Real Estate Law in Belgium

The main provisions that govern the acquisition of assets in Belgium can be found in the Belgian Civil Code (more in particular in Book 3 entitled “Assets,” that entered into force on 1 September 2021), which contains provisions regarding property ownership and other rights in rem, including usufruct (usufruit/vruchtgebruik), long leases (emphythéose/erfpacht), and building rights (superficie/opstalrecht), which are often seen as alternatives for property ownership or classic leases.

As for leases in Belgium, the applicable legislation is laid down in the (old) Belgian Civil Code as well as in separate laws, as adopted by the federal and/or competent regional legislators, regulating one or more specific types of leases.

For instance, retail leases are governed by (i) common law principles laid down in the (old) Belgian Civil Code, which apply to all types of leases to the extent specific laws do not provide for deviating provisions and (ii) by the (Federal) Retail Lease Act dated 30 April 1951, which is incorporated into the (old) Belgian Civil Code, as the case may be amended by regional legislation on retail leases. For more information on leases in Belgium, please see "Lease of assets and lease of business" section.

Lastly, the acquisition of an asset in Belgium cannot be done without respecting the general rules of contract law, which are incorporated in the new Book 5, entitled “Obligations” of the Belgian Civil Code (entered into force on 1 January 2023). In addition, separate laws on various subject matters (e.g., asbestos, soil, town-planning, etc.) may provide for specific rules to be respected in the case of transfer of assets and/or when establishing rights in rem thereon.

There are generally no restrictions on ownership or occupation by foreign entities, from a civil law perspective.

One restriction applies to both foreigners and nationals. Some areas of the country in Flanders, Wallonia, and in Brussels are subject to regulatory pre-emption rights in favor of public entities, entitling its beneficiary/beneficiaries to match the terms offered by a candidate buyer and to pre-empt the property or right in rem put for sale.

Belgian Property Law experienced a thorough reform with Book 3 “Assets” of the Belgian Civil Code that came into force on 1 September 2021. The most commonly used real property rights in the framework of real estate development and/or investment, besides the full ownership of a property, are the rights in rem. In addition to ownership, Belgian law distinguishes between what are called rights in rem (droits réels/zakelijke rechten) which are attached to the land, transferred with it and enforceable against everyone, as opposed to personal rights (droits personnels/persoonlijke rechten) which are attached to a legal person. In respect of rights in rem it is not possible to create more rights than those provided by the law. The “numerus clausus” principle was reaffirmed in Book 3 of the Belgian Civil Code. In addition, for the first time, a clear enumeration of rights in rem was provided. Following Book 3 of the Belgian Civil Code, rights in rem can be divided into four categories: ownership, co-ownership, in rem rights of use (droits réels d’usage/zakelijke gebruiksrechten) and security rights. The rights in rem recognized by Book 3 of the Belgian Civil Code are the easements (servitudes/erfdienstbaarheden), the usufruct, (usufruit/vruchtgebruik), long leases, and building rights (superficie/opstalrecht).

Despite the closed system of Belgian Property Law, in principle, all provisions of “Book 3” of the Belgian Civil Code are suppletive. There are two exceptions to this autonomy of will, namely (i) the definitions and (ii) where the law provides otherwise.

Usufruct (usufruit/vruchtgebruik)
The right of usufruct is the right to have use and enjoyment of property which belongs to someone else. A right of usufruct is a temporary right granted for a limited period of time to a beneficiary (being either a legal or a natural person – for legal persons, for a period up to 99 years) who benefits from the right to use the property and obtain income from the property, such as, for example, rents resulting from a lease agreement. However, with the obligation to maintain the property in a good state of repairs (other than structural repairs which typically remain a responsibility of the bare owner). Under Book 3 of the Belgian Civil Code, the bare owner has been granted the right to claim from the usufructuary a proportional contribution to its costs regarding the execution of the major works, proportionately with the remaining value of the usufruct.

Building right or right to build (superficie/opstalrecht)

There is a presumption that any construction or object rooted in the ground belongs to the owner of the land. The building right derogates from this presumption. A right to build is an exception to the right of accession. A right to build involves a, in principle temporary, division of the right of ownership to immovable property and a building right grants a right of ownership to a volume within which the building right holder may acquire or install buildings or plants. Under Book 3 of the Belgian Civil Code, a building right can have a term of 99 years (instead of a maximum of 50 years), there is no minimum duration. In some exceptional cases a building right can be “eternal”. A building right can be eternal (i) for the purposes of public domain, or (ii) the creation of different volumes that each have a different destination and independent use and do not share any common parts. Building rights are often used by developers, as they enable to construct buildings on land owned by a third party without the need to purchase the land on beforehand, it being further noted that a building right can be granted for free. The buyer of a part of a development will typically purchase the constructions from the developer and the shares in the land attached to the constructions (as described in the base deed) from the owner of the land.

