Prices of private real estate have typically been less volatile in Belgium than in other countries over the past decades. They even were largely untouched by the financial and economic crisis of 2007-2008. How come?
Essentially the prices of private real estate in Belgium never rose as high as in the surrounding countries. First of all because local banks typically do not lend money if the borrower already has more than a third of his income paying other debts. Furthermore tax on purchases of real estate in Belgium is very high with a headline figure varying between 10 and 12.5%. Last but not least rent prices are not very high in Belgium because the rent market is not very large given that the typical Belgian would rather own a house than have to rent.
The stability of the private real estate market here attracts private investors . While the taxation on purchase of private real estate is high, the taxation of the income therefrom as a private investor is typically low if you let the property to a private person who uses the property for private purposes.
Before launching yourself in this market though, it is good to learn its key characteristics.
First and foremost be sure about the property you want to buy and the price you want to pay for it. Belgium does not go by the system of free offers, where you can withdraw at any time.
Here an offer is typically binding if accepted by the selling party and is the start of the formal buying process (“Compromis de vente”).
In Belgium you buy a property, save for a few exceptions, in the state it is in without recourse on the former owner. Have a real estate expert check it in detail before you sign. Refurbishing an old house or changing its purpose is regulated by stringent urbanisation rules you have to follow.
A real estate company, a real estate expert and a notary are the typical parties in any transaction. The latter is mandatory, the two former ones typical. Even if the selling party has his or her own notary, you also have the choice to have a notary of your own without extra cost to the total notary costs of the transaction. Thus, it is highly recommended to do so. It is also more than worth the money to ask a real estate expert for a valuation of the property beforehand. Those few hundred euros will save you paying too much for a property you may not know the exact state of.
Belgian banks are typically quite willing to lend money to you for a private real estate purchase in Belgium , up to about the purchase price of the property, subject to the acceptance of your credit file. If you pay income tax in Belgium there are important tax advantages for taking out a mortgage to finance the property you are going to live in, and to a lesser extent for “buy to let” property.
There are information seminars available in Belgium to help you prepare for a smooth buying process.
Dave Deruytter
Head of Expats & Non-Residents at ING Belgium
March 2016