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  • Real Estate
  • 09-01-2017

The new statutory rules for temporarily letting residential accommodation has created uncertainty regarding a tenant’s right to cancel a lease that was concluded for a minimum period of, for example, one year.

Such leases for a "fixed" period of one year in which respect the parties have no real intention of cancelling the lease at the end of said period are quite common in practice. In other words: the parties do not intend to conclude a fixed-term lease, but rather to assure the lessor that the tenant will rent the accommodation for a minimum of one year. As a result of the new wording of article 271 of Book 7 of the Dutch Civil Code, it was unclear whether lessors could bind tenants for a fixed period of time.

It is apparent from various Parliamentary documents drafted prior to the formation of this legislative amendment that it is premised on "open-ended" leases being the standard in the future as was the case in the past. Aside from an occasional casual comment, no attention was devoted to "fixed-term" leases, which were and are still often used.

In response to questions posed by the House of Representatives, the Minister of the Interior and Kingdom Relations confirmed that the introduction of fixed-term leases was not intended to affect common practice among commercial lessors to work with minimum contract periods, which means that this will in fact continue to be possible.

The Minister’s answer has provided the much-desired certainty sought by practitioners. The Minister does not deem it necessary to clarify the law on this point. That is a missed opportunity, especially since the Minister wants to amend article 271(1) of Book 7 of the Dutch Civil Code on another point.

Stichting NuRecht has asserted that article 271(1) of Book 7 of the Dutch Civil Code does provide that deviation from the fourth sentence "Fixed-term leases, within the meaning of the second sentence, may be cancelled by the tenant before the end of the fixed term with effect from a day agreed for payment of the rent." is not permitted. It is evident from Parliamentary history that the legislature’s intention was for this to be mandatory law and that parties not be able to deviate from it. As such, the Minister has stated with regard to this point that he will ensure that a proposal to amend this article is presented to Parliament, by adding a sentence to that subsection stating that all clauses that conflict with the fourth sentence are null and void. It would seem little effort – and desirable for practitioners – to then also explicitly provide that minimum lease periods are in fact permitted.

Lessors who want to conclude "normal" leases, but who want to bind tenants for a specific minimum period, would do good to include this explicitly in the relevant leases. They could do so for example by providing that the lease cannot be cancelled before a particular minimum period has elapsed. Another option would be to emphasize that it is not the parties’ intention to conclude a fixed-term lease and that the tenant furthermore continues to enjoy tenant protection.

Read the replies to the questions raised in Parliament and the Minister’s letter.

I have previously published an article on temporary letting under the Dutch Mobility in the Rental Market Act (Wet doorstroming huurmarkt) in Vastgoed Fiscaal & Civiel. Click here if you would like to read that article.

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