A subtle, almost elusive wealth strategy is quietly blooming in Brussels: Allocate your life savings to a modest apartment, earn rental income taxed at one of Europe’s lowest rates, and hand over appreciated assets to the next generation.
Thanks to a unique and outdated system that taxes income from rent based on a notional “cadastral value”, rather than the actual earnings, the Brussels real estate market has become a haven for pensioners who want to safeguard their wealth, prop up their pension, and one day leave an inheritance.
“The Belgian has a brick in the stomach,” said Patrick Willems, president of the National Union of Property Owners and Co-Owners (SNPC).
“We are still a country with a huge number of small private landlords, who’ve chosen rather than putting their money into a bank account or on the stock market, to invest in real estate with the goal of having two or three properties for rent and having an easier pension," he tells The Brussels Times.
Belgians are known for their tax optimization schemes — some call it the national sport — as they face the highest effective income taxes in the OECD, and this scheme is no exception. Like many quirky things in Belgium, the rental income tax once started as a sensible idea, only to morph, after centuries of convoluted history and a healthy dose of Belgian complacency, into what today can only be called an absurdity, at least at first glance.
Napoleon launched the “cadastre” in 1807 across the French Empire, including what’s now Belgium — then the Austrian Netherlands, annexed in 1795. It was a rational Enlightenment tool: uniform maps showing who owns which properties and surveys to estimate the rental income a property could theoretically generate in normal market conditions.
It was designed to update regularly and became the basis for property taxation. After Napoleon fell, the Dutch ruled briefly, and when Belgium became independent in 1830 it decided to keep the cadastre.
Except that Belgium somehow forgot the whole updating part. The last time a broad re-evaluation was carried out was 1975. As a result, cadastral income values have remained frozen in time for at least half a century. For Brussels, cadastral income values still reflect the gritty, post-industrial city it was fifty years ago — at odds with the sleek, upscale neighbourhoods that now define much of the city.
This outdated picture, especially in the formerly industrial neighbourhoods of western Brussels, yields cadastral incomes that are much lower than the real rental incomes many landlords receive today.
To complete the picture: Each year, the cadastral income is adjusted for inflation and by municipal, regional, and federal coefficients, yielding a notional figure that is added to the landlord’s income tax return and taxed at the marginal rate, often well above 50%. The resulting notional rental income is a theoretical figure that varies randomly and is typically much lower than real rental income received.
As a consequence, the effective tax rate on real rental income varies widely too — across regions, municipalities, and even from neighbour to neighbour — typically below 30% and, in some lesser developed neighbourhoods in Brussels, even below 10%. That’s a far cry from over 50% — and a slick move in the national sport.
Brussels has about 600,000 homes, of which about 350,000 are rented out. The rentals are mostly apartments owned by about 50,000 landlords, according to the SNPC. Most of them are local pensioners who own a few apartments and live in the same building or in the neighbourhood. A minority of landlords own more, over 20 and some up to 40 properties.
The typical Brussels landlord is a Belgian middle-class, self-employed retiree, drawn to apartments decades ago, for their generous tax breaks.
Barend Wind, a professor of spatial sciences at the University of Groningen, showed in a 2019 study that Belgium’s self-employed are far more likely than salaried workers to own and rent out secondary properties as a lifeline for retirement.
Belgium’s fragmented pension system offers generous payouts to employees but undercuts the self-employed, with income replacement rates as low as 30-45% after retirement.
Rental income fills that void, boosting self-employed households’ earnings by 15-35% during retirement, the study finds.
“Politics has allowed this to happen,” Prof. Wind told The Brussels Times, “because of the role rental income plays in replacing pensions for the self-employed. In fact, the way the welfare state is structured has a direct impact on how the housing market is structured.”
