Important for tenants in the Netherlands: new protection rules!

Do you rent your house in the Netherlands? If so, as a tenant you are protected against the landlord if, for example, he charges too high a rent, does not repair defects or does not want to repay the deposit at the end of the tenancy. The tenant can go to the Rent Commission or the subdistrict court, which will then give a ruling and, if necessary, order the landlord to repair or pay.

Good Landlord Act

From 1 July 2023, the Good Landlord Act applies. This contains additional obligations for the landlord. If the landlord does not comply with these obligations, the municipality has the option of imposing an administrative fine on the landlord. That fine can amount to €25,750 in extreme cases, and up to €103,000 in repeat offences. In certain cases, the municipality also has the option of temporarily taking over the management of the leased property. These are far-reaching measures.

New obligations for landlords and their enforcement

The Good Landlord Act changed/clarified the following:

  1. a) The landlord does not dircriminate. He uses a clear and transparent selection procedure and motivates his choices. He shall put his working method in writing
  2. b) The landlord shall refrain from intimidation
  3. c) The deposit may not exceed two months
  4. d) The tenancy agreement shall always be in writing
  5. e) The tenant is informed in writing of his rights and obligations, insofar as these are not included in the tenancy agreement
  6. f) The municipality opens a municipal hotline, where tenants can address complaints
  7. g) The municipality is authorised in certain cases to introduce a permit requirement by ordinance. In that ordinance, the municipality can attach conditions to the licence that relate to good landlordship, rent and maintenance. When renting to labour migrants, rules regarding the accommodation and facilities can also be set.
  8. h) The rental agreement must state: the term of repayment of the deposit (14 days without settlement, 30 days with settlement of costs), the details of a caretaker the tenant can contact, the contact details of the municipal hotline, which service costs are due, that an annual overview of the service costs breakdown must be provided.
  9. i) No more service charges may be levied than permitted by law
  10. j) No mediation fees may be charged to the tenant if the mediator also acts for the landlord
  11. k) When renting to migrant workers, the rental agreement must be recorded separately from the employment contract
  12. l) Information on further rights and obligations must be recorded in a language the migrant worker understands

If a landlord fails to comply, the municipality may impose a fine. In case of multiple fines, or if a landlord does not comply with the applicable licence conditions, the municipality may take over the management of the rented property. It can then set the rent at the legal maximum, collect the rent and install necessary facilities. At the landlord’s expense, of course.

More information

Fortunately, most landlords are good ones. Should you still face a problem with the landlord, then please contact us. We will be happy to act for you.

Tenancy agreements for residential accommodation

When you are planning to rent out your house, there is a lot to arrange and even more to consider. The most important of all is to draw up a good tenancy agreement. It would be wise to check the tenancy agreement before signing so you know your legal rights and obligations. There are three main categories of residential tenancy agreements, each with their own set of legal provisions. I this article I will shortly discuss the categories of tenancy agreements for residential accommodation and their legal aspects.

1. Tenancy agreement for an indefinite period of time

Generally speaking, one enters into a tenancy agreement for an indefinite period of time.

The tenant may terminate the agreement at any time. He does not need to explain the reason why he wants to terminate the agreement. He does however need to comply with a notice period, which is equal to period between two payment days (usually one month, maximum three months). And he has to give notice of the termination by registered letter or bailiffs writ (article 7:271 paragraph 3 DCC).

If you want to terminate the agreement as a landlord, you are limited by the statutory grounds for termination as listed in article 7:274 DCC, such as bad tenancy and urgent personal use. You are only allowed to terminate the tenancy agreement on the basis of one of these grounds of termination. For a landlord there’s a notice period of three to six months. This depends on how long the tenancy agreement has lasted. And just like the tenant, you have to give notice of the termination by registered letter or by bailiff’s writ. If the tenant agrees with the termination, the agreement is terminated. If the tenant does not agree, then you must  ask the court to terminate the agreement. In that case, the agreement is not terminated until the court decides and the decision is irrevocable (article 7:272 DCC).

