The Flemish Government has recently amended the Energy Decree. Because of one of these amendments, from now on an energy performance certificate (EPC) will also have to be present when leases are concluded between related companies and persons. There is also a change in the case of mergers and demergers*.
Also EPC when renting without publicity
Until before this change, real estate leases did not require an EPC if there was no publicity. For leases entered into from October 1, 2023 an EPC will be required, even if it has not been disclosed to the public. The impact in practice should not be underestimated, as all rental agreements concluded between related persons and companies will now also fall under the EPC obligation: even if you, as an entrepreneur, decide to rent out a property to your own company, without publicity through, for example, an estate agent, an EPC will still need to be available.
This new requirement applies to leases of both residential and nonresidential buildings or building units, and to both oral and written leases.
When should the EPC be available?
You must be in possession of a valid EPC no later than the conclusion of the lease. If it is a rental with publicity, the EPC must already be available when that publicity is first announced.
For the occasion, we reiterate below some important rules regarding the EPC:
- An EPC is required per housing unit: so per house, apartment, studio, etc. For labels D, E or F or the absence of an EPC label, the EPC label of a dwelling let as a principal residence in Flanders has an impact on the indexation of the rent.
- In all forms of notarized transfer in full ownership, there should be an EPC (sale, gift, contribution to partnership, contribution to matrimonial property, etc.), as well as when establishing a right of superficies or long leases.
How long does the EPC remain valid?
The EPC for residential buildings, for small non-residential buildings and for common parts is valid for 10 years. For ordinary non-residential buildings, the EPC is valid for 5 years.
Samples
Compliance with this additional EPC obligation will be monitored by the Flemish Energy and Climate Agency (VEKA), which will check by means of spot checks whether a valid EPC is present. If it appears that there is no EPC available, then as an owner you will receive a letter inviting you to provide written arguments regarding absence to the VEKA. If the VEKA is not convinced by the arguments, you risk a fine between 500 and 5,000 EUR. Even if this fine was paid, an EPC will still have to be drawn up in this case as well.
Update 06/10/2023: Mergers and demergers
However, another important change was made to the Energy Decree. Namely, an EPC is no longer required for buildings in case of restructuring of legal entities through merger or demerger[1]. These are both residential and non-residential building units.
An EPC label will reveal, among other things, whether or not renovation is required within the five years following acquisition of property. Indeed, given that mergers and demergers fall outside the scope of the renovation requirement, it makes more sense that an EPC should not be present in these types of transactions.
Mergers and demergers may no longer require an EPC, but that doesn't take away from the need to have other certificates available. If you want to be well informed at every step you take, don't hesitate to contact your client manager or one of our pro experts.
[1] Articles 9.2.5/0 and 9.2.10/0 of the Energy Decree
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