The pre-emptive right of Brussels housing tenants and the various forms of housing tenancy in the Brussels Region.

By way of introduction: the new pre-emption right of the Brussels residential tenant

It has been widely reported in the press: from 1 January 2024 in many cases a preferential right (actually a pre-emptive right) will apply in the Brussels-Capital Region, to the benefit of a tenant of a property when that property is put up for sale to third parties (Insertion of a new « Section 4bis – Preferential right of the tenant when the leased property is sold » in Title XI, Chapter III of the Brussels Housing Code of 17 July 2003).

The landlord who wishes to sell the (full) ownership of a (residential) building must notify the tenant by registered letter with acknowledgement of receipt, stating, among other things, the location and cadastral references, the sales price (or the starting price in case of public auction), the conditions of the sale and any rights in rem over the property.

During a 30 days period, the tenant can give notice whether he[1] wishes to buy the property on those terms. This right also applies to certain persons living with the tenant.

The tenant’s acceptance counts as a sale. However, the transfer of ownership of the property and payment of the price do not happen until the execution of the authentic sales deed (except for any advance payment).

Only if the tenant refuses or does not respond within the 30-day period, the owner can effectively sell the property to a third party at the price and conditions as communicated.

A sale in breach of the right of first refusal entitles the tenant, during a period of one year, to bring an action for substitution against the buyer, i.e., the right to have the sale cancelled and buy the property himself.

However, this new rule does not apply to all leases. It only concerns long(er)-term leases for a building used by the tenant as his main residence, and provided the tenant has his domicile in the property. Short-term leases (three years or less – Article 238 of the Brussels Housing Code) are in principle not covered, although certain student leases and co-tenancy agreements may give rise to the application of the pre-emption right, provided the tenant is domiciled in the building concerned and he uses the leased property as his main residence.

Given the above, it may be useful to give an overview of the several types of leases that exist for housing (in the broad sense) in the Brussels Region. In what follows, we will discuss these types in more detail. The minimum (housing) quality requirements applicable in each case are, however, not part of the scope of this text.

Types of leases for housing in the Brussels Region: common provisions

The Brussels Housing Code regulates housing tenancy (baux d’habitation / woninghuur) in the Brussels Capital Region and provides general, mandatory provisions applicable to all housing tenancy agreements in the broad sense (Article 215 – 233duodecies of the Brussels Housing Code), such as:

The landlord’s pre-contractual duty of information: description of the property, rent, presence of meters for utilities, charges and expenses, the EPC and management of the property of which the rental property is a part.

The mandatory written form of the lease.

The requirement of the good condition of the leased property.

The mandatory inventory of fixtures (on entry and on exit).

The tenant’s obligation to take care of rental repairs and minor maintenance and the landlord’s obligation to all other repairs. The Brussels legislator has drawn up a list of the respective repair and maintenance obligations. The list is non-exhaustive but mandatory; parties may not deviate from it.

An indicative reference rent. In order to provide an objective view of private market rents, the Brussels legislator created an indicative grid of reference rents. This grid of reference rents is prepared by the regional public agency Bruxelles Logement / Brussel Huisvesting based on internal and external housing criteria, such as the location and condition of the property, the habitable surface, and the number of rooms. They are revised annually and can be consulted online. The reference prices are not binding on the private rental market but are required to be included in the lease. However, the Brussels legislator has already left the possibility for the Brussels government to curb excessive rents (20% higher than the reference or even less in case of defective properties). However, the date of entry into force of this possibility has not yet been determined.

Rent indexation: an annual adjustment of the base rent based on the health index is allowed in principle (subject to several conditions).

Real estate withholding tax (property tax) cannot be charged to the tenant in the case of a residential lease in the strict sense, a student housing lease, or a sliding lease (see below).

The registration of the lease is mandatory.

The substitution of the new owner in case of transfer of the leased property.

Prohibition of lease assignment except with the landlord’s prior written consent.

Subletting of the leased property is allowed subject to the express or tacit consent of the landlord.

