From a nation of owners to a nation of renters: Katrien Kempe (UPSI-BVS) on the rental market, mandatory renovation and affordable housing

In Brussels, roughly one in three landlords wants to sell their rental property, more than in the rest of the country. At the same time, only 3% of landlords own more than twenty homes. What does that mean for tomorrow's tenant?

Katrien Kempe knows real estate from several sides. She started out as a lawyer, discovered her real passion through a postgraduate degree in real estate at KU Leuven and has been a director of UPSI-BVS, the Belgian Real Estate Federation, since 2023. For some seventy years it has represented Belgium's property developers and investors. In our podcast Bakstenen en Boterhammen (Bricks and Sandwiches), she talks to FixForm CEO Edward Boete about rents, social housing, renovation and what Belgium can learn from abroad.

Why the Brussels reference rent is going to court

Brussels has a big problem on its rental market: scarcity. Anyone who does find a rental often ends up with a home that does not meet quality standards. The previous Brussels government therefore put a strong focus on protecting tenants. "Rightly so," says Kempe, "but the cursor has moved a little too far towards the tenant."

One of those measures is the reference rent. Landlords have to check their rent against a rent grid, a database of rents in Brussels. The problem, according to UPSI-BVS:

• The grid is based on old rents that have not been updated and so gives a distorted picture of the market. Landlords are forced to charge a rent that is not in line with the market.
• Binding rules are attached to it. In Flanders and Wallonia, a rent grid works perfectly well: it is updated every year, rests on scientific research and is voluntary.

Kempe calls that combination "a bad cocktail for landlords and investors". Because if you are no longer allowed to charge a market rent, why would you still let your property? UPSI-BVS is therefore challenging the scheme before the Constitutional Court. At the time of recording, the federation expected a ruling within the month.

Other countries show where strict rent regulation can lead. Paris goes a step further than Brussels, and according to Kempe that has not had the desired effect on rents. At first such a measure seems to curb prices, but in the longer run supply dries up.

Social housing: let private players build too

In Flanders alone there is a shortage of some 200,000 homes. The government cannot solve that on its own. Yet in Belgium today it is all but impossible for a private player to bring social housing to the market. Kempe calls it a closed system: public housing companies and private players each work in their own corner.

Her proposal is an open system, as in Germany. "There the reasoning is: it doesn't matter who puts the home on the market, as long as it gets on the market." That is not competition, she stresses, but complementarity. The housing companies remain, and the gap between the market rent and the social rent can be bridged with subsidies or alternative financing mechanisms. The European Investment Bank is also studying such public-private models. UPSI-BVS hopes to arrive at concrete structures for the Belgian market in 2027.

That it can be profitable is proven, according to Kempe, by Inclusio. The listed company invests in social rental housing, housing for the homeless and emergency shelter, at a market return.

Densification can help too. Let developers build higher in certain neighbourhoods, on condition that part of the project consists of social or affordable homes. That raises the return on land without extra subsidies.

And there is a quick win in existing social housing. Families change, but the home does not change with them. A couple living in a home for six today is occupying a family home. "Look at who lives where, and move people around according to occupancy."

Mandatory renovation: achievable, if we make it simpler

By 2033, some 250,000 homes will have to be renovated in Brussels alone. That means going from about 5 to 50 renovations a day. Kempe remains optimistic, but sees two big obstacles.

Permits. For a small change you can easily lose two to three months on a permit application. Brussels is working on a simplification, so that more works, such as insulation, are exempt from a permit. Because the mental hurdle of applying for a permit alone holds owners back.

Standards. Do we really have to meet the strictest energy standards when renovating, if that puts affordability at risk? Those standards are far easier to meet in a new build than in an existing building. Kempe is not arguing for less ambition, but for a realistic weighing of the return on investment. In Europe, too, she sees the pendulum swinging back, with less overregulation and more simplicity.

Portugal shows how it can be done radically differently. In urban areas where detailed rules already apply per neighbourhood, street or plot, you no longer need to apply for a building permit. The developer submits a declaration that the project complies with those rules, and starts building. Edward draws the comparison with Belgium: why first a subdivision permit and then a building permit on top? According to Kempe, they are "two very heavy procedures, one of which we could perfectly well skip."

Belgium is becoming a rental market, and that is an opportunity

What will the property market look like ten years from now? Kempe expects two big shifts.

First: from a buyers' market to a rental market. Today around 70% of Belgians own their home. But with a tight market and limited purchasing power, a large part of the population will find it easier to rent a home than to buy one. That also calls for more flexible leases.

Then: more variety in ways of living. Young people move more easily from student room to co-living, to an apartment and eventually, in the best case, to a family house. They want to be able to move as their career and family situation change. Today, transaction costs and leases that are hard to terminate hold back that mobility.

That is a big opportunity for professional landlords. Today they hold only a small share of the residential rental market, which is largely in the hands of private individuals with an extra flat as a pension pot. Professional players with 100 or 200 units can offer quality real estate. "Quality doesn't mean expensive," says Kempe. It is about energy-efficient buildings in which the tenant's total cost of living is lower, and about professional management.

21% VAT on new builds: "a killer for the market"

UPSI-BVS's top issue for the upcoming budget talks is VAT on new builds. If you buy an existing home as your only home, you pay 2% registration duty. If you buy a new, energy-neutral home, you pay 21% VAT. "That gap is far too big."

UPSI-BVS is not asking for a general reduction, but a targeted one: for first-time buyers of their only home, within certain floor areas. That way they too can acquire an energy-neutral home at a normal tax burden.

What does this mean for anyone managing real estate?

The conversation with Katrien Kempe makes a few things clear:

• The professional landlord is gaining ground. If you manage a larger portfolio of rental homes, you have to be able to deliver and demonstrate quality, with well-maintained buildings and satisfied tenants.
• Renovation is becoming a continuous process. With mandatory renovation on the horizon, you need to know the condition of every building and which investments are needed when.
• The lowest cost for the tenant comes from good management. An energy-efficient, well-maintained building keeps the total cost of living low. That starts with reactive and preventive maintenance done on time.

Do you manage a portfolio of rental homes or social housing, and want a firm grip on maintenance, assets, documents and compliance? FixForm helps property managers keep their buildings in perfect condition, with reactive and preventive maintenance in one platform. Get in touch and we'll look together at what that could mean for your portfolio.