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Expats on the property market in Belgium, plus seven pointers
Debbie Quinn (pictured):
This is our first house in Belgium and it’s our dream home. It was built in 2009 and has 3 hectares of land. We will probably downsize in the future as the house is quite big, but hopefully keep the same amount of. Property is good value in Belgium, certainly compared to in Holland. I like the fact that most properties have a generous plot and that new builds are very individual.
Before buying our farm in Wallonia we had an apartment in Zaventem, which we bought off plan and sold two years after it was built. We intend to have some of the farm outbuildings renovated to possibly rent out in the future. Property is affordable here and provided you take a medium- to long-term view, it is a good place to buy. The disadvantages are the high taxes when you buy and the time it can take to sell a property.
I recommend having a house or apartment built rather than buying complete; this way you pay in stages as it is being constructed, paying at the point of land purchase. We were able to save money this way when we bought our apartment. The drawback is you have to wait for the building work to be completed, and there could be VAT to pay on the sale if you sell within the first few years. Rental income in most cases is tax-free, so buying and renting can be a good income source. If interest rates fall significantly, you should go to the bank and ask for a review, even if it appears you have a fixed-rate mortgage. We have done this twice and the savings were thousands of euros per year!
We own a large villa in Rhode-Saint-Genèse that we completely renovated. We are now looking to sell it, as we want to downsize and possibly buy a property in a warmer country, where we would like to spend more time, especially during winter, though we want to keep a base in Belgium. I also own and rent out various properties in different parts of Brussels and the surrounding area, via my property investment company. Overall, the Belgian market has been a good investment, with a steady if not stellar increase in property values over the past 20 years. The rental returns have been rather disappointing in the past few years and we have had to drop rents by as much as 40% to re-rent some of our properties.
I think investing in residential property in Belgium, in particular the greater Brussels area, remains a good investment in the long term, especially if you are looking for capital growth (but it is not a very good market for yield). Property prices remain very low compared to other European capitals and major cities, which should make you less liable to big price drops in case of a market downturn.
We have always lived in Woluwe-Saint-Pierre; we like the neighbourly vibe and decided to buy a house and settle here for the foreseeable future. I am no expert, but while searching for our perfect family home in this area over the past four years, it appears that house prices have retained their market value despite the recession. It would also seem that the recession has had an impact on deterring individual buyers from buying homes that need significant refurbishment.
My advice to potential buyers is to keep searching: you will eventually find the home you are looking for. And don’t give up even if your offer is refused; this might be a blessing in disguise. When you find a place, look at its potential and not its current state.
ING's seven things to know about the property market in Belgium
- The private sales agreement to buy a property in Belgium (known as a compromis) is the effective start of the purchase process. It is much more than a non-binding offer that still has to be confirmed: in fact, it’s an agreement to start the formal process of purchasing a property, subject to some conditions.
- In Belgium it is common that the seller pays the estate agent involved. If you’re a potential buyer and are in contact with such an agent, bear in mind that people and companies essentially work for the person who pays them. A recent phenomenon in Belgium is estate agents who are paid by a potential buyer.
- Don’t hesitate to take your own notary on top of the one chosen by the seller. Both parties have the right to choose a notary, and it won’t cost you more since the two will have to split the fees. The notary can give you valuable information on costs and taxes.
- Once you’ve bought a property it is difficult to put claims on the former owner if you discover a problem you were not aware of that you think the former owner should have told you about. Always have a surveyor check the property in full before you sign anything.
- If you buy to let in Belgium, be aware that taxation of rental income is substantially higher if your tenant is a company or a person using the property for professional use than if it is for private use.
- Property has its place in any diversified investment portfolio. It is, however, important to be aware of the features of a direct investment:
-- It’s a (very) long-term investment particularly given the typically (very) high purchase taxes in Belgium
-- It’s an illiquid investment: you can’t always sell the property at a good price quickly and it can take several months before you actually see the money
-- Depending on the total value of your investments, it may be a (very) big asset in relative terms to the total of your investments, leading to less diversification and thus a lower average return in the long term
- Taxation of private real estate in Belgium is very high on purchase, with headline rates ranging from 10 to 12.5% and even 21% for new buildings. Taxation on revenue is low when living in the property yourself or renting it out for private use. Capital gains are typically only taxed when you sell within five years (eight years for land), and transfer to your heirs is rather expensive unless you have the real estate assets in a company and transfer the shares in due course.
This article was first published in Expat Time, Spring 2013