Brussels-Capital Region limits the indexation of retail leases as of 22 December 2022
On 21 December 2022, an ordinance regulating the limitation of the indexation of retail leases in the Brussels-Capital Region was published in the Belgian Official Gazette.
What is the objective of the proposal?
This ordinance introduces a system to temporarily limit the indexation of retail leases in the Brussels-Capital Region in order to mitigate the impact of the extraordinary increase in inflation on retail tenants.
What is the scope of the limitation?
The system applies to all retail leases relating to property located in the Brussels-Capital Region.
How does the limitation work?
There will be a different indexation formula for one year, based on the consumer price index excluding energy components (the so-called "index-0-energy", as published by Statbel) from June 2021 - being the moment when energy prices began to rise sharply. Thus, the direct contribution of electricity and fuel price inflation to overall inflation from June 2021 will not be passed on fully to the tenant.
- Contracts in force before 1 August 2021. For leases already in force in July 2021, the indexation formula will be the following:
base rent x 0,99 x new index0energy
starting index
- Contracts in effect from 1 August 2021. For leases effective after July 2021, the indexation formula will be the following:
base rent x new index0energy
starting index0energy
Are there any exceptions to the limitation?
If, according to the lease agreement, the indexation is not based on the cost of living (kosten van het levensonderhoud/ le coût de la vie) (art. 1728bis old Civil Code), the system will not apply. If article 1728bis old Civil Code does apply but the lease agreement provides for a regime more favourable to the tenant than the above, that more favourable regime will prevail.
When will this ordinance enter into force? For how long?
This temporary system entered into force on Thursday 22 December 2022 (i.e. the day after the publication in the Belgian Official Gazette) and will remain in force for one year.
What about Flanders and Wallonia?
In Flanders and Wallonia, no legislative initiatives have yet been taken on limiting the indexation of retail leases. However, the Flemish Parliament is currently examining the possibility of linking the rent indexation for retail leases to the EPC-label, similar to the initiative taken for residential leases earlier this year.
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