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Alignment of registration fees to 7 percent in Flanders

Throughout Belgium, the acquisition of real estate includes registration fees. In Flanders, they were previously about 5 or 10 percent depending on the properties, creating disparities according to rules that are now obsolete. Fortunately, as of June 1, 2018, all registration fees are unanimously reduced to a single rate of 7 percent, which can be adjusted in certain situations. This standardisation measure has strong repercussions on the Flemish real estate market. Engel & Völkers explains the issues.
 
Why has the rate been aligned to 7 percent?
 
Until now, registration fees in Flanders were 5 percent for low-income homes (up to €200,000) and 10 percent for more expensive properties. However, the percentage applied according to the 1975 cadastre rules, forcing some small-town dwellers to pay 10 percent. Standardisation was thus long requested by Belgian property associations and stakeholders, hence the 7 percent registration fee in Flanders, regardless of the value of the property.
 
7 percent and other allowances
 
In the interests of equality, however, steps have been planned for owners of modest homes that see de facto rate increase from 5 to 7 percent. They are eligible for a reduction of €5600, applied on the first purchase of €80,000 if it is their first real estate investment. This allowance is also valid up to €220 000 for every apartment purchased in Brussels and its outskirts.
 
Another allowance is also applicable as part of an energy renovation, initiated no later than 5 years after the acquisition. The rate then increases to 6 percent for a total of €4800 discount.
 
An impacted real estate market
 
Echoing this alignment of registration fees, Engel & Völkers, also located in Flanders, could only note the general postponement of purchases of apartments and houses throughout the region. Potential investors preferred to pay less by waiting for the rates to come into play. As a result, although they have found the property of their dreams, many couples and families have signed pledges to purchase their property at 7 percent after June 1, 2018.
 
Nevertheless, it is always good to know that the change to the 7 percent registration fee does not apply to second homes. There was, therefore, no need to delay an investment in the context of a second visit to the notary for an additional residence. However, a transferability principle does apply if you want to reduce the amount of your new acquisition, the fees paid in connection with the purchase of your first property. Up to €12,500 are transferable. Please do not hesitate to ask your advisor at Engel & Völkers about if you have any concerns about the implications of these new measures.
 

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