You undoubtedly know that a residential lease may be indexed every year on the anniversary of the contract using the following formula:
Base rent x new index
Base index
Specifically for Flanders, the term "Base index" means the figure of the month preceding the month the contract (or rent review) came into force.
For Brussels, this is the month preceding the month of closure.
For residential rents that relate to the tenants' main residence, emergency legislation was adopted in both Brussels and Flanders in autumn 2022. The reason for this was that tenants of poorly isolated houses would be twice the victim of high indexation and inflation and rising energy prices.
1. Which restrictions have been imposed?
For both Flanders and Brussels, houses that scored bad in terms of energy could not be fully indexed.
In Flanders, there was a limit of 50% for a D-labelled house (or flat) and no indexation as from an E-label (or when there was no EPC at all).
For Brussels, there was a limit of 50% for an E-labelled house (or flat) and no indexation for an F-label (and also when there was no EPB certificate at all). An important condition in Brussels was that, besides having an EPB certificate, the lease also had to be registered.
For more explanation on the emergency measures, please read our previous article.
2. What about a full indexation now in Brussels and/or Flanders?
2.1 Flanders
In Flanders, nothing has changed for houses that already scored well in terms of EPC (anything above D). For the "poor" scoring houses, indexation can be done again since October 1, 2023, but a correction factor has to be applied.
It is important to note that the application of this correction factor is not time-limited. As long as the contract is therefore in force (because contracts concluded after October 1, 2022 are not covered by these regulations!),the correction factor continues to apply. Thus, the only way to get rid of this limitation and be able to fully apply the indexation is to obtain a better scoring EPC.
To know which correction factor you need to take into account, a distinction must be made between contracts that expire in the period between 01/01 and 30/09 and those that expire between 1/10 and 31/12. The second distinction to be made is whether there is an EPC D label or an EPC E label (or no EPC).
Depending on the case your contract is in, the following (simplified) correction factor applies:
Anniversary between 01/01 and 30/09:
- EPC D: 50% x ((index 2022 + index 2023) / index 2023 )
- EPC from E or no EPC: Index 2022/index 2023
Anniversary between 1/10 and 31/12:
- EPC D: 50% x [ (index 2021 + index 2022) / index 2022]
- EPC from E or no EPC: Index 2022/index 2023
You must multiply this correction factor by the amount you could have obtained under normal indexation.
2.2 Brussels
In Brussels, there is currently a proposal for an ordinance (amending the Brussels Housing Code) to introduce correction factors as well. Indeed, this was not foreseen in the emergency measures. This proposal has not yet been approved at the time of writing and may possibly undergo changes.
It aims to prevent landlords from 'double' indexation. ,
It proposes that for the calculation of rent indexation, different correction factors should apply from 14 October 2023 and this for leases concluded before 14 October 2022 and having an EPB certificate E, F or G.
Also in Brussels, the anniversary of the contract will affect the correction factor. The following correction factors are included in that proposal:
Anniversary between 1/01 and 13/10:
- EPB-certificate E: 50% x ((index 2022 + index 2023) / index 2023 )
- EPB-certificate from F: Index 2022/index 2023
Anniversary between 14/10 and 31/12:
- EPB-certificate E: 50% x ((index 2021 + index 2022) / index 2022 )
- EPB-certificate from F: Index 2021/index 2022
You must then also multiply the correction factor obtained by the normal index.
Attention, in Brussels you will not be able to index if there is no EPB-certificate (and if the contract is not registered). Normally, these conditions will not be touched and therefore remain applicable.
3. Conclusion
Landlords (and property managers) are now required to make some extra calculations.
To make it a little easier, we advise you to follow the following steps:
- Calculate the normal indexation (without any limitation -> this can still be done via the rent calculator));
- Then use the table above to calculate the correction factor (or, in Flanders, use the Flemish government's tool;
- Multiply both numbers and you have the new rent amount.
Know that you can always soften the indexation, but not tighten it (see our previously published article on this topic.
Ulrike Beuselinck