The notice period of termination always starts the first day of the month following the month in which the notice is given.

In the event of the tenant’s death, the landlord can terminate the lease agreement if the property is no longer occupied by his family members and the rent or charges remained unpaid for a period of two months.

The landlord has the right to carry out energy improvement works on the leased property once every three-year rental period.

On top of that, specific rules apply to each type of residential rental.

Lease agreement main residence in the strict sense

The residential lease under which the tenant makes the leased property his main residence at the outset (bail relatif à la résidence principale du preneur / Huurovereenkomst hoofdverblijfplaats), with the express or tacit consent of the landlord, also falls under the specific rules applicable to residential leases for main residence in the strict sense (articles 217 – 252 of the Brussels Housing Code).

For a residential lease to be considered as a residential lease for main residence during its term, the written consent of the landlord is required. The date of that consent will count as the commencement date of the residential leases for main residence in the strict sense.

The special protection for residential tenancies regarding the tenant’s main residence is mandatory and includes the following principles:

Any clause that disregards the purpose of the leased property as main residence which cannot be substantiated, will be disregarded.

Tenant protection on notices and minimum duration of lease.

The conditions for a review of the rent at the expiry of each three-year period if (i) the normal (market) rental value has become 20 % higher or lower than the contractual rent or (ii) the normal (market) rental value has increased at least 10% over the contractual rent due to works carried out by the landlord.

Prior to the sale of the leased property, the landlord must notify the tenant of the intended sale (and from 1 January 2024, the right of first refusal also applies, as mentioned above).

The tenant has to provide (a) a deposit / guaranty of up to two months’ rent through an individualised account in the tenant’s name with a financial institution or (b) a deposit / guaranty of up to three months’ rent through (i) a bank guarantee that allows the tenant to constitute the deposit progressively or (ii) a bank guarantee through a standard contract between a CPAS / OCMW and a financial institution.

When the tenancy ends (by expiry or after notice), the tenant has a one-time right to request an extension of the tenancy in case of extraordinary circumstances. The tenant bears the burden of proof of these circumstances.

A special arrangement for legal proceedings and eviction of the tenant, which in any case always require prior notice of default by the landlord.

In the case of other types of residential leases in the broad sense, whenever parties opt to establish the tenant’s main residence in the leased property, these protection rules will become mandatory as well. As a result, the rental regimes of co-leases, student housing leases, sliding leases, solidarity leases or intergenerational leases may also be covered.

In principle, a residential lease for main residence in the strict sense is considered to be for a term of nine years but can also have a longer duration.

The lease does not end automatically: either party must give notice at least six months before the expiry date. If no timely notice is given, the lease will be automatically renewed for a term of three years, at the same conditions.

A residential lease for main residence in the strict sense may also be concluded for a duration of less than or equal to three years. The tenancy may be renewed one or more times under the same conditions without the total duration of the tenancy exceeding three years.

However, a short lease of less than six months ends automatically at the expiry of the agreed term. A short tenancy of more than six months does not end automatically: either party must give notice at least three months before the expiry date.

Other (early) termination options are limited, depend on the duration of the lease and may in certain cases require the payment of a termination fee (either by the tenant or the landlord).

Student housing lease

A student housing lease (bail de logement étudiant / studentenwoninghuurovereenkomst) is a lease concluded by or for a student in the context of completing his studies at an accredited educational institution (articles 253 – 256/1 of the Brussels Housing Code).

Student housing leases require proof of the student’s status for the duration of the agreement, through a certificate of regular enrolment at an accredited educational institution (secondary education institution, institution organising higher education or central examination board).

Student housing tenancy is (in principle) an optional regime: the rules only apply if the parties agree. Consequently, the possibility exists to opt for a different type of residential lease in the broad sense.

In case the student also uses the property as main residence, subject to the explicit or tacit consent of the landlord (and the property qualifies as such), the special rules for residential leases for main residence in the strict sense (insofar as compatible with the specific rules for student housing leases) will apply.

