On 20 March 2017, the Dutch Real Estate Council (Raad voor Onroerende Zaken, "ROZ") drafted a new model lease and general terms and conditions for residential accommodation.
The model lease, general terms and conditions and the instructions on how to use them have been available on the website www.roz.nl since 18 April 2017. The previous model dated back to 2003. Since case law and the legislature have not sat still since then, it is high time for a new model that reflects the latest developments, but does it in fact do so?
The ROZ postponed drafting the new model until after the Dutch Mobility in the Rental Market Act (Wet Doorstroming Huurmarkt) came into force on 1 July 2016, which is clearly evident from the model. Below, we highlight the main changes:
- Both the preamble and article 3 of the lease include various options to choose from regarding the duration of the lease. Parties can opt for a lease for:
i) An open-ended lease
ii) An open-ended lease, subject to a minimum duration of twelve (12) months
iii) A fixed-term lease subject to a maximum of two (2) years or less for self-contained accommodation
iv) A fixed-term lease for a period of more than two (2) years for self-contained accommodation
In particular, the option mentioned at ii) – in short, the situation where a lessee enjoys security of tenure, but is bound to a lease for a minimum of 12 months – was the subject of much debate. This was the existing practice prior to the introduction of the Mobility in the Rental Market Act, but the text of article 271(1) of Book 7 of the Dutch Civil Code (“DCC”) made it unclear whether this was still possible. Although this is currently still not 100% clear, I expect that it will stand. For more information on this subject, see the previous article on this topic, which is available on the Real Estate Outlook page. I think it is desirable that the ROZ has fleshed out this option (and the ROZ was right to include a comment about it in the comprehensive instructions).
The option referred to at iii) concerns "temporary leases", which are now possible as a result of an amendment to article 271(1) of Book 7 DCC. By law, such leases end, without any notice of cancellation being required, when the contractual period ends (article 228(1) of Book 7 DCC), provided that the lessor inform the lessee in writing about the date on which the lease ends no sooner than 3 months and no later than 1 month prior to date on which that fixed term ends. The legislature has not prescribed any further rules regarding the manner in which that information must be provided.
Article 18.2 of the general terms and conditions gives shape to the requirement "to inform". My opinion is that the phrasing of that article is not entirely in line with the legislative text. Article 18.2 states that the lease ends by means of notification rather than cancellation, which notification must be made by registered letter, which means that it imposes stricter requirements on the lessor. Although it is advisable to send a letter by registered post, I believe the lessor should be at liberty to inform the lessee by any other written means.
- Under the Mobility in the Rental Market Act, the scope of the statutory ground for cancellation "urgently required for personal occupancy" has been expanded to include various target groups. The law previously acknowledged a group that consisted of elderly persons, handicapped persons and students. That group has now been expanded to include letting to young persons, doctoral candidates and large families. Article 1.2 of the lease takes letting to these target groups into account. That articles not only states that the leased space is intended to be used as residential accommodation by one of these target groups, but also rightly states that the leased space will be re-let to a lessee who falls within the scope of one of these target groups after the lease has ended.
- The 2003 ROZ model did not include any provision about the payment of a deposit by the lessee. Such a provision is now included in article 10 of the lease and in article 21 of the general terms and conditions.
- The lease now also includes a new article 11, which provides for an extensive penalty stipulation. Although the penalty amounts have been left blank, the ROZ has set guidelines in the instructions. Council Directive 93/13 EEC on unfair terms in consumer contracts necessitated the inclusion of the penalty in the lease rather than in the general terms and conditions.
Article 11 states that the lessee must pay the penalty: "without prejudice to (i) the lessee’s obligation to as yet comply with this obligation and (ii) the lessor’s entitlement to damages or additional damages, and (iii) the obligation for the lessee to surrender the profits or estimated profits enjoyed as a result of this breach." The surrender of profits is not stipulated for all potential breaches as not all breaches result in profits. What is missing, however, is the explicit provision that the penalty applies without prejudice to the lessor’s right to seek rescission. Depending on the breach – and the lessor’s policy – this may be explicitly included in the special provisions. This applies to the prohibition on subletting, the scope of which has now been expanded to include letting through AirBnB and similar organisations.
- The 2003 general terms and conditions also prohibited hemp growing. The ROZ saw reason to expand the scope of this provision (currently article 14.3.c of the general terms and conditions) to include variations on producing, selling and using drugs in a group or allowing said group use. It is worth noting that the provision states that acting contrary to that prohibition is considered such a severe breach that it justifies rescinding the lease as soon as possible. Although rescission requires a judge’s approval, including the rescission sanction could play a role in the judge’s decision.
The new ROZ model properly provides for the developments and the opportunities that the new legislation offers. Given the developments on the housing market, I expect that the next version will not be another 14 years in the making.