Brussels proposes change to registration fees to make buying a home cheaper

Brussels’ minister of finance Sven Gatz wants to make the purchase of a home cheaper by reducing the registration fees involved in buying a house, Bruzz reports. Those who make their home more energy efficient will receive an extra discount.

The proposal, which was already part of the regional government's coalition agreement, will be discussed in the coming weeks in the context of the multi-annual budget.

Currently, the registration fees in Brussels amount to 12.5% of the purchase price of a house. But anyone buying a family home has been able to benefit from a discount since 2003. No registration fees are paid on the first €175,000, amounting to a discount of €21,875.

For example, the registration fees on a house costing €200,000 are only €3,125, thanks to this discount: 12.5% of the €25,000 above the exempt amount of €175,000.

However, the more expensive the house, the smaller the discount becomes and the higher the registration fees. For example, the registration fees for a house of €450,000 can easily amount to €34,375. Anyone who buys a property over €500,000, and these are becoming increasingly frequent in the Brussels region, does not receive a discount at all. The discount is intended as a measure for the middle classes and does not apply to homes from €500,001 upwards.

New proposal includes raising threshold for property tax discount

Sven Gatz is now proposing three changes in the registration fees policy: raising the discount, raising the ceiling to €600,000 and introducing an extra discount when the house is made energy efficient.

The figures are not yet fixed, but Gatz proposes to apply the discount to the first amount of €200,000 to €250,000 (instead of €175,000). This will provide a discount of between €25,000 and €31,250 (instead of €21,875).

In addition, he wants to raise the level from when the discount is applicable from €500,000 to €600,000. And those who make the home more energy efficient, and the energy performance (EPB) category of the house increases, will receive an additional discount. The discount would be increased by €25,000 per increased EPB category.

Bid to keep younger and more affluent families in capital

One of the main reasons behind this move is to keep the middle classes in Brussels. If only the highest and lowest income classes continued to live in the Brussels region, fiscal support would be at risk. The Brussels government therefore wants (young) families to continue living in Brussels and to acquire a home in the region.

But that is becoming increasingly difficult as real estate prices in the capital continue to rise. Even in the corona year of 2021, the median price for a home rose by 5.2%. For example, a house in Brussels can easily cost €460,000.

In addition, the Flemish government decided last year to significantly reduce the registration fees. It's a linear reduction from 12% to 3%. Those who make their home more energy-efficient pay just 1%. That makes buying a home in Flanders a lot more attractive and the region is also more interesting for tax purposes, especially for a home worth over €250,000.

Due to the harsh fiscal competition laws, Brussels can only follow Flanders’ lead in reducing the registration fees, even if its intention preceded Flanders' decision.

However, the Brussels Region finds itself between a rock and hard place. It has to lower the registration fees to keep the middle classes in the capital, because they bring in money. But Brussels is short of cash and registration fees are a significant source of income, amounting to €621 million per year. Reducing them would cost €37 million, while the Brussels Region desperately needs the revenue to balance the budget. In a special budget meeting after the Easter holidays, the Brussels government will attempt to untangle this thorny issue.