Good news for property investors: rent indexation can be resumed (but not entirely)

In Wallonia

In the Walloon Region, where rent indexation was limited on the basis of the PEB by a decree of 19 October 2022, rents (for primary and secondary residences, student accommodation, etc.) can be indexed again from 1 November 2023 , but with a correction factor that limits the increase.

Therefore, for homes with an EPB of D, E, F, G or without EPB, the base rent to be used will be the rent that was adjusted in the period between 1 November 2022 and 31 October 2023 (75% indexation for an EPB of D, 50% for an EPB of E, 0% for F, G or without EPB), while the base index will be the health index for the month preceding the anniversary of the entry into force of the lease between 12 November 2022 and 31 October 2023. The new rent payable will be calculated in two stages.

Example 1:

For an apartment in Namur, you signed a lease on 29 October 2021, with effect from 1 December 2021. The base rent is 700 EUR, the EPB is E and the lease has been registered. To find out the rent payable on 1 December 2023, you need to proceed in two stages:

•  Calculate the rent payable on 1 December 2022: 700 EUR x 127.44 (November 2022 index)/112.29 (September 2021 base index) = 794.44 EUR. As only 50% of this surplus of 94.44 EUR (i.e. 47.22 EUR) can be applied, the new rent for the period from 1 December 2022 to 30 November 2023 is increased to 747.22  EUR (700  EUR+ 47.22 EUR).
• The rent payable from 1 December 2023 will be this new reference rent 747.22 x 130.50 (November 2023 hypothetical index, not yet known)/125.24 (September 2022 base index), i.e.  778.60 EUR.

Example 2:

You do not have an EPB certificate (or the EPB is F or G) for this apartment, which is let under the same conditions.

• As a result, the rent could not be indexed between 1 December 2022 and 30 November 2023 and was therefore maintained at 700  EUR.
• The rent payable from 1 December 2023 will therefore be 700  EUR (base rent on 1 December 2022) X 130.50 (November 2023 hypothetical index) / 125.24 (September 2022 index), i.e. 729.40 EUR.

In Brussels

Lastly, in the Brussels Region, rents (for registered leases for which the EPC has been communicated to the tenant) can be indexed again since 14 October 2023, but with a corrective factor (leases affected by a 12-month limitation on indexation):

• If the lease came into effect before 14 October 2022
• If the home's EPC certificate is E, F or G
• If the property is rented through a CPAS, a local authority, a Social Estate Agency or the “Régie Foncière”

For homes with an EPC certificate of E:

1. If the anniversary date of the lease falls between 1 January 2023 and 13 October 2023 included, the correction factor is 50%.

For example: An apartment in Schaerbeek with a base rent (indicated in the lease contract) of EUR 1,000. Lease signed and effective : 1 February 2020. Base index (January 2020: 109,72).

- The indexed rent in 2021 was EUR 1,000 x 110.35 (January 2021)/109.72 = EUR 1,005.74.

- The indexed rent for 2022 was EUR 1,000 x 118.21 (January 2022)/109.72 = EUR 1,077.38.

- In 2023, if the authorised indexation had been 100% : 1.000 EUR x 128.00 (January 2023) /109.72 = 1,166.61 EUR.

- The anniversary date falls after 14 October 2022. Indexation in 2023 was therefore permitted, but at 50%: (1,077.38 EUR + 1,166.61EUR)/2 = 1,121.99 EUR.

- If the rent has not yet been indexed and you wish to do so, you must:

• calculate the indexed rent using the usual rules (at 100%);
• and then apply the correction factor of 0.96175 to this amount.

 In our example: 1.166.61 (100% indexation in 2023) x 0.96175 = EUR 1,121.99.

- If you have already indexed the current year, you will have to wait until the next anniversary date of the lease, in this case from 1 February 2024, and then apply the above-mentioned correction factor to the result of your usual indexation calculation.

      2. If the anniversary date of the lease falls between 14 October 2022 and 31 December 2022

For example: The lease for an apartment in Saint-Gilles signed and effective from 1 November 2020, rented at EUR 1,000, base index : 110.11 (October 2020).

• The indexed rent in 2021 was EUR 1,000 x 113.94 (October 2021)/110.11 = EUR 1,034.78
• The indexed rent in 2022 was EUR 1,000 x 127.92 (October 2022)/110.11 = EUR 1,161.75
• The anniversary date fell after 14 October 2022. Indexation was therefore authorised, but at 50%. The rent payable was then (EUR 1,034.78 + EUR 1,161.75)/2, i.e. EUR 1,098.26.
• The correction factor applied is 0.94535 : 1,161.75 x 0.94535 = EUR 1,098.26.
• The rent can be indexed again from 1 November 2023 using the same correction factor. In this case, the new rent is (1,000 x 128.30 (October 2023)) / 110.11 x correction factor = EUR 1,165.19 x correction factor = EUR 1,165.19 x 0.94535 =EUR 1,101.52.

In Flanders

In the Flemish Region, rents can be indexed again since 1 October 2023, using a correction factor in addition to the usual formula:

• For leases entered into before 14 October 2022;
• Please note that the correction factor only applies to principal residences. This measure therefore does not apply to leases of social or student accommodation.

Note: if you rent a property through an AIS, this measure also applies to the main tenancy agreement with the AIS.

• The PEB is D, E or F or there is no PEB.

The correction factor to be applied depends on the PEB and the anniversary date of the lease (see table below).

The Flemish Region provides an Excel tool that automatically performs the necessary calculations on its website: https://www.vlaanderen.be/huurprijs-en-huurwaarborg/huurprijsindexatie-sinds-1-oktober-2023-met-correctiefactoren

Conclusion

You must apply the correction factor each time the rent is indexed. So you don't just have to apply it only to the indexation in 2023, but also in subsequent years. Only if you obtain a better PEB or enter into a new rental contract do you no longer need to apply the correction factor.