Fainting in Coyles An occasional letter from the
Heart of Euroville
Friday, January 16, 2004
I cannot make head or tail of this, but here goes.
Dread moment I know, but it comes to us all. I am trying to buy a house. Now property prices are very reasonable in Brussels – nobody would live here by choice unless they were…
a) Escaping from North Africa.
b) Working for, or around the EU, or
Yesterday I went to a house auction. The property was a rather fine turn of the century building in an area that is being gentrified – that is EU types are moving in. There are cars on both sides of the street, badly parked with the blue, tax-free Euro plates (Oh yes, you get a different (lower) tax rate and number plate if you work for the institutions).
Well the auction took place in a dusty small claims court. A reserve price of 60,000 euro was set and the auction started. The auctioneer stayed impassive, it is up to the floor to suggest prices. Slowly the price raised with people shouting out different figures, up it went to 150 – 160,000 and stopped.
Going once, going twice, sold.
Now according to my understanding that is it. But no, this is Belgium. The vendors sidled up to the notaire and his staff. After a five minute huddle the notaire returned to his seat and announced.
“Right there will not be another auction in two weeks if the price goes up”. This is where, I lose track of the system. It appears that if, despite the property raising to 1000,000 above the reserve price and the gavel coming down, if the vendor believes that he can get more then he can organise another auction in a fortnight to get a better price. Or somebody who is interested can offer 10,000 or more above the selling price and gazump. Not only that but the final purchaser has to pay the extra costs of new advertising and the notaire etc.(cost approx 6,000)
The notaire then announced that if the price went up to 175,000 there would be no future auction and, in a little aside the tax rate would drop to only 16% (It can go as high as 22% purchase tax).
Sure enough the price did rise until it hit 175,000.
Can somebody explain to me how a system like this is fair on the purchaser? I have always believed that when the gavel goes down, that is the point where a contract is agreed.