Besides termination by notice, you can end a tenancy agreement by mutual agreement (article 7:271 paragraph 8 DCC). And by termination for breach of contract (article 6:265 and 7:231 DCC). This applies to all tenancy agreements, regardless of their duration.

2. Tenancy Agreements for an indefinite term with a minimum lease period of one or two years

This type of agreement ends after termination by the lessee or lessor after that specific period. Premature termination is not allowed. Following on from the above, the lessor has the obligation to refer to his specific (statutory) ground for the termination. This last type of tenancy agreement is under pressure, some people feel that this type of agreement cannot exist since the Property Rental Market (Measures to Facilitate Movement) Act 2015 came into effect. Others emphasize that the minister has indicated that this was however not the intent of the legislature. The Supreme Court has not decided on this subject yet

3. Tenancy agreement for a definite period of time of two years or less

You can also decide to use the agreement for a definite period of no longer than two years. (See article 7:271 paragraph 1 DCC). The tenancy agreement must then contain explicit provisions. Such as that the agreement is entered into for a definite period of time. In this case of two years or less in the sense of article 7:271 paragraph 1 DCC.

Article 7:271 paragraph 1 DCC allows you to rent out your house, without the tenant enjoying full rental protection. This means you are not bound by the termination grounds of article 7:274 DCC. Therefore, you can end the agreement by simple notification one to three months before the end of the tenancy agreement. The notification that the agreement will end on the agreed upon end date will then suffice.

It is not possible for you to terminate the agreement prematurely. If you notify your tenant in time, the agreement will end automatically. If you do not notify your tenant (on time), or if you extend or sign a new  tenancy agreement with the same tenants, the agreement will automatically convert into an agreement for an indefinite period of time. In that event, the tenants will enjoy full security of tenure.

A tenant may terminate the agreement at any time and he can do so by simple letter notifying his landlord that he wants to terminate the agreement. Also, he has to comply with the notice period. This period is equal to the rent payment term (usually one month, maximum three months).

4. Tenancy agreement for a definite period of time of more than two years

Finally, you can choose to rent out your house for a definite period of time of more than two years. This agreement is much alike the agreement for an indefinite period of time. As a landlord you may only terminate the agreement on the basis of one of the termination grounds of article 7:274 DCC. If your tenant does not agree with the termination, the agreement does not end until the decision of the court to terminate the agreement is irrevocable. Also, both you and the tenant have to terminate the agreement by registered letter of bailiff’s writ and you both have to comply with the aforementioned notice period of (usually) one month, respectively three to six months. Then, the agreement will end automatically on the end date.

This tenancy agreement differs from a tenancy agreement for an indefinite period of time in the sense that neither the tenant nor you may terminate the agreement prematurely. Both parties have to wait until the agreed upon end date. If you and your tenant wish to extend the tenancy agreement, this extension will convert the agreement into an agreement for an indefinite period of time.

Get help with your tenancy agreement for a fixed fee

Summarizing, the type of tenancy agreement is guiding for the security of tenure. In addition, one can include specific clauses with regard to nuisance, commercial hemp cultivation or illegal subletting, especially seeing on termination because of breach of contract or penalty stipulation.

Finally, over the last years a lot of municipalities have drafted housing bylaw (in Dutch: ‘huisvestingsverordening’), seeing on housing permits, housing evaluation points (number of points scored in a housing evaluation system to determine the rent), or putting a maximum to the amounts of tenants per house in certain areas. It is important to draft or check clauses regarding these subjects as well, since revoking a housing permit will cause major consequences for both owner and tenant

 

Need advice?

GMW lawyers can review your tenancy agreement or specific clauses. They can also provide you with a general legal advice for a fixed fee of EUR 750 including office costs and VAT or draft a tenancy agreement for a fixed fee of EUR 1250 including office costs and VAT.

This written advice contains an overview of your legal rights and obligations regarding the tenancy agreement. In addition, we point out any risks (or red flags) and offer suggestions to alter clauses if necessary. Based on this advice, you can then decide whether you want to use the tenancy agreement you’ve drawn up. Or if you would like to add, alter of remove any clauses.

Our fixed fee package covers only the review and initial advice – but our support does not stop there.

