Inflation increase due to high energy costs

Earlier, the Brussels Government already decided to limit the indexation of rent prices of residential leases (see Real Estate Update - November 2022), depending on the energy performance level of the property.

In the Brussels Capital Region, indexation of residential rent is prohibited if the energy level of the dwelling carries an F or G-label. If the label mentions ‘E’ the indexation is limited to 50% of what is legally allowed. If the level is A, B, C or D, the indexation can be applied as foreseen by law or by contract. This regime is applicable as of 14 October 2022 and lasts for 12 months.

Commercial lease index limited for 1 year

Now, the Government also wishes to respond to the retail industry, who are suffering from the increasing costs of energy as well, leading to an increase of the consumer price index.

As from 22 December 2022, landlords of commercial property will be able to apply indexation of the rent but in only in relation to the consumer price index without the energy component as published in the Belgian Official Gazette.

To recall, the new index is the index of the month preceding the month of the anniversary of the entry-into-force of the lease agreement. This consists in a deviation of the article 1728bis of the (old) Belgian Civil Code for commercial leases, indicating that the indexed rent cannot exceed the amount following the use of the formula:

Base rent x 0,99 x (New index 0 energy / Base index)

However, if the lease agreement is concluded after July 2021, the following formula applies:

Base rent x (New index 0 energy / Base index 0 energy)

Consequently, landlords will not be able to request the full indexation of the commercial lease rent based on the costs of living. Today, that amounts to an index of 5.6 per cent, instead of the full 12.3 per cent without correction.

The measure applies for one year following the entry-into-force of the Ordonnance, i.e. until 22 December 2023.