The student housing lease shall be considered to have a duration of 12 months. However, a shorter duration is also possible. Lease agreements longer than 12 months, in turn, cannot fall under the scope of the rules on student housing leases.

If the tenant continues to occupy the leased property after the end date without opposition from the landlord, the student lease will be extended for a period of one year, on the same terms or will be considered to have been initially entered into for one year in the case of a lease of less than 12 months.

The tenant may terminate the lease at any time subject to two months’ notice. The landlord may only terminate the student housing lease on the anticipated end date, subject to notice of termination of at least three months. A student housing lease with a duration of three (3) months or less cannot be early terminated.

The tenant may terminate the student housing lease up to one month before the start of the lease, provided there are valid reasons to do so and subject to payment of one month’s rent.

Co-lease

Co-leases (colocation / medehuur) refer to the renting of the same accommodation by several tenants who, with the explicit or tacit consent of the landlord, opt for the application of the co-leasing scheme (articles 257 – 261 of the Brussels Housing Code). They then conclude a single rental contract, the so-called co-leasing pact.

The co-leasing pact contains at least the following information: the split of the rent, the settlement of dilapidations, maintenance and repairs, rental charges, an inventory of the furniture present and its origin, the rental deposit, payment of (fire) insurance, and the arrival, departure, and replacement conditions of a co-tenant. The pact also regulates the practical aspects of community living.

The co-tenants are jointly and severally liable towards the landlord.

The co-leasing system is an optional system. Co-tenants can also opt for another type of residential lease in the broad sense, provided the relevant conditions are met.

In case one or more co-tenants also use the property as their main residence, subject to the explicit or tacit consent of the landlord, the special rules for residential leases for main residence in the strict sense will apply (as far as compatible with the specific rules for co-leasing).

No specific deviating rules apply to the duration of co-leases.

The termination options for co-tenancy depend on the number of co-tenants giving notice:

One of the co-tenants or a part of the co-tenants may exit the lease at any time with two months’ notice.

If half of the co-tenants give notice, the landlord can terminate the lease after giving six months’ notice.

When the co-tenants simultaneously terminate the co-leasing pact (in accordance with the rules of the applicable residential tenancy regime), the termination must be signed by each of them.

A co-tenant who terminates the lease must find a substitute co-tenant to join the co-leasing before the expiry of his notice period. If he does not manage to find a replacer, the exiting co-tenant (only) must prove that he has undertaken an « active and sufficient » search.

The landlord and the non-exiting co-tenants may refuse the newly proposed (prospective) co-tenant for valid and reasonable reasons.

Intergenerational housing lease

An intergenerational dwelling (habitat intergénérationnel / intergenerationele woning) is a building with at least two dwellings, of which (at least) one is occupied by a person over 65 years of age and in which the cohabitants provide reciprocal services, as set out in a written agreement, house rules or similar instrument (articles 2, 26° and 262 of the Brussels Housing Code).

Intergenerational residential leases always are residential leases for main residence in the strict sense.

It was intended that properties earmarked for letting of this type could be given a specific label on the basis of which derogations to the rules for residential leases for main residence in the strict sense could be determined, i.e., regarding duration, notice and conditions of occupancy. However, the label has not been introduced to date.

Intergenerational dwellings can be managed and rented out by social letting agencies.

Solidarity housing lease (solidarity life project)

A solidarity house (habitat solidaire / solidaire woning) is a dwelling in which several families reside, at least one of which is eligible for social housing, based on a solidarity living project (articles 2, 25° and 262 of the Brussels Housing Code). Each family has one or more private space(s) exclusively used by that family and there is at least one shared living space. The mutual relationship of the residents is set out in a written agreement, house rules or similar instrument.

Solidary housing leases always are residential leases for main residence in the strict sense.

Solidarity houses, like intergenerational dwellings, can be managed and rented out by social letting agencies.

Again, it was proposed that the buildings earmarked for solidarity housing leases could be given a specific label on the basis of which derogations to certain rules for residential leases for main residence in the strict sense could be determined. Such label has not been introduced to date either.