If you need further legal advice about renting out your house, assistance with understanding your rights and obligations, if you have a dispute, or if you need additional help with a specific situation, our lawyers can continue to help you according to our hourly rates.

Please feel free to contact one of our specialists for more information or to request our fixed fee service.

The diplomatic clause

Are you a diplomat who is about to be deployed to another country? Then it is possible for you to rent out your home for the time you are away, by including a so called ‘diplomatic clause’ in the tenancy agreement. This allows you to terminate the tenancy agreement and return to your home at the end of your deployment. Article 7:274 paragraph 2 DCC allows such clause, or a similar clause for landlords who wish to temporarily stay elsewhere for a different reason, but want to return to their home eventually.

Conditions of the diplomatic clause

The diplomatic clause is one of the grounds of termination the Dutch law allows. Do you want to successfully terminate the tenancy agreement on the base of the diplomatic clause? Then it must be clear that the tenant is entering into the agreement for a definite period of time. And that the tenant must vacate the home at the end of that period. You can explicitly determine this in the agreement. When giving notice of the termination, you must also specify to the tenant that you are invoking the diplomatic clause.

In the case when they prolong your deployment it is possible to extend the tenancy agreement. This could again be for another definite period of time as long as your your tenant agrees. The Dutch law allows such extension(s) with the retention of the diplomatic clause. Whereas they don’t allow an extension of a tenancy agreement for a definite period of time without a diplomatic clause. The extension would then automatically convert the tenancy agreement to an agreement for an indefinite period of time. Herein lies the advantage of the diplomatic clause.

Please note

There are a few things you need to be aware of when terminating the tenancy agreement by invoking the diplomatic clause. First, you must comply with the notice period. This notice period is three to six months, depending on the duration of the tenancy agreement. Second, if your tenant does not agree with the termination in writing, you must ask the court to terminate the agreement. The agreement does not end until the decision of the court is irrevocable. Third, you can’t invoke the diplomatic clause if you do not intend to live in your home upon your return. For example, if you want to use it as an atelier or otherwise.

Alternatives

Do you already know that your deployment won’t last more than two years? Then you can also choose to rent out your home for a definite period of no longer than two years (article 7:271 paragraph 1 DCC). In order to terminate such an agreement, you would only have to notify your tenant one to three months before the end of the tenancy agreement. The notification need to include that the agreement will end on the agreed upon end date. The agreement will automatically convert into an agreement for an indefinite period of time if you extend the tenancy agreement. This could also happen if you do not notify your tenant (on time). Therefore, if the time of your deployment or leave isn’t sure, this might not be the best option for you.

Besides the diplomatic clause, another ground for termination of a tenancy agreement is that you have an ‘urgent personal use’ for your house (article 7:274 paragraph 1, sub c DCC). However, for a successful termination you would have to prove that there is an urgency to get your house back, that you will use the house permanently again and that there are other suitable houses available for the tenant to rent.

How to avoid obstacles

Moreover, the interests of the property owner and the tenants will have to be weighed up, with an uncertain outcome. The judge could also oblige you to compensate moving- and furnishing costs of the tenant. And if you do not inhabit your house within one year, there is a risk that you have to pay the tenants compensation for the fact that they had to move without you returning to the house. By including a diplomatic clause in your tenancy agreement, you could avoid all these obstacles.

If you think a diplomatic clause is suitable for you,please do not hesitate to contact with one of our real estate lawyers.

Conflicts with a building contractor

Hiring an inaccurate building contractor can cause a lot of issues. This blog will inform you on what to do when conflicts with a building contractor arise. In general, the contractor has a duty to heed any orders and directions issued by or on behalf of his client. He has to carry out the work properly and thoroughly in accordance with the provisions of the agreement in question. Additionally, the contractor is liable for any damage he inflicts on a client’s other works and property. He is liable for all damage caused by the execution of work and attributable to negligence. However, carelessness or improper conduct on the part of the contractor also falls under this liability. Including the damage caused by the contractor’s staff, subcontractors or suppliers.

