Rental index in Belgium
The index is the mechanism for the periodic adjustment of the rental price for on-going rental agreements across the lifespan. In order to index a rental price, it is important to differentiate between a rental agreement for a primary residence and a rental agreement for goods and/or work. The pre-conditions for being able to index are different in the two cases, just like the rules for the calculation of the indexing itself.
Indexing the rental price (primary residence)
In the event of a rental agreement for a primary residence, the ability to index the rental price is provided by Article 6 of the Law of 1991 concerning the rental agreement for a primary residence.
What are the preconditions for indexing the rental price ?
In order to know whether a rental price may be indexed, we must look at the date of the conclusion of the rental agreement.
A short-term rental agreement, which was concluded before 28 February 1991, may only be indexed if this ability is included in the rental agreement in writing.
For a rental agreement that is concluded after this date, the law provides that this may always, one time per year, on the starting date of the agreement, be indexed, even if the contract contains no clause that specifically permits this. The only precondition is that it must be a written rental agreement. This rule, however, is not obligatory: both parties may, by mutual agreement, in writing, agree that they will forego the ability to index the rental price.
When may the rental price be indexed ?
The indexing does not take place automatically. Each year, on the start date of the rental agreement, either party may, in writing, request indexing of the rental price. (This is usually done by the landlord.)
The request can only be retroactive by three months, calculated from the month of the application.
How is the rental price indexed ?
When the rental price must be indexed, then the formula must be applied that is described in Article 1728bis of the Civil Code, namely:
Basic rental price x new (standard of living) index Basic (standard of living) index
The basic rental price is the price that was agreed between the two parties upon the conclusion of the rental agreement.
For the amount that will be taken into account, no consideration is made of the fees or other costs that that are incurred by the renter.
Since 1994, the indexing will always be calculation on the basis of the fluctuations in the standard of living index.
The basic index is that of the month preceding the conclusion of the rental agreement.
The new index is that of the month preceding the start date of the rental agreement.
An example: A rental agreement was signed on 4 February 2012 in order to begin on 1 March 2012. The monthly rental price that was agreed between the parties and that was reported in the rental agreement is 1000 euros. On 1 March 2013, the landlord may index of the rental price with the formula above.
1000 X 120,27 = 1017,082... 118,25
Starting on 1 March 2013, the monthly rental price thus amounts to 1017.08 euros.
How should the indexing of the rental price be reported?
It is not necessary to send the indexing of a rental price by registered mail. This request may be delivered to the other part using a regular letter. But, in order to have evidence available, it is advisable, if there is no response to the request, to send a copy of the first letter by registered mail so that it will be noticed that the indexing was not yet applied.
Indexing of the rental price (rental of goods and/or work)
The rental agreement for goods and/or work is a rental agreement that does not fall under a specific law (for example: law pertaining to rental agreements for a primary residence or a commercial rental). This agreement will be then be governed by the general provisions of Article 1713 and according to the Civil Code.
The rental agreement for goods and/or work may only be indexed if the rental agreement specifically includes this option.
The formula for this indexing is the same as that for a rental agreement for a primary residence (see above), namely the formula that is determined in Article 1728bis of the Civil Code. All other provisions with respect to the time of the indexing and the reporting thereof are also applicable.
Standard of living index
Since 1994, the standard of living index is published monthly by the Federal Public Service Economy. This index is compiled on the basis of the index of the consumer prices that reflects the fluctuations of the prices of all goods and services.
In order to determine the value of the standard of living index, some goods (alcoholic drinks, tobacco and fuel) will be omitted from the consumer price index.
There are two tables (Base 2004 and Base 2013) for the determination of the standard of living index since this has been calculated by a new formula since 11 February 2014. For a rental agreement that is concluded after this date, it is recommended to use the standard of living index Base 2013. Rental agreements from before this date must use the standard of living Base 2004.
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