15 April 2015

Rental agreement in the Netherlands

Category: Contract law

Dutch law on lease has different rules for office space/ business premises and retail space (like shops and catering outlets) and for rental agreements for houses. For the lease of office space and other business premises (not being shops, catering, et cetera) section 7:230a of the Dutch Civil Code applies. There are very little rules on the rental contract for such business premises. Usually the lease term is for five years. The landlord and the tenant are free in negotiating any other least term and conditions. Feel free to contact real estate lawyer.

Dutch law on retail space

The Dutch law on retail space or catering space is quite different. The Dutch Civil Code has some compulsory rules regarding rental agreements for retail space. The law prescribes a lease period of five plus five years. It is also possible to agree on a lease period of two years or less. Conditions that are not in compliance with Dutch law on retail space (section 7:290 Dutch Civil Code) may be approved by the court (sector Kanton). A Dutch real estate lawyer can apply for such an approval by the court.

Agreement on terms rental agreement under Dutch law

Model contracts for Dutch rental agreements are used. The lease is very often based on the model adopted by the “Raad voor Onroerende Zaken” (ROZ), the real estate counsel of The Netherlands. Next to the ROZ model contract, there is a set of general conditions which usually apply to the rental contract. Therefor when you enter into a Dutch rental agreement for business space or retail space, specific conditions agreed upon between landlord and tenant should be converted in the contract. These conditions may concern subletting, rental free period, turnover rent (for example based on turnover of the tenant) and the right to sell the business at the end of the lease and propose a new tenant.

Model lease agreement for Dutch lease

Standard clauses in Dutch model rental agreements are for example indexed rent: will be adjusted upwards every year according to the CBS Index.
VAT over the rent should be specifically agreed upon in the rental agreement.
Payment of the rent per the first of every month or every quarter depending on the rental terms.
Subtenancy is prohibited; the right to sublet hould be specifically agreed upon with the landlord.
Rent adjustment (not to be mixed up with rent index) takes place after five years (rent review). The landlord should invoke this adjustment, a specific clause for this adjustment is stipulated in the contract and may include advice on the rent by a Dutch real estate agent. The landlord also has the right to apply for a lower rent in case after five years the rental prices in the market have decreased. This right of the tenant may be contracted out for.
A bank guarantee to be put up by the tenant for three months rent is usual. Instead of a bank guarantee the tenant can also pay a deposit for three months, including VAT.

Expiration of lease agreement in the Netherlands

On expiration of the lease term for a business space or retail space usually a consecutive lease term of five years start.If nothing was agreed on renewal after the first lease period then the rental agreement for business office ex Section 7:230a BW will be for an indefinite period and the lease for retail space ex 7:290 Dutch Civil Code will automatically be renewed after five years for a consecutive lease term of five years.

Please do not hesitate real estate lawyer to ask any other questions regarding the Dutch rental system for business space and retail space. It is quite an intricate system, you can easily get lost in.