What is the initial index of your lease?

What is the initial index of your lease?

That one time of year has come again: you get to index the rent of your rental property. You have the formula for calculating the rent indexation at hand, your letter template for the indexation is already ready... but then you get stuck when you need to enter the actual figures.

Rental indexation formula

First, we briefly review the calculation of rent indexation in Belgium. Then we explain where to find the different figures for a rental contract. The formula is as follows:

Base rent x new index (=health index) / initial index

Where do you find the base rent?

The first figure, the base rent, is simple. For this, you take the rent determined in the lease. So you always take the same amount here. For example, if the base rent is 800 euros and it was already indexed to 825 euros last year, then you still make this year's calculation based on the original 800 euros.

Where can you find the new health index?

Next, we look at the new index. That figure is based on the current health index and can be found on the statbel website. When indexing the rent, you always use the index figure prior to the month in which you are indexing. For example, if you index the rent on July 1, you take the figure for the month of June. In 2022, that figure is 121.02.

Finally, pay close attention to which part of the table you read. This happened in 1996, 2004 and 2013. If your lease was drawn up between 1996 and 2004, you should take the first part of the table. For leases between 2004 and 2013, you take the second part. Finally, for leases made after 2013, look in the last section.

Where do you find the new initial index?

Finally, we need the initial index. The initial index of your lease is the health index figure for the month before it takes effect. This last part is very important, especially for contracts that don't actually take effect until months after they are signed. For example, if the lease was signed on February 15, 2021, but doesn't take effect until July 1, 2021, then you take the index figure for June 2021. That figure at the time was 111.31.

We fill in this full formula for a moment: 800 x 121,02 / 111,31 = 869,79. Consequently, the only figure you need to look up and adjust annually to make the rent index calculation is the new health index.

Automatic calculation of rent indexation

Do you want to calculate the indexation of the rent automatically so you don't lose time? Then SNDQ can help you with that. By entering all the information of the lease once, our software can calculate the indexation for you. You can also set the rent to be automatically indexed every year. Communication to the tenant will also be organised fully automatically, so you will never lose money through forgetfulness.

Does that sound interesting? Then be sure to check out SNDQ's other positions on the website and contact us for more information.

SNDQ is the cloud platform for private and professional landlords, stewards and syndicators.

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