New or old, what’s the best plan?

Rising raw material prices, extended deadlines for work, taxes, efficiency and energy standards… Several factors play a role when it comes to choosing between a new property and an old property. here they are.

Return and value added

Any budding investor must lend with a certain intent of return, i.e. the ratio between the annual rental income and all the capital that is injected into the property.

On this point, Nicolas Jacquet, co-CEO of The Own Group, is categorical: an ancient property that provides a better return. On the other hand, it will be affected more easily: “Old properties offer a more pleasant return, around 3.5-4%, but that return will vary depending on costs, business, and condominium fees which will be different,” he explains. “In new buildings, on the other hand, this yield will be more compressed initially (3-3.5%) but no further costs are expected for a given period,” adds Nicolas Jacquet.

4%

The yield for older properties is currently between 3.5 and 4%.

In fact, with a new property, there is no additional work to be expected and exorbitant co-ownership fees are not expected. With limited maintenance costs and modern materials, the comfort level is high. Budget-wise, you’ll make significant savings in the long run, just in terms of energy standards.

Note, however, that the opposite phenomenon of . will be observed capital gainsthat is, the profit margin on the day the property is sold: “The new property will have a more liquid attractiveness if you put it up for sale, and growth will accelerate because it will meet current demands, particularly in terms of energy standards,” explains Nicolas Jacquet.

Energy Standards

You will also need to pay attention to the energy parameters in your calculations. Legally, the standards differ in Flanders, Brussels and Wallonia, but also if it is a new building or renovation. “It also happens that a standard is established for the entire dwelling and, in other cases, energy requirements are set on a business basis, which again varies from district to district,” he explained. Marilyn Bury, Head of the Tax Service at the Construction Federation.



“Achieving high energy performance in renovation is always more complex than in new construction. In new construction, foundations can be insulated, while in a renovated home it is often unreasonable to do so.”

Terry Wantins

Architect

Again, everything will depend on your property, its location, and your goals. “Achieving high-energy performance in renovation is always more complex than in new construction. In new construction we can insulate the foundations, while in a renovated home it is often unreasonable to do so,” details Thierry Wantins ( 2architectes sprl ).

But here again it is necessary to qualify: “The legislation states that new construction is inefficient (less than 15 kWh / m² / year). And in renovation, there is no such obligation at the moment (…) it can be The basis of the renovation work is very expensive (…) However, it is quite possible to regenerate and the energy is very low (more than 15 kWh/m2/year) without incurring astronomical costs.The architect adds.

Light or heavy renovation?

As part of purchasing an existing property, everything will depend on your goals and/or the type of renovations you will face. Remember that the cost of renewal is related to the nature of the work performed. So a proper estimation of how much this will work before you buy is essential.

There is actually A big difference between the price of resuscitation of the analgesicand the Heavy renovation work. “Major renovation means returning everything, except for the structure we keep,” he explains. Terry Wantins . “Let’s take the example of a house from the sixties located in Wallon Brabant. If it is not very interesting architecturally, if it is not well insulated and if it presents infiltration problems, we can ask if it is better to tear down everything and rebuild or find the land and build something new,” he continues.

Ten years warranty and hidden defects

Also, remember that new ownership is always covered Ten years warrantyWhich protects the owner in the event of a problem after purchase. A warranty that does not exist in the context of selling an old property, where the risk of hidden defects (defects that were not visible at the time the property was purchased) is higher.

These subtle flaws deserve special attention if you intend to acquire a property, but according to Thierry Wantins, there are also, you need to qualify: “In intensive renovations, we go so far as to eliminate the risks of hidden defects. All work carried out by the company is guaranteed, such as waterproofing the building, etc. (…) and therefore this risk is minimal. However it is more present in the light renovations”, explains the architect.

Deadlines and material prices

From a purely technical point of view, keep that in mind Deadlines are rarely extended in the context of new construction. On the contrary, they can easily be bypassed for renewal.

+ 70%

The price of wood has increased by 70% since December 2020.

In addition, in construction as in renovation, you must take into account the prices of materials that are rising. According to a document notified to us by the company Marcel David, “ESTS”, Specialize in selling items to professionals, The price of wood, for example, in May 2022 has increased by 70% since December 2020.

Also note that while the renovation market is booming, It is increasingly difficult for traders to save themselvesWhich prolongs the time. This deficiency affects insulation products or even metals. Be especially vigilant about these points, because it is likely that in the event of a prolonged delay in your work, your bill will be revised upwards due to the prices that continue to rise.

Value Added Tax, Return and Capital Gains

VAT applies at 6% for renovations, compared to 21% for new renovations (for constructions, but also for everything else). As described on the website of FPS FinanceThis reduction, however, depends on certain circumstances. The dwelling must be in particular less than ten years old, and used as the main activity and as a private dwelling.

Registration rights

Remember that too Old property buyers must pay district tax, that is, registration fee. Normal range for this duty 12.5% In the Walloon region and the Brussels-Capital Region, against 12% in the Flemish region.

12.5%

Old property buyers must pay a registration fee. The normal rate for this duty is 12.5% ​​in the Walloon region and the Brussels-Capital Region, compared to 12% in the Flemish region.

When the new property is more than two years old, you are also required to pay the registration fee, before that date only 21% VAT will be applied. Note however that, for a new property, it is possible to pay the registration fee on the land only, but with certain conditions: “There must be two different owners. What the developers do is they buy the land through one company and build through another to reduce the impact on the final buyer. Comments Nicolas Jacquet.

Mortgage Credit and Registration Fee

There is no direct difference in accepting credit for new or old property: everything will depend on its assessment after work and the profile of the borrower. However, note thatThere are specific bank loans to finance the energy saving business. Flanders also advanced since 1Verse January 2021, 0% renewal credit.

This is granted, for a maximum period of 20 years (including the registration period), to owners who pledge to improve PEB of their interest in five years With regard to the loan as such, in general, part of the amount granted will be released at the time of signing the deed of purchase of land or property, and the rest, as and when construction or renovation takes place. Progress of work.

Also, due to deadlines that tend to get long, and To prevent customers from unnecessarily extending the direct debit period when work is delayed, “Banks from a certain moment calculate a booking commission (which is used to lock in the rate and terms of the mortgage) on the credit balance that has not yet been withdrawn”explain Valerie Halloy, spokesperson for BNP Paribas Fortis.



At BNP Paribas Fortis, for example, the customer will be subject to a booking commission of 0.20% on the undrawn portion of the credit after a twelve-month period.

Note, however, that when a customer builds or renovates with an energy-saving investment, there is no No booking commissionAt BNP Paribas Fortis, for example, the customer will be subject to a booking commission of 0.20% On the undrawn portion of the credit after a twelve-month period. Thus, the reserve commission is payable from the thirteenth month.

For example, for a housing loan of 100,000 euros: If 50,000 euros have already been withdrawn during the first twelve months, and the remaining 50,000 euros are contracted once after six months, then there will be no commission for the first twelve months, while for 50,000 euros withdrawn during the last six months, the commission is from 100€/month i.e. 600€ after 6pmOIS, will be applied.

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