“Brussels has an enormous group of expats, from the European institutions and the wealth of businesses around it, who don’t live their whole life in the city. Brussels is also a city of arrival for a lot of people coming from outside of Europe. This raises the demand for rentals. On the other hand, there is a lot of capital across the country seeking a destination for pension-wealth creation. And that’s where the fiscally advantageous cadastral income tax — particularly low in some Brussels neighborhoods — comes in very favorably, facilitating the supply of capital for the rental market.”
As a result, Belgium has become a hotspot for small landlordism in Europe, only behind Germany, with over half of its secondary properties — homes beyond the primary residence — rented out, according to the European Central Bank’s latest Household Finance and Consumption Survey.
Belgium is joined by France, Luxembourg, and Ireland in a league where rental income is the main reason for secondary property ownership. And unlike Mediterranean countries and Finland, where second homes are often holiday retreats or old family homes, Belgians skew toward investment, turning apartments into steady cash flows rather than summer escapes.
“Small private landlords have a stabilizing effect on the market,” said Emmanuelle Causse, president of the International Union of Property Owners (IUPO), a European umbrella group for property owner associations, based in Brussels.
“Profit is not their main interest,” Ms. Causse added, “private individuals care much more about their property. They keep it for a very long time, it’s a life investment, you buy it for your pension and maybe to pass it on one day.”
IUPO data shows that private landlords raise rents less than large professional groups, fostering lower real estate prices and steadier markets in places like Brussels, where small landlords outnumber bigger players, Ms. Causse noted.
Brussels’ median rent for city-centre apartments is €16 per square meter, compared to Berlin (€20), Luxembourg City (€24), Paris (€38), Amsterdam (€38), and London (€52), per the 2025 Global Property Guide.
The cadastral income tax applies only to non-professional rentals. When landlords own multiple debt-financed properties, tax authorities deem it a business, requiring registration and adding a 25% corporate tax on actual rental income to a partial cadastral tax. This dims the appeal for big players, which often seek leverage, keeping Brussels’ landlordism small-scale.
Yet the main reason large investment groups overlook Brussels is its modest financial returns, according to Ms. Causse. Regulatory barriers, high costs, legal complexity, and language issues? “They can manage those.”
Brussels’ apartments yield 4.2 – 4.8% annually, per the 2025 Global Property Guide, measuring rent against purchase price — decent, but outshone by Bucharest (8.24%), Dublin (7.94%), or Riga (11.68%). Big investors seek higher yields or faster growth, often in Eastern Europe.
The bond between small landlords and slow, stable growth thus runs both ways, sidelining foreign firms that fuel volatile markets.
Some argue, however, that small landlordism in Brussels faces pressure from municipalities raising cadastral adjustment coefficients and increasingly costly regulations from the government.
“Renting has long been profitable here, but now the tides are changing,” Olivier De Clippele told us, a Brussels notary and an expert on residential real estate. “The older generation increasingly wants to sell, but younger generations are not eager to step in and continue the practice, instead buying to inhabit themselves.”
A 2024 study from Belgium’s second largest bank KBC Groep showed that one in three landlords in Brussels wants to sell within three years, compared to one in five across the country.
“The selling pressure has a downward impact on the apartment price, which for the moment remains stable, while the increased cost of upkeep and regulation is pushing rental prices up,” he said. Finally, he added, “several Brussels communes have raised their cadastral adjustment coëfficients in recent years, further eroding the margins for landlords.”
“It’s actually a good time for the young wealthy to buy and settle,” Mr. De Clippele concluded.
None of these pressures seem to threaten Belgium’s cadastral tax anomaly, though. Adjusted annually by a set of complex coefficients, it has carved out a cozy spot in the nation’s eclectic fiscal landscape after a two-hundred-year-long surreal journey.
“It would be a phenomenal work to re-evaluate the cadastral income after a 50 year hiatus,” said Patrick Willems, the home owners’ association president, “it would be highly costly and politically sensitive, frankly the government doesn’t have the capacity to do it.”
“I’m not saying it’s just, or even makes sense,” he admitted. “It’s just much easier to leave it like that.”
