Saturday 19 September 2020

Know your rights: tenancy agreements in 2020

Whether you are a landlord or a tenant, Dutch law applies to renting accommodation. Once a tenancy agreement is signed, it is legally binding, so it’s important to understand what type of contract it is, and what that means for your rights when it comes to terminating the lease.

Read on for more on the different Dutch tenancy agreements, their respective notice periods and termination rights.

Types of tenancy agreements in the Netherlands

Tenancy agreements for residential space can be divided into three main categories:

  1. tenancy agreements for an indefinite term,
  2. short-term tenancy agreements of less than two years, and
  3. regular tenancy agreements for longer than two years.

Tenancy agreement for an indefinite term

In practice, many tenancy agreements are entered into for an indefinite term. Often the landlord and tenant agree that both parties cannot prematurely terminate the lease for a certain period. In that case, there is a lease for an indefinite period with a minimum lease period of, for example, one or two years.

With such a lease, the landlord has the certainty that the tenant will not be able to terminate the lease during the agreed minimum lease term.

Cancel in the meantime

The landlord may only terminate a tenancy agreement for an indefinite term based on one of the legal grounds for termination from Article 7: 274 paragraph 1 of the Dutch Civil Code. The notice period for a landlord is at least three months. Every year that a tenant rents the house, the notice period is extended by one month. The notice period is a maximum of six months.

A tenant can also terminate a tenancy agreement for an indefinite term after the minimum lease period. A tenant does not need a legal ground for termination. The notice period for the tenant is equal to the period between two payment days, but with a minimum of one month and a maximum of three months. In practice, this usually means that the notice period for the tenant is one month.

New owner of the rented property

A new owner must also terminate the tenancy agreement if they want to end the lease. The lease does not end when the house is sold (“purchase does not break rent”); the new owner will continue the existing lease. If the new owner wants to terminate the lease, they are bound by the legal rules for termination.

Please note: a new owner who wants to use the house himself or herself (“urgent own use”) can only terminate the lease three years after they have notified the tenant in writing that they are the new owner.

Short-term tenancy agreement of less than two years

Since the introduction of the Property Rental Market (Measures to Facilitate Movement) Act 2015, it is possible to enter into a short-term tenancy agreement for a maximum of two years or less. This must be stated clearly and unambiguously in the tenancy agreement and the legal article (article 7: 271 paragraph 1 BW) must be mentioned in the tenancy agreement.

In this type of agreement, the tenant has a minimum of rental protection. This means that the landlord does not have to rely on at least one of the legal grounds for termination. A landlord can end this type of agreement by informing the tenant about the ending between 3 months and 1 month before the agreed term. If a tenancy agreement was concluded before July 1, 2016, it does not fall under the new rental legislation. Note that it is the closing date of the contract that is decisive, not the start date.

Cancel in the meantime

The landlord cannot prematurely terminate a short-term tenancy agreement of less than two years. A tenant can. A notice period equal to the payment term applies to the tenant.

Renewal and informing incorrectly

A short-term tenancy agreement can be extended. However, in that case the lease automatically changes into a tenancy agreement for an indefinite term, offering the tenant a maximum of rental protection. This is also the case if the first term was less than two years. If the landlord does not inform the tenant about the ending between 3 months and 1 month before the agreed term, or does not perform the necessary formalities, the lease also automatically changes into a tenancy agreement for an indefinite term.

Housing corporations

Housing corporations may only offer specific tenants a fixed-term lease of less than two years for homes with a social rent. Consider, for example, emergency shelter and replacement living space. Housing corporations are allowed to conclude such rental agreements for homes in the private sector.

Fixed-term lease for more than two years

If a regular temporary tenancy agreement with a lease term of more than two years is entered into, different rules apply. This lease is very similar to a tenancy agreement for an indefinite term.

Cancel in the meantime

Both the landlord and the tenant cannot cancel prematurely. The landlord can only terminate the lease after the agreed rental period by invoking a legal ground for termination (Article 7: 274 paragraph 1 of the Dutch Civil Code).

Renewal

A regular temporary tenancy agreement for more than two years can be extended. In that case, the lease changes into a tenancy agreement for an indefinite term.

Tip for landlords

Clearly and unambiguously record which type of tenancy agreement will be concluded, and which (minimum) rental period applies. This prevents ambiguity and discussion. If you are unsure if your current contracts adequately protect your rights, seek legal advice.

Tip for tenants

Read your tenancy agreement thoroughly before you sign it. If you do not understand it, or you feel that there is an unreasonable clause, get legal advice before you proceed. Once you sign a tenancy agreement, you are legally committed.

If you need advice about tenancy agreements, or you need assistance with creating a tenancy agreement, please contact GMW lawyers on 070 361 5048 or visit gmw.nl/en

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