Participative financing platforms have made the renovation of buildings a major focus of their development.
With an ageing property stock and a shortage of new residential projects, we know that Brussels faces a colossal renovation challenge in the years to come. The figures speak for themselves. In order to reduce average energy consumption in housing by a factor of 3 and achieve energy neutrality in the tertiary sector by 2050 — a target set by Europe — the Brussels region needs to renovate no fewer than 250,000 homes by 2033. This figure is set to triple to 745,000 by 2043.
No more energy inefficiency
Energy-inefficient properties — those with an EPB rating of “F” or “G” — will be banned from 2033 onwards. The impact of this measure on property valuations is tangible. As noted by our colleagues at L’Echo, a flat with an EPB rating of A in Brussels recently sold for an average of €4,589/m², compared to €3,015/m² for one rated G. According to the ERA estate agency network, energy-guzzling homes have already lost 1.2% of their value in 2024. For owners looking to maintain their property’s value, renovation is no longer optional.
Platforms as key players
For several years now, most Belgian crowdlending players have made the building renovation sector the key segment in their development. Crowdfunding is a term used to describe approved participative financing platforms that enable individual investors, or even companies with cash to invest, to finance business projects. While their success has been growing since they first appeared around ten years ago, 2024 marked the first time that the sector has seen a decline. "But our performance is closely tied to the real estate market, which has suffered. Mortgage rates were too high, limiting households' access to property. This has left players with stocks of property on their hands and prevented new projects," explains Frédéric Levy Morelle, CEO of Look&Fin.
Sensitive to interest rates
"With the inflation in raw material prices and the rise in interest rates, property developers have been hit hard by a double risk in both construction and sales. Banks suddenly lowered their ceiling for financing new projects to 80%. They also required that at least 30% of the flats be pre-sold off-plan before they could be granted financing," confirms Joël Duysan, CEO of Beebonds, another established player in Belgian crowdlending.
Property dealers as partners
Look&Fin now devotes more than 80% of its applications to renovation projects. In 2024, it backed around 100 projects, with average funding of €600,000. The platform supports property dealers in particular. These are people who buy existing buildings that they renovate, and sometimes restructure, before putting them up for sale. Taking the place of the bank, the platform finances the acquisition and then the renovation work in two separate instalments. ‘The second amount is held in a bank account and released as the work progresses,’ explains Frédéric Levy Morelle.
But why this particular interest in property dealers? "Their projects have a much shorter duration than those of property developers. On average, it's two years", explains the CEO. In fact, his platform only accepts projects that do not require planning permission (we know how long that can take in Brussels) or, or at least where permits are cleared of any potential legal appeals.
Strictly selected projects
The platform's financial committee uses other criteria before agreeing to finance a project. "To be eligible, the project leader must demonstrate real expertise, for example by having successfully led at least three projects of a similar size and nature. As for the asset, it must meet a certain number of geographical, quality and liquidity criteria", explains Frédéric Levy Morelle. So while buildings that are too ‘low-end’ are excluded, the same applies to luxury properties. In addition, the technical complexity of the project is also thoroughly analysed.
A new rental certificate
The Beebonds platform, on the other hand, supports property projects that have already been financed to a large extent by a bank loan. In this case, participative financing will represent a maximum of 75% of the ‘own effort’ required by the bank.
Recently, the platform introduced a new innovative product: the rental certificate. It allows a company that owns a completed and let property to refinance energy efficiency upgrades in exchange for a portion of the rental income. “This allows owners to retain tenants who are increasingly sensitive to the energy performance of their home, or to bridge the time while waiting for public subsidies. It can also prevent a property company from having to sell one asset to renovate another,” explains Duysan. By receiving part of the rental income, investors limit their exposure to risk, as the property is already let.
The loans set up in this way are spread over a period of 5 to 15 years. A proportional share of the indexed rental income goes towards interest repayments, while the capital is repaid at the end of the term. To secure the loan, six months of interest are held in reserve for three years. Here too, both the quality of the asset and tenant are carefully analysed by a financial committee, with quarterly project reports required.
The challenge of public buildings
The rental certificate allows the platform to target private owners, companies and public bodies, whether for residential or commercial buildings. According to Joël Duysan, there is no shortage of applicants with projects in mind. The challenge is to convince a growing number of investors of the opportunities offered by the certificate. "According to estimates by the Cap Construction cluster in Wallonia, the renovation of Walloon public buildings alone will require an investment of €50 billion between now and 2040. When you consider that €300 billion is available in personal accounts and €1,700 billion in corporate cash investments, it makes perfect sense to use platforms to put people in touch with each other", he points out.
The real estate future of Brussels in question
Turning back to Brussels, Frédéric Levy Morelle is asked for his current view on the capital’s property market. He first points out that the other two regions have significantly reduced their registration fees. While he understands Brussels’ budget constraints, he questions why that fiscal deficit is compounded by inefficiency in permit approvals. Above all, the CEO is concerned about the impact of the recent rent control ordinance. “On the one hand, we have measures pushing first-time buyers out of Brussels, which is turning the city into a place of renters. Fair enough — but if that’s the model, we need to attract owners willing to invest in bricks and mortar. Yet the rent reference index adopted by the authorities seems completely detached from market reality. In such conditions, investors will simply go to Walloon or Flemish Brabant rather than Brussels,” he warns.