Lease law in the Netherlands — rental agreements under Dutch law
Article 7:201 of the Dutch Civil Code (Burgerlijk Wetboek) defines a lease (huurovereenkomst) as:
a contract whereby one party, the lessor, undertakes to provide the other party, the lessee, with the use of a thing or a part thereof and the lessee undertakes to perform a counter-obligation.
A lease contract does not require a special form (it is however always advisable to have a written contract). Regulation of lease contracts under Dutch law is to a large extent driven by the desire to protect the economically weaker party.
What is commercial contract law under Dutch law?
Commercial contract law in the Netherlands governs agreements between professional parties. The status of the contracting parties determines which legal rules apply, and businesses dealing with one another enjoy a distinct legal position compared to consumer relationships.
Dutch commercial contract law sits at the intersection of general private law and specialised trade practice. The identity and capacity of the parties, often called their hoedanigheid, shapes the applicable rules at every turn. A contract between two professional enterprises is assessed differently from a consumer agreement, even when the underlying transaction looks identical on paper.
Disputes between commercial parties can be submitted to specialised forums, including arbitration and the Netherlands Commercial Court. That court handles international commercial cases in English, making it an attractive option for cross-border transactions governed by Dutch law. Leading Dutch commentators take the view that the demand for legal certainty and predictability is the defining characteristic of international commercial contracting, and Dutch law has developed its commercial contract rules with that demand in mind.
How does Dutch law compare to English law on good faith in contracts?
Dutch law applies reasonableness and fairness as a general standard throughout the contracting process, including pre-contractual negotiations, under Article 6:2 of the Dutch Civil Code. English law takes the opposite position and recognises no equivalent general duty.
Article 6:2 of the Dutch Civil Code obliges parties to act in accordance with reasonableness and fairness at every stage of their relationship. This approach is common across civil law jurisdictions, including Germany, France and China, each of which has codified comparable obligations. English law, by contrast, has never accepted an overriding principle of good faith. English courts have instead developed specific doctrines to address particular instances of unfairness, without committing to any general standard.
The position in English law becomes even more pronounced in the pre-contractual phase. English case law holds that a duty to negotiate in good faith is fundamentally incompatible with the adversarial nature of commercial negotiations. Each negotiating party is free to pursue its own interest, provided it avoids misrepresentation. This contrasts sharply with Dutch law, where the negotiating phase is already subject to the standards of Article 6:2 of the Dutch Civil Code.
A limited exception has begun to appear in English law for so-called relational contracts: long-term agreements characterised by ongoing cooperation and mutual dependence. Some English courts have shown a greater willingness to read good faith obligations into the performance of such contracts. However, this development does not extend to the pre-contractual phase, and it remains a narrow departure from the general English rule rather than a wholesale acceptance of civil law thinking.
Obligations of the lessor under Dutch lease law
- The lessor must put the leased property at the disposal of the lessee.
- The lessor must keep the property during the lease period in such a state that it may be used for the purpose for which it has been leased.
- The lessor must provide the lessee with undisturbed enjoyment of the leased property. This means that the lessor must refrain from disturbing the lessee's enjoyment and is liable for all defects that hinder the use of the property.
Obligations of the lessee under Dutch rental law
- The lessee must pay rent. Whether rent is due in advance and in which time-unit depends on the contract. In the absence of a contractual stipulation, local custom applies.
- The lessee must use the property in a proper way and according to its purpose. The lessee may not sublease the property (unless the lessor grants permission); if the sublease concerns part of a house, sublease is permitted (unless the contract provides otherwise).
- The lessee is liable for all damage inflicted on the property during the lease period, unless the damage is not attributable to the lessee.
Dutch lease law does not restrict foreign persons, whether legal or natural, from leasing real estate in the Netherlands.
Why is English law the most popular choice for international commercial contracts?
Research among international businesses consistently shows that English law is the most frequently chosen governing law for international commercial contracts, selected in approximately 40% of cases overall. The primary attraction is the perception of legal certainty and predictability.
Surveys of international companies indicate that the choice of governing law is driven above all by the perceived neutrality of the legal system, the suitability of that system for the type of contract, and the parties' familiarity with the law in question. When parties are free to choose any law, they most often prefer their own system, but English law ranks highest as a neutral third-party choice. Swiss law and New York law follow at a considerable distance.
