1. Issues regarding the building itself
a. Requirements under public building law regarding energy efficiency
The European Energy Performance of Buildings Directive (EPBD) 2002/91/E of 16 December 2002 has been transposed in Belgium, via 3 energy performance of buildings Acts adopted by the Flemish, Walloon and Brussels Region between 2004 and 2007.
By virtue hereof, a minimum energy performance level (“e-level”) which indicates the energy efficiency of a building is imposed. This e-level depends on the type of the building and the underlying transaction. Such e-level is determined by a recognized organism, which must issue an energy performance certificate.
In general, a distinction is made between:
- Construction of new buildings;
- Large renovations of existing buildings;
- Public buildings; and
- Sale or lease of buildings (with a sub distinction between residential and other buildings).
The implementation of the concerned Acts in the 3 regions takes place gradually. Consequently, the status of such implementation is not the same in the three Regions.
b. Do the regulations applicable under a) only affect new buildings or must all buildings be provided with energy efficiency facilities?
See a) above – the regulations concern both the construction of new buildings and the renovation of large existing buildings.
c. Does the market pay any attention to energy certificates?
Pecuniary and even criminal sanctions can be imposed in the event of non compliance with the applicable EPBD regulations.
Market players are becoming more and more aware the energy performance of buildings and the imposed certification. The regulations set out under 1a) provide for a phased implementation in the various Regions.
The e-level certificate, which is already imposed for the lease and sale of residential buildings, will also become obligatory for non residential buildings (such as office buildings), and this implies that a considerable number of old and existing buildings will require considerable renovations and investments to meet the imposed e-level. This will most likely influence the market of real estate transactions and create a specific level of competition.
d. How popular is the certification of buildings (LEED, BREEAM, DGNB)?
In recent years it seems that buildings certification has gained popularity, due to inter alia, to rising demand on the market for “green” buildings, and increased awareness and “corporate responsibility” on the level of the investors.
Today, we see that nearly all important real estate projects market their project with green certification. BREEAM certification is mostly applied.
2. Issues regarding the use of the building
a. Can the landlord push on the operating costs (mainly for electricity, water, heating) to the tenant following consumption or does that need to be established by the lease? Is there a distinction drawn between different types of buildings (e.g. residential, office, commercial, etc.)?
No legal obligations exist in this respect and parties to a lease contract have the contractual freedom to determine which party bears which cost and how the invoicing/payment thereof is done.
In practice however, costs for water, electricity and heating will usually be borne as follows:
- if separate consumption meters are available for the let premises, the subscription to these meters is made by the tenant, who pays the costs directly to the various suppliers; and
- if separate meters are not available, a fixed amount is determined as provision for these charges, which is then paid by the tenant to the landlord on a monthly or quarterly basis. At the end of each year, a balance is made between the total costs effectively incurred and the provisions paid. Based on this balance, the provisions may then be adjusted downwards or upwards. In the event of multiple tenants, the participation by the tenant in these costs is determined pro rata the surface let by the tenant in the total building or building site.
For residential leases, the law provides that either party may at any time (independent of what is provided in the lease contract) request before the Justice of the Peace the adjustment of the applied provision for the rental charges or the conversion into the effectively borne costs and charges.
According to Article 1724 Belgian Civil Code the tenant must consent to the landlord carrying out urgent repair works when this cannot be delayed until the expiry of the lease contract. This applies even if part of the premises cannot be used by the tenant due to these works. If however the execution of these repair works exceeds 40 days, the lease price is reduced pro rata the duration of these works and the part of the let premises cannot be used by the tenant as a consequence thereof.
In the case of residential leases, Article 1724 provides that, if the execution of such urgent repair works causes the residential building to become inhabitable, the tenant may request the dissolution of the residential lease contract.
Parties are however free to exclude or limit the application of this provision in their lease contract.
For the execution of works which have the intention to increase the energy efficiency of the building, Article 1724 will not apply as in most cases such works will not be considered as “urgent repairs which cannot be delayed until the expiry of the lease”. Consequently, the landlord does not have the right to carry out such works unless this is explicitly provided for in the lease contract.
c. Does the landlord have a right to receive reimbursement of the costs made for the measures under lit. b)? Is there a distinction between different types of buildings (e.g. residential, office, commercial, etc.)?
No, unless specifically provided in the lease contract.
d. If the respective rights mentioned in b) and c) are not provided by statute, but need to be provided in lease contract: does a standard content exist (and what is its content)? Please give examples of typical regulations.
No standard clauses exist, parties have complete contractual freedom.
e. Which other obligations regarding sustainability (building materials, energy efficiency, waste management etc.) exist? If they need to be imposed by the lease agreement: does a standard for such obligations exist (and what is its content)?
Please give examples of typical regulations.
No legal application. Parties have contractual freedom to provide specific obligations in their lease contract.
3. Allocation of costs; incentives to improve sustainability of buildings or its use
- Reduction of the energy costs for the parties with a possible reduction of the rent for the tenant
- Building in a better general state (higher value on the market)
- Compliance with legal requirements
By virtue of Article 145.24 of the Belgian Income Tax Code, a tax reduction is granted to the owner, tenant, usufruct holder or emphyteotic lease holder of a residential building, who makes investments for a better rational use of energy:
15% tax reduction
- replacement of boiler
- replacement of water and heating system through solar energy
- installation of photovoltaic panels to transform solar energy in electricity
40% tax reduction
- isolation of the roof
- installation of a double glazing energy audit