Long lease right (emphytéose/erfpacht)

This is a form of long lease which confers, for a maximum period of 99 years and with a minimum of 15 years (instead of a minimum of 27 years – Book 3 of the Belgian Civil Code reduced the minimum term to 15 years), the use of a building/land belonging to another. The condition that an annual payment called the canon had to be paid to the landowner no longer applies. This also puts an end to the symbolic euro that was used as an alternative to the canon. The beneficiary of a long lease right (i.e., the long leaseholder) has the same rights and privileges as the landowner, which is the object of its right, unless the destination of the property is contractually restricted. Furthermore, the long leaseholder may not reduce the value of the object of its right. They are consequently obliged to pay all charges and taxes related to the use of the building/the land for the duration of the right, but benefit from the income from the property, such as, for example, rents resulting from a lease agreement. Finally, Book 3 of the Belgian Civil Code provides for an obligation of the landowner to compensate the long leaseholder for the buildings/plantings made by the latter at the end of the long lease.

The holders of rights in rem of usufruct, building right and long lease are the full owners of the constructions they erect during the term of the right, it being noted that the bare owner of the property encumbered with the aforementioned rights in rem will recover the full ownership of the underlying property upon expiry of the relevant right in rem. This “accessory” building right is enshrined in Book 3 of the Belgian Civil Code to increase legal certainty. Depending on the contractual arrangements and the nature of the right in rem a compensation for the (residual) value of the constructions might be due to the holder of the right in rem upon expiry of its right.

Structure of the property registries

Belgian law provides for a system of title recording.

Within four months from the date of signing the private sales contract, or of it becoming unconditional, or any shorter period which is agreed between the parties, the sale must be completed by signing the authentic deed in a register held with the mortgage register to show ownership of real estate property. In the case of a transfer of real estate property, the mortgage register will in principle only accept authentic deeds drawn up by Belgian civil law notaries for transcription. Other types of documents which are accepted for transcription into the mortgage register are court judgements of equivalent status and private deeds recognized in court or by a Belgian civil law notary. It is only following transcription in the mortgage register that the transfer will be effective against third parties acting in good faith. The mortgage register is open to the public and is a mean of checking the entitlement by a particular entity (either an individual or a company) with respect to all immovable properties located in the mortgage register’s jurisdiction.

The responsible authorities

The mortgage office (Bureau Sécurité Juridique/Kantoor Rechtszekerheid), which is part of the General Administration of Patrimonial Documentation (Administration générale de la Documentation Patrimoniale/Algemene Administratie van de Patrimoniumdocumentatie) is the public institution in charge of the mortgage register.

Connection with the cadastral-tax registries

Any transfer of property rights is also recorded in the land registry (Cadastre/Kadaster). The land registry, which is also open to the public, organizes a division of the Belgian territory in different plots of land (including by way of maps of the Belgian territory clearly showing the boundaries of the different properties), and is regularly updated following the recording of transactions in the mortgage register. Its data are for information purposes only and are very useful to check the surface of a plot of land and/or of surrounding buildings and the level of the yearly property tax imposed on a property.

Compulsory registration

All deeds related to the transfer of real property, all lease agreements with a term exceeding nine years or including a discharge of rent payment of more than three years of rent and all deeds relating to the establishment or transfer of rights in rem, preference rights, pre-emption rights and option rights pertaining to immovable property rights, must be registered in the mortgage office (Bureau Sécurité Juridique/Kantoor Rechtszekerheid) where the assets concerned are situated. If one of the deeds is not registered, the immovable property rights contained therein will not be enforceable vis-à- vis third parties acting in good faith.

The transcription of immovable property rights into the mortgage register is not free. Registration duties are typically paid by the buyer, beneficiary, or assignee of a right in rem, or tenant, even if parties may freely otherwise allocate the costs of the registration duties between themselves.

How registration guarantees the rights of the holder of immovable property rights

If one of the deeds mentioned above is not registered the immovable property rights contained therein will not be enforceable vis-à- vis third parties acting in good faith.

How registration works in a typical transaction

The acquisition of real estate property in Belgium is usually completed in two stages: (i) the signing of a private sales agreement, followed in a second stage by (ii) the signing of an authentic purchase deed before a Belgian civil law notary.