The appeal of English law rests on its emphasis on freedom of contract and its respect for what parties have actually agreed. English law does not impose hidden obligations that might override the written terms. The absence of a general good faith duty is, paradoxically, presented as a feature rather than a deficiency: commercial parties know exactly where they stand because the contract itself, and not an external standard of fairness, governs their relationship.
This environment of contractual certainty has a direct consequence for drafting practice. Because English law will not supplement the agreement with implied duties of cooperation or fair dealing, the written document must be complete. That requirement produces the detailed, lengthy contracts that have become the international standard, and it explains why those contracts follow Anglo-American templates even when the parties are based in civil law countries.
Rental of real estate in the Netherlands
Under Dutch lease law, lease agreements can pertain to different types of goods: movable goods (for instance, the operational lease of a car), immovable goods (for instance, the lease of a house) or property rights.
Lease law in the Netherlands has a system of four different legal regimes:
- the lease of undeveloped or movable goods
- the lease of residential premises
- the lease of business premises, and
- the lease of other properties (i.e. all types of immovable properties which cannot be classified as residential or business premises, office space, storage space and industrial buildings).
Under rental law in the Netherlands there are three separate legal regimes for commercial, retail and residential leases respectively. All three types of lease can be for a fixed period of time or can be perpetual.
The Dutch Council for Real Estate (Raad voor Onroerende Zaken) has model contracts for each type of lease. These model leases tend to be more favourable to the lessor than the default positions under Dutch law. While there is a large degree of contractual freedom for leases of office and other commercial spaces, residential and retail leases are more strictly regulated.
The primary use of the property will be decisive for determining the type of lease. When entering into a lease under Dutch law it is important to be aware of the mandatory rules which apply to the type of lease in question.
Commercial and industrial leases in the Netherlands
Commercial leases are the least strictly regulated of the three types of lease under Dutch law. A commercial lease will usually be appropriate for factories, offices, warehouses and similar properties. The parties can freely negotiate the time period for the lease and the amount of the rent. Termination of commercial leases under Dutch law is not strictly regulated. However, there are requirements for how notice is to be served on the tenant: either by summons or by registered letter with confirmation of receipt. Furthermore, the tenant enjoys a two-month protection period following the expiration of the notice. The tenant may also apply to the court to have this protection extended for up to three years.
Given the contractual freedom that parties to a commercial lease have, it is advisable to retain the services of an English-speaking lawyer in the Netherlands to assist with drafting the lease document.
Lease of retail space in the Netherlands
The definition of a retail lease is contained in Article 7:290(2) of the Dutch Civil Code. Shops, cafes, restaurants, hotels and camping grounds are included in the definition, with the fundamental requirement that the premises contains an area that is open to the public.
Subject to possible approval by the court, the provisions related to retail leases cannot be derogated from to the detriment of the lessee (Art 7:291(1) of the Dutch Civil Code).
Retail leases must be for a maximum of two years or a minimum term of at least five years, with a right to renewal for a second period of five years (or a sufficient number of years to make a total period of ten years).
The parties can mutually agree to terminate the lease at any time. The possibilities for unilateral termination by the lessor are much more limited. The law specifies that the lessor may not terminate the lease agreement without providing grounds for the giving of notice. Moreover, if the lease agreement was entered into for a specified duration, it may only be terminated at the end of this specified period with a minimum notice of one year. If the lessee objects to the termination, the lessor will need to apply to the court to have the lease terminated. The courts seldom grant termination orders after the first five (or less than ten) year period, and the lessor will need to prove that specific grounds exist, for example, that the lessor has an urgent need to use the property for his own purposes.
Lease of residential premises in the Netherlands
Residential leases are regulated in Articles 7:232–7:282 of the Dutch Civil Code. In the Netherlands, residential lease law was historically, and continues to be, protective of tenants. In principle, parties are free to agree on the rent prices. However, residential leases are subject to rent control under the Rent Price Law (Huurprijzenwet). The rent must correspond to the quality and status of the premises.
A lease for a fixed period of time does not automatically terminate upon the expiry of the fixed term. A landlord must give reasons for terminating a lease; termination other than for the grounds listed in Article 7:274(1) will be null and void. Valid grounds include that the tenant has not conducted himself as befits a good tenant, that the landlord has an urgent need to use the premises, or that the tenant does not consent to a reasonable offer to enter into a new lease.