Whether the contractor fails to fulfill his contractual obligations, strongly depends on the specific circumstances of the case. First, it needs to be clear on what work(s) the parties have agreed. The offer, final agreement and further correspondence provide a frame work to give more clarity on this subject. Secondly, there will need to be proof of the defect itself. Again, this strongly depends on the agreements regarding the quality, time frame, and quantity of the works.

Notice of default and conversion statement

In most cases, the contractor has the right to correct his errors. This is because an agreement cannot be terminated easily under Dutch law. Therefore, the client needs to call the contractor to account as soon as possible and give him a deadline in writing to perform properly or to correct the defect. This is called a notice of default. If the contractor does not comply within the set (reasonable) time, he runs a great risk.

Depending on the seriousness and scope of the breach, the client has multiple options, such as (partial) termination, suspending his obligation to pay, or opting for a conversion statement (in Dutch: ‘omzettingsverklaring’). With such a declaration, the client can convert the obligation to perform into an obligation to pay compensation. The contractor can then no longer perform the contract, and is obligated to compensate the client for the damages; in most cases the costs of hiring a third party to finish the works. Once a conversion notice has been sent, the client cannot rescind the contract.

Risks


Please note that short delays or minor defects do not justify termination or making a conversion statement. If the client acts unduly expeditiously, he could actually be the one failing his contractual obligations by not paying the agreed sum or refusing the contractor to finish the works. This makes the contractor the party who may terminate the contract.

Summarizing, it is very important for the client to take all necessary steps in a well-considered way, since you cannot easily undo your (legal) actions. Therefore, we advise you to let an independent building contractor or building engineer review the works, since their reports can be crucial for rightfully taking the necessary legal steps. After this, a lawyer can assist you in taking the next steps, depending on the nature and seriousness of the defects.

 

If you have any questions regarding conflicts with a building contractor, please do contact us.

The 3 most common breaches of contract by a tenant

A landlord can ask the court to terminate a residential tenancy agreement. This is possible in cases where the tenant breaches the agreement. The court can consequently order the tenant to evict (in Dutch: ontbinding en ontruiming) the property. A residential tenancy agreement can be terminated according to the statutory grounds for termination by giving notice (in Dutch: opzegging). Termination of  an agreement can also take place by mutual consent (in Dutch: wederzijds goedvinden). However, sometimes a breach of contract is also one of the grounds for terminating a residential tenancy agreement as well.  In the following I will discuss the three most common breaches of contract by a tenant.
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Renting out your property: management agreement or tenancy agreement?

Increasingly, property owners choose to outsource the management of their properties. There is often no proper definition of what is for whose account, with costly and sometimes irreversible consequences. The main cause of this problem are the often unclear drafted agreements between owners and property managers. When you’re renting out your property; Do you choose management agreement or tenancy agreement? Read more down below.

Lease or management agreement?

The title of the agreement is not decisive for the qualification of the agreement. This is also evident from a 2019 case. Here, the parties had called the agreement agreed upon between them a “rental agreement for living space”. A specific clause granted the tenant/manager the right to sublet the premises. When the property owner wanted to terminate the lease, the tenant/manager invoked rent protection. (As if he was a regular tenant).

If this appeal succeeded, the tenant/manager could continue to sublet the rooms for an indefinite period of time. Both parties referred to the agreement as a “rental agreement,”. However, the actual performance of the agreement led the Court to come to a different conclusion. They stated that the agreement could not be classified as anything other than a management agreement. The tenant would have rent protection if the court had ruled that there was a rental agreement. This would have made it more difficult for the property owner to terminate the rental agreement.

Company as resident

In a similar case, the District Court of Amsterdam ruled that there was a management agreement with, among other things, the consideration that a private limited company could not even occupy a property as a tenant.  This made it legally impossible to speak of a tenancy agreement, contrary to what the parties had agreed.

Notices to the administrator

(Non) given announcements can also lead to a discrepancy between the tenant, landlord/manager and property owner. In a case from 2012, the tenant believed that the manager had given him permission for a large-scale renovation. The manager in turn defended this. He was stating that the tenant could not even assume that he was authorized to give permission for large-scale renovations. The Court of Appeal of Amsterdam did not go along with the manager’s defence. The claimed that giving permission for a major renovation does indeed fit in with a manager’s job. The tenant was therefore entitled to assume that he was allowed to carry out the large-scale renovations.

