Leases - under Dutch law

Lease law in the Netherlands - rental agreements under Dutch law

Article 7:201 of the Dutch Civil Code defines a lease 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 dominated by the desire to protect the economically weaker party.

Obligations lessor under Dutch lease law

1. The lessor must put the leased thing at the disposal of the lessee.
2. The lessor must keep the thing during the period of lease in such a state that it may be used for the purpose for which it has been leased.
3. The lessor must provide the lessee with the undisturbed enjoyment of the leased thing. This entails, that he must refrain from disturbing the enjoyment of the lessee and that he is liable for all defects that hinder the use of the thing.

Obligations lessee under Dutch rental law

1. The lessee has to pay rent. Whether he has to pay rent in advance and in which time-unit depends on the contract at hand. In the absence of a contractual stipulation, the local custom is decisive.
2. The lessee must use the thing in a proper way and according to its purpose. The lessee may not sublease the thing (unless with permission of the lessor); if the sublease concerns a part of a house sublease is permitted (unless the contract provides otherwise).
3. The lessee is liable for all damage inflicted to the thing during the period of lease, unless the damage is not attributable to him.

Dutch lease law does not restrict foreign persons, whether legal or natural, from leasing real estate in the Netherlands.

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:

1. the lease of undeveloped or movable goods
2. the lease of residential premises
3. the lease of business premises, and
4. the lease of other properties (i.e. all types of (immovable) properties which can't be classified as residential - or business premises - office space, storage space and industrial buildings).

So, 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 etc. 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 requested 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 minimum term of at least five years, with a right to renewal for a second period of 5 years (or sufficient number of years to make a total period of 10 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 minimal notice of a year. If the lessee objects to the termination of the lease, 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 extensively 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 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 if the tenant does not consent to a reasonable offer to enter into a new lease.