Circular NBB_2025_16 on ADC exposures to residential property under Article 126a of Regulation (EU) 575/2013

Public NBB_2025_16 – 18 November 2025 Circular – Page1 /3 14 Boulevard de Berlaimont,1000 Brussels tel. +32 2 221 30 17 company number: 0203.201.340 Brussels RLE www.nbb.be Circular Public Brussels, 18 November 2025 Reference: NBB_2025_16 Your correspondent:
Saïf Chaïbi
Tel. +32 2 221 56 88 saif.chaibi@nbb.be
EBA Guidelines (EBA/GL/2025/03) of 27 June 2025 on ADC exposures to residential property under
Article 126a of Regulation (EU) 575/2013
Scope
This circular applies to credit institutions, financial holding companies and mixed financial holding companies approved or designated under Belgian law (hereinafter “institutions”), both on a consolidated and on an individual basis. This circular specifies the NBB’s approach to less significant institutions. Significant institutions subject to direct supervision by the ECB are recommended to follow this circular insofar as the ECB has not published guidelines on this matter. Summary/objectives The purpose of this circular is to implement the European Banking Authority (EBA) Guidelines EBA/GL/2025/03 of 27 June 2025 on ADC exposures to residential property under Article 126a of Regulation (EU) 575/2013 (hereinafter “the EBA guidelines”). French and Dutch versions of the EBA guidelines can be found on the website of the National Bank of Belgium.

Public NBB_2025_16 – 18 November 2025 Circular – Page2 /3 Dear Sir or Madam, As part of the Standardised Approach to credit risk, Article 126a of the Capital Requirements Regulation1 (CRR) introduces a new class of exposures within those secured by mortgages on immovable property, which covers land acquisition, development and construction exposures (hereinafter referred to as “ADC exposures”). ADC exposures are considered to present an increased risk and, as a result, a specific risk weight of 150% is provided for in Article 126a of the CRR. However, institutions may assign a 100% risk weight to ADC exposures to residential property where the institutions comply with strict origination and monitoring standards and where at least one of the credit risk mitigation conditions specified in Article 126a(2) of the CRR is met. Namely that:

• legally binding pre-sale or pre-lease contracts for which the purchaser or tenant has made a
  substantial cash deposit which is subject to forfeiture if the contract is terminated, or where the financing is ensured in an equivalent manner, amount to a significant portion of total contracts;
• legally binding sale or lease contracts, including where the payment is made in instalments as the
  construction works progress, amount to a significant portion of the total contracts;
• the obligor has substantial equity at risk, which is represented as an appropriate amount of obligor￾contributed equity to the residential property value upon completion.
  In its guidelines of 27 June 2025, the EBA specifies the terms “substantial cash deposits”, “financing ensured in an equivalent manner”, “significant portion of total contracts” and “appropriate amount of obligor-contributed equity”. The supervisory authority fully adopts the guidelines attached to this circular. This circular applies from 18 November 2025. With respect to the definition of “substantial cash deposits”, two separate threshold levels have been established: firstly for pre-sale contracts (i.e. not lower than 10% of the sale price), and secondly for pre￾lease contracts (i.e. not lower than three times the monthly rent). With respect to the term “financing ensured in an equivalent manner”, equivalents to the cash deposit are to be exclusively considered as instalments paid and cash held in a segregated account, both subject to forfeiture if the contract is terminated. In order to determine whether the portion of total contracts is significant, the guidelines introduce two separate ratios for pre-sale/sale and pre-lease/lease contracts, proposing a threshold of 50% for each:
• for pre-sale or sale contracts, this refers to the ratio of the sum of the sale prices of the signed
  “eligible” contracts to the credit facility, including drawn and undrawn amounts, granted to the borrower to finance the ADC project;
• for pre-lease or lease contracts, this refers to the ratio of the number of signed “eligible” contracts to
  the total number of units that are part of the ADC project.
  With regard to the appropriate amount of obligor-contributed equity, the guidelines define a closed list of five elements that can be considered as forms of equity, and require the ratio to the residential property value upon completion not to be below 25%. With regard to lending by institutions to public housing or non-profit entities that are regulated by national law and that exist to serve social purposes and to offer tenants with long-term housing, the guidelines define a specific framework which remains optional in relation to the general framework at the discretion of credit-granting institutions. This specific framework stipulates that ADC exposures to social housing projects may be assigned a 100% risk weight when the number of applicants for social housing units exceeds the number of units available for lease at the project level or, where such data is unavailable, at the municipal level. 1 Regulation (EU) No 575/2013 on prudential requirements for credit institutions.

Public NBB_2025_16 – 18 November 2025 Circular – Page3 /3 ADC exposures to social housing projects may still be assigned a 100% risk weight by applying the thresholds provided for in the general framework. In this context, the condition for the equity at risk is adjusted in two ways: the threshold is lowered to 20%, and subsidies and grants committed (i.e. not already paid) to the obligor for project costs are now allowed in the equity calculation. A copy of this circular will be sent to your institution’s accredited auditor/audit firm or accredited statutory auditor/audit firm. Yours faithfully, Pierre Wunsch Governor
Annex: EBA Guidelines EBA/GL/2025/03 of 27 June 2025 on ADC exposures to residential property
under Article 126a of Regulation (EU) 575/2013.