The signing of the private sales agreement entails binding commitments for the parties, amongst others, for the buyer to pay the purchase price and for the vendor to deliver the property by transferring legal title on the date of signature of the subsequent notarial deed. The buyer will not be protected against bona fide parties until signing of the notarial deed and the registration thereof at the mortgage register.

Although a private sales contract may contain valid binding obligations between the parties under Belgian law, only documents which have been elevated to the status of an authentic deed may be registered in the mortgage register and notaries have a monopoly over their preparation.

Within four months from the date of signing the private sales contract (maximum term for the payment of registration duties), or of it becoming unconditional, or any shorter period which is agreed between the parties, the sale must be completed by signing the authentic deed.

The civil law notary in charge of the authentication of the sale will carry out various searches and will obtain a certificate from the mortgage register showing whether the property is encumbered by an existing mortgage, or any other immovable property rights granted to third parties. The civil law notary reviews the vendor’s title to the property and recites or at least refers to all specific conditions and/or easements (servitudes/erfdienstbaarheden) to the extent these are still relevant and applicable to the property sold, in the notarial deed. In the capacity as a public official the notary is required to conduct a fiscal search to ascertain whether the vendor has any outstanding tax liabilities to the Ministry of Finance. In this way the Ministry of Finance ensures, via the notarial system, that any arrears of taxes are collected on the occasion of a transfer of property held by the taxpayer.

The only documents the mortgage register will accept for registration are authentic deeds passed before a civil law notary (or court judgements of equivalent status or private agreements recognized in court or by a civil law notary).

A civil law notary offers a public service, they are not one of the parties to the contract, nor do they negotiate any terms of the contract.

A civil law notary is responsible for the validity of the transfer deed, for checking the identity and capacity of the parties, for ensuring that the property is free of mortgages if the property is sold on that basis, and for reciting any easements or special conditions contained in the title deeds which may affect the property. The civil law notary’s responsibility also extends to other matters which might affect the land, e.g., they have to formally check, amongst others, the applicable town planning requirements, the potential existence of public pre-emption rights and/or the potential pollution situation of the soil. Finally, the civil law notary will also collect the registration duties applicable to a specific transaction.

The Belgian Civil Code provides that a seller must hold a buyer harmless against hidden defects of a property which appear shortly (à bref délai/binnen een korte termijn) after the purchase, but parties may derogate and/or organize this provision (e.g., by agreeing on a maximum term for filing claims relating to hidden defects with a seller), and quite often do so (it being noted that professionals may not fully contract out their liability for hidden defects).

A buyer also has a recourse against the architect and/or the building contractor for any major defects affecting the structure property (such as stability issues) for a term of 10 years generally starting at provisional acceptance (reception provisoire/ voorlopige oplevering). From 1 July 2018, architects, building contractors and other service providers in the construction sector are required to take out insurance that covers their 10-year liability.

It is also market practice for the buyer of larger properties to negotiate representations and warranties covering compliance of the properties with the applicable regulations (including building and environmental permits), and this both for asset deal transactions as for share deal transactions.

The only form of security taken with regard to immoveable property in Belgium is a mortgage (hypothèque/hypotheek). A standard security package required by third party lenders generally consists of a hypothèque/hypotheek, possibly in combination with an irrevocable mortgage mandate (mandat hypothécaire irrévocable/onherroepelijk hypothecair mandaat). Book 3 of the Civil Code also refers the following security rights: (i) special privileges, (ii) pledge and (iii) a retention right.

A mortgage deed must be signed before a notary public; substantial costs are involved in the vesting of a mortgage, the main cost being the registration and inscription duties at the Mortgage Registry (amounting to approximately 1.4% of the mortgaged borrowed amount).

As a result of this, it is common for real estate investors to negotiate with lenders to only have a first ranked mortgage on a lower part of the borrowed amount, coupled with a mortgage mandate for a more substantial amount; the duties only being due on the part of the mortgaged borrowed amount. Mandates to mortgage consist in the borrower irrevocably authorizing the lender to establish a mortgage on the real property. Such mandates diminish the costs but increase the risks for the lender, due to the fact that no priority rights are granted to the lender as such; it is only after use of the mandate (and subsequent registration) that the mortgage will become effective and opposable vis-à-vis third parties.

For a mortgage to be enforceable and opposable towards third parties, the mortgage deed will have to be transcribed at the Office of Legal Security (Bureau Sécurité Juridique/Kantoor Rechtszekerheid) after being passed before the notary public. The enforcement procedure of securities, and mortgages in particular, is governed by mandatory provisions of law. In principle, the enforcement of a mortgage takes place by way of a sale on a public auction.

