Housing rents: indexation depends on EPC certificate and region
January 2023 – Rent is a regional competence, but the three regions took the same measure to protect tenants in the context of soaring energy and heating costs: a freeze on indexation. Still, there are some differences.
Rent indexation
In principle, landlords are allowed to index the rent of their properties every year, in the month in which the contract was concluded. The index adjustment may not exceed the increase in the so-called health index. The health index is equivalent to the Belgian consumer price index, but excluding the prices of alcohol, tobacco, petrol and diesel. At the end of September 2022, that health index increased by 11.2% (year-on-year)...
Making a property energy efficient is actually a decision that lies with the landlord. But it is not affected if the heat flows out through windows and doors. That is the tenant's problem. Over the past few months, they were not only threatened with a huge increase in rent, but also with a huge rise in the cost of gas and electricity.
In response, the three regions made the same reasoning: to protect the tenant from the rise in energy costs and rent on the one hand, and to encourage the landlord to do something about the energy efficiency of rental properties on the other, the rent is frozen at last year's level.
But the modalities of that index freeze are different in the 3 regions.
In the Flemish Region
On 1 October, the Flemish Parliament approved the non-indexation of the rent for non-energy-efficient houses. Initially, the measure was to take effect on 1 November, but at the last minute, the government decided to ban the indexation of the rent of non-energy-efficient houses already from 1 October.
Landlords are generally required to communicate the energy efficiency of their rental property to potential tenants through the so-called energy performance certificate, or EPC. An EPC is awarded by recognised experts and the energy score on the certificate can range from an A+ (this is an energy-producing building) to an F (this is an energy-wasting building).
There are some exceptions to this rule: an EPC has only been mandatory since 2009. For leases older than 2009, an EPC is not required. Also, if a property is put on the rental market without publicity (e.g. the landlord knows the tenant), no certificate is required.
A new Flemish decree now stipulates that landlords may not index the rent of houses with an EPC value E or F or of a house without an EPC certificate.
Landlords of a dwelling with an EPC value of D are only allowed to pass on half of the index increase.
Rents of houses with an A+, A, B or C certificate may be indexed as normal.
The index freeze began on October 1 and lasts for 12 months.
Attention: the index freeze is not made up afterwards: as long as the energy score on the EPC certificate remains D, E or F, the index freeze is pushed through via a correction mechanism. Ordinary indexing is only possible again if a new and better certificate is issued after renovation works. The landlord can then request indexation based on the new certificate. But he can go back a maximum of 3 months in doing so.
Brussels-Capital Region
The Brussels region reached an agreement on an index freeze in early October and the ordinance implementing the freeze came into force on 14 October 2022.
As in the other regions, landlords in Brussels are obliged to communicate the energy performance of their building to potential tenants. There, energy efficiency is presented in an energy performance certificate (PEB in French, EPB in Dutch) with an energy score from A for the most energy-efficient building, up to G for an energy-inefficient building.
According to the ordinance, an index freeze based on the property's PEB/EPB value applies in the following way:
If the PEB/EPB value is A, B, C or D, the rent can be indexed as per the law or contract.
If the PEB/EPB value is F or G, the rent cannot be indexed.
If the PEB/EPB value is E, only half of the statutory indexation can be applied.
This index freeze took effect on 14 October and lasts for 12 months.
Unlike the Flemish regulation, this regulation does not provide a correction mechanism when the 12-month period is over.
If improvements are made to the building so that a better certificate is available, the landlord can apply for indexation based on the new certificate, but can go back a maximum of 3 months in time.
Walloon Region
On 19 October 2022, the Walloon Parliament approved a decree imposing a freeze on the indexation of rents from 1 November 2022 to 31 October 2023.
It sets energy efficiency in an energy performance certificate (PEB), ranging from A for the most energy-efficient building, to G for an energy-inefficient building.
In Wallonia, the index freeze happens as follows:
Prohibition of index freezing for PEB F- or G-labelled houses and for houses without a PEB certificate;
For PEB E-labels: limitation of rent indexation to a maximum of 50% of the health index;
For PEB D-labels: limitation of rent indexation to a maximum of 75% of the health index;
For PEB A, B or C labels: indexation is allowed.
The Walloon decree also stipulates that the index freeze will continue after 31 October 2023.
For rents to which the index freeze applied, the base of the rent and the base of the indexation will be determined based on the rent and indexation on the anniversary between 1 November 2022 and 31 October 2023, respectively. Consequently, the landlord cannot make up the lost rent after 31 October 2023.
And finally, if the landlord can later produce a certificate with a better score than that of 1 November 2022, he may correct the applicable indexation based on the new certificate, but he may go back in time a maximum of 3 months.
Who should do what?
The landlord must check whether or not he is allowed to index and must apply the above rules.
The tenant must check whether the landlord has made his calculation correctly. If he believes that no, or only partial, indexation is possible, he is entitled to limit the payment of rent to that part. The landlord cannot sue him for rent arrears.
Conflicts can be fought out in the justice of the peace, but it is obviously better to talk out any conflicts first and try to reach a correct solution between themselves.