Sliding lease

A sliding lease (bail glissant / glijdende huur) is a residential lease for main residence, with the express or tacit agreement of the principal landlord, signed with one of the legal entities authorised by the Brussels Government, in order for the lease property to be simultaneously sublet to a person to whom, after the expiry of a social counselling project and insofar as the objectives of the project have been achieved, the main lease will be automatically assigned (Articles 263 – 266 of the Brussels Housing Code). Such person will subsequently become the direct tenant of the principal landlord.

A sliding lease agreement targets vulnerable or disadvantaged persons who receive social support. The objectives to be achieved are set between the counselling organisation and the person receiving assistance (cf. budget management, social integration, health, etc.).

The counselling organisations referred to, with whom the landlord can enter into a sliding lease agreement, are social letting agencies, CPAS / OCMW, accredited non-profit social housing associations, public centres, and housing services, etc.

Under a sliding lease regime, a dual contractual relationship exists:

a residential lease for main residence between the landlord and the counselling organisation (main tenant); and

a sublease between the counselling organisation (main tenant) and the person receiving social counselling (subtenant).

The counselling organisation has an explicit contractual right to assign the (main) lease to the person receiving counselling (subtenant) at the end of the first, second or third tenancy year, when the counselling organisation considers that the objectives pursued have been achieved. The (main) landlord cannot oppose this lease assignment.

The assignment terminates the sliding lease. From then on, the rules on residential leases for main residence in the strict sense apply. However, the rent and rental conditions remain unchanged from what was agreed in the initial (sliding) lease, subject to indexation. The term is automatically extended to a period of nine (9) years as from the initial commencement date.

The sliding lease on its turn has a duration of up to three years. If no assignment of the sliding lease takes place, the sliding lease agreement ends at the expiry of that term. However, the (main) landlord may expressly authorise the counselling organisation to extend the original sliding lease at the same conditions.

Prior to the lease assignment, the sliding lease can only be terminated under the rules applicable to short-term residential leases.

Co-living

Co-living (not to be confused with co-leasing) is a collective form of housing where residential buildings are divided into private rooms (the individual housing units) and common (living) areas, offered to tenants together with certain services such as cleaning, maintenance, repairs, digital services, etc.

No specific legal framework for this form of cohabitation has yet been developed in the Brussels Region.

As a result, co-living can fall under the regulations of one of the separate rental regimes, depending on the specific characteristics.

Several Brussels municipalities impose special taxes when renting out a property as co-living, which, however, does not apply if the co-living is structured in the form of co-leasing and/or intergenerational, solidarity and social leasing, depending on the municipality at stake. At some instances, however, some of these taxes also seem to target the latter forms of leasing, even if no co-living is intended.

Renovation lease

The Brussels legislator allows the possibility of a tenant and a landlord signing a renovation contract in which the tenant undertakes to carry out – at its own expense – certain works that should normally be carried out by the landlord, in exchange for a reduction or suspension of the rent (Article 222 of the Brussels Housing Code).

Minimum duration of the lease is three years. The parties are also required to prepare a detailed list of the works, including timing of execution. The period of the works must be reasonable and cannot exceed 12 months.

The Regional Housing Inspection Directorate (Direction de l’Inspection Régionale du Logement / Directie Gewestelijke Huisvestingsinspectie) must be notified of the renovation lease contract and will verify compliance with health, safety, and other requirements.

Letting through social letting agencies

Landlords can rent out a property (at a rent lower than the market rent) to persons of modest income through (actually to) social letting agencies (Article 120 – 128bis of the Brussels Housing Code).

The social letting agency (agence immobilière sociale / social verhuurkantoor) thereby ensures a risk-free and problem-free rental. The property must meet minimum standards of habitability (or provide for the necessary works to this end) and have basic functional equipment.