Belgium has four different types of leases, being (i) common leases (lex generalis), and three specific types of leases: (ii) retail leases (bail commercial/handelshuur), (iii) residential leases (baux de residence principale/woninghuurovereenkomsten) including student leases (baux pour le logement d'étudiants/huurovereenkomsten voor de huisvesting van studenten), and (iv) agricultural leases (bail à ferme/pachtovereenkomsten). In principle, each of these specific types are subject to a different legal framework, but the common lease regime forms the general regime (lex generalis), which is applicable in case the specific regimes do not contain provisions regarding a certain subject.

A retail lease is defined by the Retail Lease Act of 30 April 1951 (as amended by regional legislation on retail leases) as a lease of premises primarily used by the tenant for a retail or craftsman’s activity in direct contact with the public. It is not possible to escape application of the legislation on retail leases by simply declaring it not applicable to a particular lease. The provisions are mandatory and cannot be excluded from the contract. In case of doubt or conflict, courts will look at the intention of the parties and will ignore any declaration on qualification of the lease in the lease agreement.

The Retail Lease Act (as amended by regional legislation on retail leases) applies to buildings or parts of a building which are used for commercial purposes only. It includes the retail of goods and services directed at consumers. This definition means that commercial leases will apply in the case of hotels, cinemas, garages, jewelers, cafes, restaurants, theatres, bank branches, etc. One of the main elements is the direct contact with consumers.

The Retail Lease Act (as amended by regional legislation on retail leases) provides that a retail lease must have a minimum duration of nine years, with the possibility of termination by the tenant at the end of the third, sixth, or ninth year subject to a six-month prior notice. The parties may not derogate from this but may conclude a retail lease for a longer term if it is subsequently confirmed in a notarial deed. In addition, the tenant benefits from the right to request up to three renewals of the lease term for successive nine-year periods, which can only be refused by a landlord for specific reasons, after having followed a specific procedure and paid, as the case may be, an indemnity to the outgoing tenant.

All regional legislators (in the Brussels capital, the Walloon, and the Flemish regions) have adopted specific legislation on retail leases which are concluded for a period of one year or shorter, this in order to facilitate the lease of premises e.g., for use as so called ‘pop-up store’. This type of lease may be terminated by the tenant at any moment subject to a one-month prior notice.

Other leases, such as offices, parking spaces, warehouses, industrial buildings, etc., do (in principle) not entail premises primarily used by the tenant for a retail or craftsman’s activity in direct contact with customers and are therefore not subject to the strict mandatory legislation on retail leases. The general provisions of common leases apply which are in general non-mandatory provisions.

The construction or restructuring of assets is regulated in Belgium at the regional level (Flemish region, Walloon region and Brussels region). In principle, mainly two permits are relevant: a building permit and an environmental permit. In the Flemish region and the Walloon region these two permits can be applied for in one procedure and together form the ‘integrated environmental permit’. Carrying out activities for which a permit is required without the necessary permit is subject to criminal sanctions in each region.

A building permit is in principle required for all types of larger works to and around a construction, such as building, rebuilding, digging, and tree felling, for modifications to the designated use of a building or part of it. The permit is valid for an indefinite period, but it may expire if the works have not been started within a certain period after its issue or if the works have been interrupted for too long.

In addition, an environmental permit is required for certain types of installations or activities with a 'significant environmental effect' (e.g., operation of a petrol station). Environmental permits have a validity period of 15 years (Brussels region) or 20 years (Flemish and Walloon regions), but the permit can expire earlier if the exploitation of the licensed installation or activity has not commenced within a certain period of time since the granting of the environmental permit.

Other permits, such as the socio-economic permits for retail activities from a certain number of sqm, are required in specific circumstances.

In Belgium, a growing trend towards ESG compliance is becoming increasingly relevant in real estate. For example, in commercial transactions this is expressed in the appetite of real estate investors to prioritize green investments (buildings rated with high scoring sustainability certificates). On the basis of various parameters, buildings are evaluated, and this assessment is translated into a certificate. Examples of such certificates are the BREEAM and LEED certificate that give an indication of the sustainability of the building and the WELL certificate that focuses additionally on the wellbeing of the people in the building.

Furthermore, the number of ESG regulations with respect to real estate has increased significantly in recent years, both due to the influence of European Union (EU) and international initiatives such as the “Renovation Wave” and the “Fit for 55” package as well as the Belgian national objective of making all buildings energy and carbon neutral by 2050.

