The Flemish Parliament recently decided to freeze the rents of rental properties located in Flanders that are poorly insulated. Specifically, this means that the rent of an energy-wasting home may not be indexed for one year. This measure also applies to rental properties where there is no EPC yet. We provide you with answers to the most frequently asked questions.
As a landlord, may you apply rent indexation annually?
As a landlord, you may basically set the rent of your rental property Apply rent indexation annually using a calculation formula, so that the rent is adjusted to the cost of living. Therefore, the possibility of indexation does not have to be explicitly included in the lease: the rent law provides that you as a landlord can index unless it is explicitly excluded in the lease.
What is the energy performance certificate and when is it mandatory?
Since Oct. 1, 2022, whether or not indexing is allowed is temporarily linked to the energy level of your rental property, specifically the energy label found on the energy performance certificate (EPC). An EPC is a document that informs potential buyers or tenants about the energy efficiency of a building. This certificate is required to be present when selling or leasing residential (houses, apartments, studios) and small non-residential buildings (store, catering business, etc.) as well as when establishing a long lease or building lease right.
Since January 1, 2019, the EPC has been redesigned and, in addition to a core number, it also states a label, namely from A (energy efficient) to F (energy consuming). An EPC is valid for ten years. For sales, the seller must be able to present an EPC prepared under the new layout to the buyer. For rentals, an 'old' EPC may still be used.
If you have an EPC prepared under the old layout, the kWh/m² can be converted to the following label:
- Less than 0 kWh/(m² year) = label A+
- between 0 and 100 kWh/(m² year) = label A
- between 100 and 200 kWh/(m² year) = label B
- between 200 and 300 kWh/(m² year) = label C
- between 300 and 400 kWh/(m² year) = label D
- between 400 and 500 kWh/(m² year) = label E
- higher than 500 kWh/(m² year) = label F
With which EPC label may I no longer index?
|EPC label E or F||Do not index|
|EPC label D||A rent indexation is allowed, but bad for 50%|
|EPC label A, B or C||No restrictions, rent indexation allowed|
|No EPC present||Do not index|
Does this measure apply to all types of rentals?
It goes only to residences where the tenant establishes primary residence, that is, to residential leases, entered into before Oct. 1, 2022. So this does not apply, for example, to second residences or student housing. If you rent out a warehouse or a commercial establishment, for example, you may apply a rent indexation, in accordance with your rental agreement.
How long does this measure apply?
It involves a temporary freeze: this measure applies to leases entered into before Oct. 1, 2022, and applies for one year, being from October 1, 2022 to September 30, 2023. From Oct. 1, 2023, an indexation for rental housing without an EPC or with a label D, E and F is allowed again, but according to a modified formula. The indexed rent is multiplied by a correction factor, so that the rent indexation only takes into account the indexation figure of that moment, without taking into account the increased index from the period October 1, 2022 to September 30, 2023.
What if I renovate?
Renovate and improve your score to at least a label D - or - if you did not yet have an EPC for your rental property and after an EPC is drawn up it turns out that you have at least a label D, you may still Apply a rent indexation: half if it is label D and full if it is a better score.
As a landlord, you can therefore opt to make your property more energy efficient. If it is an apartment in an apartment building, where there are several co-owners, it is sometimes less obvious to reach a consensus since decisions must be taken together with the other owners (association of co-owners) and always with a certain majority, depending on the type of decision to be made.
Energy renovation, of course, means investing first. The Flemish government therefore provides a series of support measures, more info on this can be found in this item.
How will the government control?
The government will enforce these rules, but the control will have to come primarily from the tenant themselves. If the landlord improperly applies a rent indexation, a tenant is not obligated to pay it.
Questions after reading this article? Please do not hesitate to contact here one of our Titeca Pro Experts.