A study carried out by rental management software company Smovin between June 2021 and June 2022 found that 20.5% of the approximately 20,000 contracts managed by the platform were fully indexed and 3.5% were partially indexed.
Landlords are able to automatically increase their rents in line with Belgium’s health index, which takes into account the price of a number of products from the consumer price index (not including socially-damaging items such as alcoholic beverages, tobacco, and motor fuels).
Using a tool published online by Statbel, Belgium’s statistics agency, landlords can see by how much they can adjust their rent each year. Against the backdrop of rapidly rising consumer inflation, this typically allows landlords to increase their prices year-on-year.
In a comment to Belgian newspaper La Libre Belgique, Smovin CEO Grégoire de Donnea said that most Belgian landlords had voluntarily made a choice not to index rents for their properties. “This is not an oversight, but a voluntary choice,” he explained.
Rental indexation is a point of contention for many in Belgium, as a large number of households are already suffering under the weight of the cost of living crisis.
Tenants feeling the pinch
Rapidly rising energy bills and the increasing cost of fuel and food reduce rental budgets. Wages have so far failed to keep up with inflation and some workers do not receive automatically-indexed salaries.
For a €1,000 rental contract signed in August last year in Brussels, 2022 rent indexation rates would mean that rent would increase by €90.66 to nearly €1,100. This would be an unpleasant surprise for renters, especially those in the capital.
In July, the Brussels government failed to pass a proposal to limit rent increases by excluding energy prices from the rent indexation calculation.
The proportion of landlords who chose to index the rental price of their properties is roughly uniform across the country. In Brussels and Flanders, around 25% of landlords index their rents. In Wallonia, just 21% choose to do so. There is also little difference in indexation between commercial and residential leases.
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Smovin believes that there is little correlation between the tendency to enact rent indexation and the rate of inflation in Belgium. The level of indexation has remained stable since the first half of 2021.
“Inflation does not seem to matter. What matters is the association between the landlord and tenant. When a contract is signed, a mode of operation is put in place. A landlord will prefer to keep the tenant whose history he knows rather than see him leave following a rent increase,” de Donnea explains.
A good relationship with tenants guarantees an uninterrupted flow of rental payments. "Knowing your tenant and maintaining a positive relationship over the long term is more valued than gains made by indexing for inflation."