ESG compliance is a matter that is regulated in Belgium at the regional level. The implementation of ESG regulations therefore occurs at a different pace in the three regions. For example, all three regions have legislation on Energy Performance and Indoor Climate (Energieprestatie en Binnenklimaat (EPB)) requirements that determine the minimum energy requirements for buildings and legislation on charging points for electric vehicles.

Furthermore, in the Flemish region, there is already an obligation for new buildings to obtain a minimum amount of energy from renewable energy sources and soon there will be an obligation to use electric heat pumps and a ban on natural gas connections. For existing buildings in the Flemish region, there is an obligation to renovate within a certain period of time after the acquisition of a building, depending on the type of use of the building. This renovation obligation involves roof insulation, insulation of windows, heating, and cooling. In Brussels, energy-inefficient residential buildings must undergo energy improvements to reach a certain level of energy consumption by 2033. The Walloon region is also developing a renovation strategy, but there are currently no standards with binding effect.

In addition to ESG implementation in the strict sense, Belgium has historically had rules on energy and energy saving which relate to soil pollution, EPC, and asbestos.

The transfer of real estate properties and rights in rem triggers certain soil obligations for the transferor to be performed prior to the transfer. A transferor of land (or rights in rem) must obtain a soil certificate from either the Flemish regional waste body (OVAM) — if the land is located in the Flemish region — or the Brussels regional waste body (IBGE/BIM) — if the land is located in the Brussels region – or the soil condition database (BDES) – if the land is located in the Walloon region, authorizing the proposed transfer transaction. These certificates give an overview of soil pollution and soil investigations known by these authorities and that new soil investigations, as the case may be followed by remediation measures, may be imposed if risk activities are performed or were performed in the past on the relevant property.

In addition, an energy performance certificate (certificat PEB/ Energieprestatiecertificaat (EPC)) must be obtained by a seller, transferor, or landlord, prior to the completion of most property transactions. The certificate informs potential buyers or tenants in advance about the energy efficiency of the building.

This certificate must be:

• Published in any advertisement relating to the sale or letting of a property;
• Communicated by the seller, transferor, or landlord before the completion of the proposed property transaction; and
• Drawn up when completing construction works for which a building or environmental permit is required.
  

Finally, specific regulations apply to asbestos, which must be inventoried on a yearly basis and monitored closely, and to other toxic materials. Federal labor law requires every employer to prepare an asbestos inventory for all buildings where they employ staff, regardless of the year of construction. In the Flemish region, from 23 November 2022, the transferor of a building constructed before 2001 must hand over an asbestos inventory certificate to the buyer. In the Walloon and Brussels regions, there is no such obligation. Of course, the seller must still report the presence of dangerous asbestos at the time of the sale.

Investors wishing to invest in Belgian real estate will have various options for structuring their acquisition. An investor can choose between a direct acquisition of the targeted real estate and an indirect acquisition; i.e., the purchase of shares in the company that owns the targeted real estate.

In case of a direct acquisition of property, Belgian registration duty (droits d’enregistrement/registratierechten) is due on all transfers of ownership of immovable property located in Belgium; i.e., by means of sale, exchange or otherwise. This registration duty is calculated on the higher of the contractual price and the market value of the property. The applicable standard rate for real estate located in Wallonia and the Brussels region is 12.5% and 12% in Flanders. However, there are lower rates that may apply in certain circumstances (e.g., a reduced rate in case of the acquisition of a first residential property, a reduced rate in case of a commitment to perform a substantial investment in energy efficiency, the acquisition of social housing, etc.)

Professional real estate traders (corporate entities or individuals, whose business activities mainly consist of buying and selling real estate) who meet certain conditions may benefit from a reduced rate of 4% in the Flemish region and 5% in the Walloon region. In the Brussels region, the reduced rate is set at 8%. A business declaration must be filed, and the real estate trader will have to provide evidence that they qualify for the régime des marchands de biens/vastgoedhandelaars regime by carrying out successive sales within the next five years.

Additionally, the reduced rate can only be maintained if the property is resold ultimately by 31 December of the eighth (Flanders) or 10th year (Walloon region and Brussels region) following the date of the purchase agreement with application of the standard registration duty (12.5% or 12% in Flanders).

For long leases (emphytéose/erfpacht) and building rights (superficie/opstal) a transfer tax is also due. However, this will only amount to 5% of the total fees and charges payable by the holder of the long-term lease rights/building right holder.

*According to the 10 December 2024 exchange rate

Download: Handbook for Real Estate Transactions