To buy or not to buy in Belgium?

Property is a good, solid investment and paying rent is throwing money away, isn’t it? Comparing the mortgage interest payable on a 100 percent loan to the value of the rental payments for the same property gives an indication as to whether it is cheaper to buy or rent.

By this yardstick, in contrast to many other capital cities, renting a home in Brussels has historically been more expensive than buying. Foreigners tend to have a strong influence on market pricing in most international cities and this is particularly the case in Brussels. So if it is traditionally more expensive to rent than to buy, this means expats are prepared to pay a premium to avoid having to buy their home in Belgium.

WHY EXPATS DON’T BUY PROPERTY IN BELGIUM

It is said that after bereavement and divorce, buying property causes the most stress in life so, unsurprisingly, buying a home is not usually high on the newly arrived expat’s agenda, particularly if they’re not sure how long they will stay. Unlike neighbouring capital cities (Amsterdam, London and Paris, for example), it is very difficult to get a quick feel for market values as the turnover in Brussels is far lower, many transactions are private and the official sales figures quoted by notaries are erratic (some expats pay way over the top not realising how cheap prices are here, and Belgians have traditionally paid part of the purchase price unofficially to evade taxes).

The total cost of buying and then selling a home in Belgium can be close to 20 percent of the purchase price, and if you sell within five years, any profits will be taxable. Homeowners in Belgium tend to move house only once every 10 to 15 years due to the high transaction costs involved, so psychologically, buying property is a confirmation that you are taking root for a number of years. This can be an uncomfortable thought for many expats who, by definition, tend to be open to international moves.

Many expats who end up staying indefinitely can look back on decades of living in Belgium but only ever a few years ahead at any point in time. If you ask an expat in Belgium how long they intend to stay, the answer you will frequently get is no more than three years. Many of these same expats, however, have been here 10 years or more. This would suggest that Belgium is not a place expats dream of making their home, even though it’s a very comfortable place to live.

WHY EXPATS SHOULD CONSIDER OWNING THEIR BELGIAN HOME

Ask yourself the question: is it possible or probable I will still be here in five years’ time? There are no certainties in life, but if you are likely to still be here in five years, the chances are you’ll recoup the transaction costs if you sell thereafter. Even if you don’t recoup all your costs, you have to factor in what you have been saving on rental payments.

The longer you live in Belgium, the more security of tenure becomes an issue. Finding your ideal accommodation in your favoured locale may be neither quick nor easy, so it’s an uncomfortable thought that your landlord could ask you to vacate when your tenancy expires.

As a homeowner, you don’t have to worry about having to convince a landlord to take action when repairs are necessary. As a tenant, you may still be involved with costly repairs; however, being obliged to restore a dwelling to its previous condition at your point of departure is of little benefit to you. Owning your own home allows you to make any aesthetic, practical or structural changes you see fit. In other words, you can create your ideal living space.

Philip Curran is an independent financial advisor based in Brussels