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Tenancy law

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Welcome to Penrose Tenancy law

Penrose specialises in Dutch real estate and tenancy laws. Hereafter, we discuss some of the property law issues that we encounter on a daily basis.

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There are various types of rentals to cater for retail, business and residential premises. The Dutch legal rules governing the various categories vary considerably. For example, governing the termination options, rent increases and security of tenure.

For residential premises, a distinction is made in Dutch tenancy law for rental purposes between self-contained and shared accommodation. An independent dwelling is a dwelling with its own access, toilet and kitchen. For example, an apartment or a house. Shared dwellings do not have an independent access: the toilet, kitchen etc. are to be shared with others. For example, a premises with student rooms.

 

Rental period

Most rentals for residential premises are agreed for a fixed period of, say, one to two years. A widespread misconception is that the fixed rental period automatically ends both for the landlord and the tenant at the end of the agreed period. This is not the case. A fixed rental period affords the tenant security of tenure. This means that the landlord may only terminate the rent on limited legal grounds and after the fixed period has ended. The very same applies if the parties have concluded an open-ended rental agreement. Here also, the tenant will have security of tenure and the landlord may only terminate the rent on (the same) limited grounds. The tenant therefore cannot easily be removed.

 

Notice of termination by tenant

A tenant may terminate the rent at the end of the fixed period subject to a notice of termination in accordance with the notice period outlined in the rental agreement. In the case of an open-ended rental agreement, the tenant may terminate the rent at any time in accordance with the specified notice period. For the tenant, the notice period may not exceed the payment term. Is the payment term one month? Then the notice period is also one month. This applies even if the rental agreement specifies otherwise. Finally, the maximum notice period of three months may apply for the tenant.

 

Notice of termination by landlord

The landlord may only terminate fixed period and open-ended rentals on limited grounds as provided for under the law:

  1. if you fail to act as a reliable tenant, for example, by allowing a (three month) payment arrears period to arise or because you have created a serious nuisance;
  2. the landlord has an urgent need to avail of the residential premises;
  3. the landlord wishes to amend the rent and has made a reasonable offer in this regard. For example, because after a long rental period, the landlord wishes to adjust the rent in line with inflation and you, the tenant, disagree with this;
  4. the landlord wishes to erect a building at the location of the dwelling, in line with the zoning plan.

If any of the above grounds should arise, the landlord will be entitled to terminate the rent in accordance with the specified notice period. However, this does not mean that it actually ends. The tenant has the right to object to the notice of termination on the grounds of security of tenure. This means that the landlord may only terminate the rental agreement and require the tenant to vacate the premises once the matter has been decided on by the Netherlands court. If the tenant objects to the termination of the rent, the landlord may only terminate the rent by filing legal proceedings with the subdistrict court in the Netherlands.

Click here to view a (Dutch) sample from the Real Estate Council of the Netherlands (ROZ) of a rental agreement that is commonly used for residential premises.

By retail premises, we mean catering establishments, hotels and shops. This is often described (in the Netherlands) as a Section 290-business premises. Renting retail premises is subject to specific provisions, particularly in relation to the period, the retail premises rental and the notice regarding termination of the rent. These provisions are there to protect the tenant. The reason for this is that the location of shops, hotels and catering establishments is of great importance and the tenant therefore must be offered extra safeguards against issues such as a notice to quit from the landlord. It may prove difficult for tenants to continue with their business in another location.

 

Rental period

In principle, renting a retail premises is generally entered into for a period of five plus five years. This rule is mandatory under the Dutch rental law. It means that one cannot deviate from the law without just cause to the detriment of the tenant. After a period of 10 years has lapsed, the tenant and the landlord are free to make their own preferred arrangements in relation to the rental period.

 

Trial period

There is one exception that applies to the 5+5 rental contract system. The parties could enter into a rental period of two years or shorter. This option was created in order to allow tenants the opportunity to ascertain if their business is profitable. Here, Dutch rental law also works in favour of pop-up stores in for instance Amsterdam or Rotterdam. If the landlord gives the tenant notice to vacate the retail premises prior to the expiration of the two-year period, the tenant will not be entitled to rely on the security of tenure provision and must vacate the business. If the period of two years is exceeded (even by one day), the five-year rental period automatically comes into effect. As from that moment, the tenant will also have security of tenure for the remaining part of that five year period.

 

Notice of termination by the tenant

The tenant has the right to terminate the rental agreement with effect from the end of the agreed rental period. At least one year’s notice period applies, both for the tenant and the landlord.

 

Notice of termination by landlord

Where the notice of termination is given by the landlord, a distinction must be made between a notice of termination issued during the first rental period of five years and the period of five years subsequent to that. The rent does not automatically end upon expiration of the first or second rental period.

Where the landlord wishes to terminate the agreement towards the end of the first five-year period, the legal reasons for rent termination are more limited:

(i)         the tenant must be guilty of poor management practices, or;

(ii)        the landlord has urgent reasons for taking possession of the retail premises.

When the period of 10 years has expired, the landlord will have more options to terminate the rent under Dutch law. If the landlord terminates the rent and the tenant refuses to vacate the premises voluntarily, the landlord will be obliged to apply to the courts for a ruling, either in a main action or in summary proceedings. The tenant has the right to continue occupying the retail premises until such time as an irrevocable decision is handed down by the court. Rent does need to be paid. In coming to its decision on the matter, the Netherlands cantonal court will need to weigh the interests between the tenant and the landlord. Arguments that may be put forward in this respect include the fact that the tenant has refused a reasonable offer of an alternative retail premises or that the landlord wishes to develop the retail premises in line with the zoning plan. The grounds referred to in (i) and (ii) above may also be of relevance in the weighing up of interests. The competent Dutch court for dealing with such rental disputes is the subdistrict court, also referred to as the cantonal court.

To view a rental agreement, commonly used for a retail space, see the (Dutch) example from the Real Estate Council of the Netherlands (ROZ).

By business premises, we also mean an office space, referred to also (in the Netherlands) as a (Section) 230a business premises. In other words, all buildings that do not qualify as a residential and/or retail premises. Such buildings include, for example, offices, a warehouse or a plot of land for project development. With a business premises, both the tenant and the landlord have a lot of (contractual) freedom, for example, regarding the duration and termination of the rent.

 

Duration and termination of rent

When concluding a business premises rental agreement for a fixed period, the rent will automatically end (by operation of law) once the agreed period has expired. In the case of an open-ended rental agreement, this can be terminated at any time by the tenant or the landlord. This does not mean however that the tenant has no option but to vacate in accordance with the landlord’s notice of termination. In the first place, the landlord must give notice to vacate. The tenant may then continue using the premises for another two months. During this period, the tenant may apply to the court to extend the vacating period by a maximum of one year. During such Dutch rental proceedings, no eviction may take place.

To view a rental agreement, commonly used for an office space, see this (Dutch) example from the Real Estate Council of the Netherlands (ROZ).

Penrose has a team of Dutch Tenancy lawyers that specialise in Real Estate. They can provide advice and help you in finding a solution, for instance in case eviction. To contact our Dutch legal team, click here.

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