In addition, the tenant thought he had permission to sublet the rooms. The court ruled that even if the manager had said that he gave permission for subletting, the tenant should not, in principle, have trusted that the owner had entrusted the manager with such powers. Such a communication concerns exploitation of the property, and one can not consider this to be part of the management by the manager.

Conclusion

These cases are frequent. They are also good examples of why it is important to draft an agreement between manager and property owner carefully. It is important to prevent a property owner from the confrontation of major renovations of his premises by the tenant. As well as the prevention of subletting by the tenant or a manager suddenly invoking rent protection.

If you have any questions regarding renting out your property, please do contact us.

 

The differences between renting or leasing commercial space

What are the differences between renting or leasing commercial space? If you rent or lease commercial space, Dutch law distinguishes between two ‘types of commercial spaces’. The so-called 230a-spaces and 290-spaces. The difference between the two types of business premises and the applicable legislation is important for both tenants and landlords. In this blog I will discuss some important differences.

290 business premises

Business premises qualify as 290 business space if you lease the building or part thereof for the operation of a retail business. Such as a restaurant, a café, a take-away or delivery service or a craft business. The relevant aspect or criterion is whether the space is a publicly accessible area and if you’ll use it for the direct supply of goods or services.

In simple terms, a commercial space qualifies as a 290-spaces if consumers can physically enter and buy or order things in the leased space. For example a supermarket or a hairdresser. Hotels and campsites also fall under this legal regime.

Duration

The tenant of a 290 business space has a relatively high level of tenant protection under Dutch law. The most striking aspect is the duration of the rental agreement. The initial rental period for 290-spaces is five years. If the contract is not terminated (in time) it will be extended for another five years by law. If the tenancy agreement has not been terminated after ten years, the tenancy agreement becomes a contract for an indefinite period by of law.

Possibilities of termination

In addition to the protective regulations for the tenant regarding the duration, the termination options of the lease contract for 290 business spaces are limited.

Both the lessor and the lessee can only terminate the lease at the end of the agreed term. This is however subject to a notice period of at least one year. The termination of a lease contract of a 290 business space can therefore not happen prematurely. However and for completeness I point out that premature termination by mutual consent is possible. One can terminate a permanent lease at any date. In all cases termination by the landlord is only possible if he states the reason(s) for termination.

The law only grants a few specific grounds for termination to the landlord. Which grounds for termination the landlord can use depends on the lease period(s) that have passed. The most common grounds for termination are: bad tenancy behavior and urgent own use by the landlord. Bad tenancy is, for example, if the rent is structurally not paid or not paid on time or if the tenant causes structural nuisance.

If the tenant does not agree to a termination by the landlord within six weeks, the landlord has to go to court to have the termination reviewed. Such a procedure is often time-consuming and costly.

230a business premises

If the leased property does not fall under the regime of residential or 290 business spaces, the 230a regime applies. Common examples of 230a business spaces are office space, factories, storage space and showrooms.

The tenant of a 230a space has much less legal protection than the tenant of a 290 space. The rental period, for example, is not subject to any form of contract. One can conclude it for a short(er) period. It is common practice that parties agree on a term of (only) one year, which period will automatically extend. An indefinite period is also possible.

A contract for a definite period ends automatically when the agreed period expires. A contract for an indefinite period ends by termination by the lessee or lessor. A reason for termination is not necessary. However, a notice period must be observed. Unless otherwise agreed, the notice period is equal to the term of payment. If the rent is paid monthly, the notice period is in general one month. However, an extended notice period could be applicable if the principles of reasonableness and fairness so require.

Note that the tenant can extend his stay in the event of termination by the landlord by invoking eviction protection. For example, because he needs time to move to another business accommodation. This period can be a maximum of three years after the date on which eviction from the leased property was given notice.

Conclusion on renting or leasing commercial space

The legislations that apply on the lease of a commercial space depend on the type of business space the tenant rents. When it comes to 290-premises, such as retail space, there is far more protection for the tenant than when it comes to 230a space.

