Boost your rental yield (at a lower cost)

Classic unfurnished rental

Here are the advantages of this classic formula, which is generally a long-term one:

• Low rental turnover: expected stability of the long-term contractual relationship with the tenant;
• You are normally entitled to index the rent on the anniversary date of the lease (in Wallonia and Brussels, this possibility depends on the PEB score of the building);
• Renting the property as it is, with no special fittings or furnishings other than amenities such as a kitchen;
• Normal wear and tear;
• Clear separation of tenant charges from landlord charges;
• The lightest taxation (indexed cadastral income increased by 40% is added to personal income tax).

To find a tenant, you can choose between (free) pages of social media such as Facebook, which are becoming increasingly popular, and paying advertisements on specialised websites such as Immoweb or Immovlan. However, the most traditional way of finding a tenant is, of course, through a letting agency (which usually charges a commission equivalent to one month's rent, excluding VAT). Our sister company, OwnerSide, specifically provides this rental service in addition to its management service.

At BuyerSide, we estimate that the gross yield deed in hand for a renovated, well-located residential property in Brussels is currently around 4.5%. This is the ratio between the sum of the rental income generated by a property over 12 months and the amount invested to acquire it (purchase price + "notary costs", around 15% of the purchase price). This benchmark refers to a standard unfurnished rental.

Medium-term furnished rental

In Belgium's major cities, and particularly in Brussels, which is home to many large corporations, lobbies, embassies and international institutions (EU, NATO, etc.), there is a particularly strong demand for medium-term rentals, ranging from a few months to a few years.

These are "relocations" (employees recruited abroad by sectors experiencing shortages, foreign executives assigned to occupy different positions within a large multinational, etc.), trainees who land a contract in one of the European institutions, doctoral students or even young professionals starting an internship in a company.

Here is the main advantage of this formula:

• Increased yield (around +15% to +40% for a 6-month contract compared with a long-term unfurnished contract, depending on supply and demand - making the "furniture" part the most profitable component of the whole investment)

In return, the landlord has to bear the following costs:

• More "turnover", with all the formalities, costs (such as the inventory of fixtures), changes in the risk profile of successive tenants and the faster wear and tear of a rented accommodation that this entails;

• Greater risk of rental vacancy between contracts.

Ideally, for 6-month contracts, you should aim to start your contract in March and September, which generally correspond to internships in international institutions. July and August, on the other hand, are more complicated because of the usual drop in demand during the summer holidays.

• Higher taxation of the furnished part: if the landlord does not specify (and in this case does not provide the tax authorities with any justification) the proportion of the "furnished" part of the total rent mentioned in the lease, the landlord will be subject to the flat-rate system (40% for the furnished part and 60% for the building part). After a flat-rate deduction of 50% to take account of expenses, the remainder is taxed at the withholding tax rate of 30%, resulting in a final tax rate of 6% (40% x 50% x 30%).

Medium-term furnished rental with outsourced services

Another interesting option is to outsource the furnished rental of your property to a property manager who has a portfolio of regular clients such as international institutions or embassies. The landlord is responsible for paying all utilities (water, electricity, internet/TV, etc.) and paying the property manager a percentage of the basic rent. In return, the landlord can expect a much higher rent than with a traditional lease. Our sister company, OwnerSide, also specialises in management and short-term rental on behalf of its customers.

 Here are the advantages of this type of contract:

• Peace of mind, as the owner delegates all rental management to the manager;

• High rents: few one-bedroom flats are available for less than €1,500 per month (i.e. almost twice as much as a standard unfurnished rental), and can amount up to €2,300 for a 40sqm one-room apartment, the price obviously depending on standing and location;

• The possibility, as this is not a standard lease, of giving 15 days' notice to terminate the lease instead of the 3 months (for the tenant) or 6 months (for the landlord) required by the Residential Tenancy Act.

Short-term rental

If you are prepared to get (much) more involved in the management of your property, with a bit of organisation and all the (many) necessary prior autorisations, short-term rentals (stays from a few days to 3 months) can give you access to huge returns that can be up to 3 or 4 times the basic rent, based on a price per night of between 70 and 120 euros and more, depending on the standard of the accommodation.

The disadvantages of this formula, which is unfortunately not entirely magical, are:

• Much heavier management 7/7-24/24;
• A specific, smooth organisation (cleaning between stays, reception and delivery of keys or a digicode, communication with residents in the event of the slightest Wi-Fi failure, etc.);

• Higher taxes (and more accounting), payment of tourist tax per night and commissions to accommodation platforms (at least 15%), which eat up a significant part of the gross income;
• Significantly greater wear and tear (sometimes with the risk of major damage);

• Heavy and numerous administrative constraints, even before the small business is up and running: it may be impossible to obtain (planning) permission from the local authorities to use the property without building additional accommodation, particularly in the Brussels region; the co-owners may need to give their consent, as they may rightly fear disturbance; a specific insurance may be required, etc.

 Booking.com, airbnb.com and tripadvisor.com are the main short-term rental platforms and are incredibly effective at finding guests from all over the world (and your own website will find it impossible to compete with these platforms). There are also more secondary sites such as appartager.com and hostelworld.com.

In the bed and breakfast segment, which involves a much greater commitment, such as preparing breakfast in a shared space in your own home, the benchmark platform in Brussels is Bed & Brussels (bnb.brussels).

Social Housing Agencies

Last but not least, there are social housing agencies which, for a limited rent (fixed scales, although 30% below the market price for a traditional tenancy), but usually on the basis of a 9-year contract, allow landlords who are not at all keen to get involved in management to sleep soundly... At least in theory, since major repairs are their responsibility anyway.

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