Rent indexation is a clause included in the rental contract that binds the tenant to the landlord. It allows the landlord to legally adjust the tenant’s rent annually.
When rent is indexed, an official index is used to calculate the new amount. The tenant must be notified and take the rent increase into account for future payments.
Important: A specific calculation method has been applied in Wallonia since November 1, 2023, and a correction factor has been applied in Flanders since October 1 for properties with energy performance ratings (PEB) D, E, F, and in Brussels since October 14, 2023, for PEB ratings E, F, and G.
When Can Rent Be Indexed?
Rent indexation occurs annually on the anniversary of the rental agreement’s start date. This date is specified in the rent indexation clause of the contract signed by both the tenant and the landlord.
It is recommended to send rent indexation notices via registered mail with acknowledgment of receipt. This ensures that the tenant receives the notice and that you have proof in case of disputes.
Since 2014, landlords have only one year from the date specified in the contract to request rent indexation.
Learn how Smovin simplifies rent indexation by automating the calculation and notification process for tenants.
Which Types of Properties Can Be Indexed?
Residential Leases
Landlords can index the rents of their rental properties annually, including both unfurnished and furnished properties.
However, new rules have been introduced regarding rent indexation based on the property’s energy performance (PEB rating). These rules vary by region and apply only to residential leases.
Common Law and Commercial Leases
Common law leases (garages, parking spaces, warehouses, offices, etc.) and commercial properties can also be indexed annually, but this option must be included in the contract.
Rent Indexation and Energy Performance (PEB)
As mentioned above, rent indexation for residential properties now depends on the region and the property’s PEB rating.
How to Calculate Rent Indexation in 2024
To calculate rent indexation, the rent excluding charges and the health index are considered.
PEB A, B, C
In Wallonia and Brussels, the initial index corresponds to the index of the month preceding the rental agreement’s signing. In Flanders, it corresponds to the month before the contract starts.
The new index corresponds to the index of the month preceding the contract’s anniversary.
The formula is:
New rent = (current rent x new index) / initial index
Example for a Lease in Wallonia
- Current rent: €500
- Lease signed: December 2021, started January 2022
- Initial index (November 2021): 115.20
- New index (December 2022): 127.89
Calculation:
(€500 x 127.89) / 115.20 = €555
The new rent charged to the tenant will be €555 per month, excluding charges.
If the base index is negative, the indexation will benefit the tenant. A clause can be included in the contract to allow only rent increases.
PEB D, E, F, G, or Unknown
If your property’s energy performance is below C or unknown, restrictions apply until October 1 in Flanders and November 1 in Wallonia. After these dates, the restrictions are lifted, but a correction factor is applied in Flanders, and the calculation method is adjusted in Wallonia and Brussels.
Explore our articles on regional rent indexation:
- Rent Indexation in Wallonia
- Rent Indexation in Brussels
- Rent Indexation in Flanders
What Is the Health Index?
The health index is an economic indicator used in Belgium for rent increases. It is also used to index salaries and social benefits.
The health index excludes certain products from the consumer price index, such as:
- Alcoholic beverages
- Tobacco
- Fuel
When rents rise due to an increase in the health index, wages must also follow, as they are tied to this index, ensuring living standards are maintained despite inflation.
How to Automate Rent Indexation for Your Tenants?
Landlords managing multiple properties may find it challenging to keep track of rent indexation. However, it is essential to stay updated and adjust rents according to the cost of living.
Rent indexation is applied annually, and a landlord with several properties can easily forget the anniversary dates of different leases.
Regular and accurate rent indexation ensures better rental property profitability.
A Digital Tool for Rent Indexation
Smovin offers a feature that automates the rent indexation process for your tenants.
The Benefits of Using Smovin:
- Rent indexation dates are met, as landlords receive notifications to remind them.
- The new rent is automatically calculated based on the reference index.
- A pre-filled notification can be sent to tenants informing them of the rent adjustment.
- The notification can be sent via email, postal mail, or registered letter.
- Landlords can fully automate this process for their entire rental portfolio as soon as an indexation is applicable.
Simplifying Property Management
Smovin is the ideal platform for landlords who want to stay on top of rent indexation. It effectively simplifies property management by automating recurring tasks.
Landlords with multiple rental properties know the importance of having the right tools to maintain rigorous management.
Automation saves time and brings undeniable financial benefits. Rents are indexed, forgetfulness is avoided, and communication with tenants is improved.
Smovin is a tool that precisely adapts to the needs of landlords with 10 to 500 rental properties, streamlining property management while allowing landlords to remain actively involved in their investments.
The platform offers numerous features to help manage rent collection, asset management, and centralizing information.
How to Notify Your Tenant About Rent Indexation?
Communication between tenant and landlord is essential for smooth interactions and maintaining a good relationship.
Keeping open communication helps prevent issues like unpaid rent or property damage.
It is important to inform your tenant of rent indexation by sending an email or, more formally, by letter or registered mail.
Without this notification, tenants are not required to spontaneously apply the indexation under residential leases.
Conversely, for common law or commercial leases, it may be specified in the contract that tenants must apply indexation independently, even if not notified by the landlord.
Find our indexation letter templates here.
Can Rent Indexation Be Retroactive?
Landlords who miss a lease anniversary date often wish to apply rent indexation retroactively. In Belgium, indexation can only be applied retroactively for up to three months.
If the landlord forgets to notify the tenant of the indexation, they can only adjust the last three rent payments.
This highlights the importance of staying on top of indexation dates and having a reliable tool to notify you in time.
The Importance of Communication
Since rent increases take effect from the landlord’s request date, it is wise to send the notification via registered mail with acknowledgment of receipt. The postmark serves as proof.
Smovin offers to automate this task and handles sending registered requests.
Can You Index the Rent for an Unregistered Lease?
In Belgium, lease registration is mandatory for tax purposes.
In Wallonia, if the lease is not registered, tenants can leave the property at any time without paying early termination fees.
Rent Indexation for Unregistered Leases
In Wallonia, and now in Brussels as well, landlords who have not registered their leases cannot index their rents.
Before this regulation, all landlords, including those without registered leases, could apply rent indexation.
The indexations carried out during this period remain valid.
Exceptions
There are two specific situations in which landlords can index rents without registering their leases:
- The lease concerns a mobile home: a caravan, mobile home, houseboat, etc.
- The indexation results in a rent decrease. The landlord can reduce the rent in this case.
Other than these exceptions, landlords must comply with their obligations to exercise their rights. Rent indexation requires lease registration.
Note: In Brussels, for properties with a PEB rating of E, our indexation tool will calculate indexation from October 14, 2023, and will not allow retroactive indexation.