Further agreements can be made in the tenancy agreement, for example regarding the termination of the contract. When it comes to 290-premises the legal rules may never be deviated from to the detriment of the tenant. However, when it comes to 230a space, parties have a lot of freedom to incorporate specific arrangements in their contract.

When entering into a commercial lease, both as landlord or a tenant, it is advisable to carefully think about the applicable legislations and the obligations by law and by contract. And when it comes to 230a space, I recommend to already incorporate agreements about, for example, the extension of the lease period, the notice period in case of termination and of course the actual possibilities of termination. When it comes to 290 commercial space, the landlord would do well to carefully organize the possible  termination of the lease.

More information?

In case you have questions about renting or leasing commercial space, ensure certainty and have your tenancy agreement assessed by a lawyer, please do not hesitate to contact us.

4 documents to read before buying an apartment

The communal interests of the various apartment owners in one building are regulated in the Dutch apartment right. Besides the rules of law, the rules for a specific complex of apartments are written down. These are the 4 documents to read before buying an apartment:

  1. the deed of division,
  2. the general property division regulations which have been declared applicable in the deed of division,
  3. internal regulations –in case they exist-, and
  4. the minutes of the VvE-meetings are important. All owners are bound to the decisions that are made in these meetings.

It is to be advised to check all these 4 documents carefully before signing the purchase-agreement of the apartment. This way, unexpected surprises can be avoided.

The deed of division

A building is divided into different apartment rights, which are described in the deed of division. The deed of division contains a description of the fractional share of each apartment in the building, the fractional share of each apartment in the contribution of the communal costs, and the voting ratio. Furthermore, the division deed contains division regulations, which mostly consists of the reference to one of the model regulations registered in the public registers, as well as amendments and additions thereto. And last but not least, the deed of division establishes an Owners’ Association (VvE), which manages the common parts of the building. Unlike ordinary associations, all owners are members by operation of law. There is no choice here.

In particular the voting ratio might be interesting to check before signing the purchase-agreement. Can your vote be of any importance? Or will you be overruled anyway by a major owner?

The division regulations

The division regulations contain all general rules of the VvE, including which parts belong to the community and which do not, which decisions require permission of the VvE-meeting, how a budget must be set up, how a meeting must be organised, the duties and power of the board, etc.. More modern regulations also contain rules on the quality of the floors in the individual apartments, or rules on sustainability.

It is very important that these rules are followed. If not, there is an actual risk that a situation or decision can be annulled or can be declared illegible.

The rules in the deed the division or the division regulations can’t be altered just by a decision at the VvE-meeting. In case the VvE-meeting wishes to deviate from the deed or the rules, they will have to decide to change the whole deed first. However, this is not easily done. A notary must draft and register a whole new deed and all owners, or at least 80% have to cooperate.

Internal regulations

The internal regulations can be established or altered by a majority of votes in the VvE-meeting. They must also be in line with the the rules in the deed, the division and the division regulations. They are suitable for example to make sure that bikes are not stalled on the gallery, elevators are kept clean, etc..

Some internal regulations forbid smoking in the individual apartments, or having pets. This is overruled by court in case law. Smoking and having pets are a private matter. As long as they don’t bother the community with any nuisance, the VvE has no say in this.

Meetings and decisions

The VvE meets at least once a year. At the meeting, decisions are made, which are in turn implemented by the board of the VvE. If an owner disagrees with a decision, he can apply to the cantonal judge within one month to have the decision annulled. The cantonal judge can annul the decision in case he concludes that the prescribed process to come to the decision was not followed, or in case he concludes that the decision is contrary to one of the main rules of apartment right: all members in the community must behave to one another according the rules of reasonableness and fairness.

Resolutions that are contrary to the division deed or the division regulations are null and void and do not need to be annulled. For that purpose, one can go to the ordinary court to have the nullity determined. No specific time limit applies (except for the statute of limitations). A resolution in which, for example, a communal debt is divided among only a few owners, can be null and void.

 

The VvE-specialists of GMW lawfirm will be happy to represent or advise you in case of a VvE-dispute. You can contact us here. We can work it out!

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