For non-residential real estate, a renovation obligation was created at the beginning of 2022 and has been extended to residential real estate since January 1, 2023. This is in line with the Flemish Energy and Climate Plan, in which the Flemish Government aims to make all buildings energy efficient. A first intermediate step in this direction is the introduction of a renovation obligation. What exactly does this mean and what do you have to take into account from now on when acquiring residential real estate?
What?
Since Jan. 1, 2023, new owners of residential real estate (houses, apartments, studios) with an EPC label E or F are required to renovate their home to a label D (or better) within five years of purchase. The label on your EPC shows you how energy efficient your home is: starting at A (energy efficient) to F (energy wasting). This renovation obligation also applies to the transfer of a vacation home or second residence.
In what cases?
The renovation obligation applies to any notarized transfer of full ownership of a house, apartment or studio that takes place from Jan. 1, 2023. For example, a sale, a gift, an exchange, a contribution to a matrimonial community ... Even if it is only part of the property.
It must be full ownership. If only bare ownership or usufruct is transferred, the obligation does not apply.
The renovation obligation also applies when establishing or transferring a building lease or ground lease (not when renewing it).
If you fall under the following exceptions, the renovation requirement does not apply:
- Divorce or termination of (legal) cohabitation: if the house is transferred to one of the partners in the context of a divorce or a termination of (legal) cohabitation and one of the partners has and maintains his main residence there, then he does not have to meet the renovation obligation.
- Stepping out of undivided property: if there is a notarized transfer of a property under a distance-sharing agreement and one of the persons has and maintains his main residence there, there is no renovation obligation.
- Inheritance: the renovation requirement does not apply to homes you receive from an inheritance.
- Merger, absorption and (partial) division of companies: even then the obligation does not apply.
Also, when selling shares of a (patrimony) company in which real estate is present, the renovation obligation does not apply.
Finally, the renovation obligation also does not apply to: homes that will be demolished within five years of purchase, temporary structures that will be used for less than two years or if they are heritage (protected monument, etc.).
Term?
The five-year period starts on the date of execution of the authentic deed. For example: if the deed is signed on March 1, 2023, the renovation obligation must be fulfilled by February 29, 2028, and the owner must be able to present an EPC with at least label D.
If the building changes hands during the term of this five-year term, whoever takes over must continue the renovation within the remaining term to achieve at least Label D.
What if I don't renovate (properly)?
If you fail to comply, the Flemish Energy and Climate Agency (VEKA) can impose an administrative fine ranging from EUR 500 to EUR 200,000 and a new deadline is set for you to achieve label D.
Furthermore, non-renovation may also have other consequences. For example, the landlord may not index the rent or only partially index the rent if he rents a property with EPC label D, E or F and this until October 2023. Read more about this here.
Financial assistance for renovation
There are many measures from the government to support you financially for such renovations. Think about My Rebuilding Loan, EPC label premium, etc. Be sure to check whether you are entitled to certain subsidies. You can also find more information on here retrieve.
As a (future) owner, you will have to consider increasingly stringent regulations.
Do you want to be prepared in advance? Then make an appointment here with our pro experts and together we'll see what your next step is.