In exchange for a below-market rent, the owner/landlord benefits from several services and guarantees by the social letting agency:

Rental property management (tenant selection and follow-up, execution and registration of leases, inventories of fixtures, rent collection, annual settlement of expenses, fire insurance, supervision of minor repair and maintenance works).

A monthly guaranteed rent and rental charges, even in case of non-payment by tenant or vacancy.

Maintenance of the property.

A guaranteed hand-over of the property in good condition at the end of the lease (covering rental damage, except normal wear and tear).

In the event of extensive (renovation) works, owners can receive guidance from the social letting agency and can also qualify for renovation grants.

Exemption of real estate withholding tax and in certain cases a reduced VAT rate of 12% may apply.

Letting through social letting agencies should be distinguished from the letting of social housing, which can only occur by the Public Real Estate Agencies (Sociétés Immobilières de Service Public / Openbare Vastgoedmaatschappijen) and the Brussels Regional Housing Agency (Société du Logement de la Région de Bruxelles-Capitale – SLRB / Brusselse Gewestelijke Huisvestingsmaatschappij – BGHM) (not the subject of this note). Letting out by social letting agency is also not elaborated further in this memo.

Some Brussels municipalities grant premiums, under certain conditions, to owners who make properties available for renting through social letting agencies.

The lease contract with the social letting agency has a duration of at least three years, and nine years in case of major renovation works.

There are no other specific rules regarding the duration of renting through social letting agencies, implying that the regime of residential leases for main residence in the strict sense applies.

Conventionalised housing

Although not exclusively related to the (private) rental of dwellings, we could also very briefly refer to the concept of so-called conventionalised dwellings (logement conventionné / geconventioneerd wonen).

In creating such concept, the Brussels legislator has provided a framework for multifunctional, sustainable housing projects through public-private partnerships, aiming at urban revitalisation. The legislator wishes to offer comfortable housing at competitive prices to residents of the Brussels Region through subsidies while investing in quality public spaces and facilities.

Conventionalised dwellings are social housing units intended to be transferred or rented to families with modest incomes, as defined in the Ordinance of 6 October 2016.

The concept provides for subsidies to be granted to municipalities as direct beneficiaries, which may, however, enter into partnerships with private players.

Following types of property operations are being envisaged:

Sustainable neighbourhood contracts

These are local-scale projects rolled out on all or part of the territory of one municipality, regulated by the Brussels Capital Government Decree of 24 November 2016.

According to that Decree, the rental of conventionalised housing within such contracts can only occur to the benefit of persons with modest incomes, with an annual base rent not exceeding 6.50% of the cost of the conventionalised housing (including acquisition costs).

The sale of convention properties is allowed within a certain period and only to specific individuals (with modest incomes).

Urban renewal contracts

These are projects on a regional scale that can extend over all or part of the territories of several municipalities, elaborated by a Decree of the Brussels Capital Government of 23 March 2017, which provides for the possibility of subsidising construction projects involving conventionalised housing and letting of such housing.

The following rental conditions apply:

the rental property may only be allocated to families with a modest income as determined by the Decree.

renovated or reconstructed dwellings are awarded preferably to the persons that were already living there before the works were carried out.

the annual base rent may not exceed 6.50% of the cost of the conventionalised property (including acquisition costs).

the lease has a term of nine years.

the lease can be early terminated by the supervisory authority after the third or sixth year if the tenant no longer meets the income requirements.

the lease is automatically renewed for three (3) years after the expiry of the term if the tenant still fulfils all conditions.

Urban Policy

Finally, these operations encompass projects on a local scale which try to fight feelings of insecurity through land-use planning or neighbourhood development. In this context also, a Brussels-Capital Government Decree of 19 January 2017 provides for the possibility of subsidising construction projects involving conventionalised housing and letting of such housing.

The rental conditions are identical to those that apply to urban renewal contracts.

Michael Bollen, senior partner

With special thanks to Gertjan Van Hoeyweghen, associate, for his research

Real Estate team

Laurius

17 October 2023

[1] In this note the masculine is used for brevity purposes only, without any intention to limit any reference to the masculine sex/gender.