the tenant must be made aware of this and must certify that this is the case. Once that has been done, indexation can take place.

Can the property be indexed if the owner carries out works in the meantime that result in an improved EPB score?

Yes, but there are different situations:

• You wish to index the property but it has an EBP score of G so indexation is prohibited. The owner decides to carry out insulation work after the anniversary of the lease (for example: November 2022). He has a new EPB certificate issued by an expert and the score becomes D in March 2023. It is then possible to index the rent retroactively for the past three months.
• The property is located in Brussels and has an EPB score of E. So you index the rent at 50% on the anniversary of the lease. The owner then decides to carry out some work and the EPB improves from E to C. In this case, you are not allowed to index the rent again (this would be a 100% indexation), simply because indexing a rent twice is prohibited.

The rent for a property can therefore be indexed after the anniversary of the lease if the EPB score improves in the meantime and indexation was previously prohibited because the EPB score was too low.

Does this measure apply to all leases?

No, it currently only applies to residential leases but it may soon be extended to commercial leases because the government has stated that there has been some discussion of this. That means that commercial leases can currently still be indexed at 100%, regardless of the EPB score.

How long will the limitation be in place?

It will last for 1 year after the measure comes into force in each region:

• In Flanders, from 1 October 2022.
• In Brussels, from 14 October 2022.
• In Wallonia, from 1 November 2022.

After this period, the indexation of rents should continue as normal, i.e. for all EPBs.

However, this measure may be extended in future, depending on the economic situation in Belgium. It is therefore clear that the EPB certificate will play an important part in property sales and lettings in future.

As the market leader in rental and property management, OP is available to provide advice as the situation evolves and provide help whenever you need it.