On May 16, 2023, the House of Representatives approved a bill to abolish temporary rental contracts for housing. The proposal, submitted by the Christian Union and the PvdA, received support from a majority of the Lower House. The aim of the measure is to combat excesses in the rental market and make a fixed rental contract the norm again. If the Senate also agrees, some changes will take place. In this article you can read all about this (possible) change.
An opinion survey by Vastgoedactueel.nl shows that the vast majority of Dutch people favor government intervention in rents when they become too high and disproportionate to the quality of the property. Thus, there is strong support for measures to regulate middle rent and make the housing valuation system mandatory.
Understandably, many tenants and landlords benefit from fixed and long-term leases. But under certain circumstances, of course, temporary rentals remain desirable. Opportunities for this still remain.
The proposed changes
The Fixed Lease Law will eliminate some of the options for temporary rentals introduced in 2016. Temporary leases for independent living spaces of up to two years are no longer possible. Rooms can no longer be rented out for up to five years.
Exceptions
During consideration of the bill, an amendment was proposed. The purpose of this is to allow certain categories of tenants to still be offered a two-year temporary lease. Exactly how this will be designed remains to be seen.
Possible exceptions are tenants who:
- Temporarily working or studying in a city other than where their home is located (including expats);
- Demolition and/or renovation requiring tenant to live elsewhere temporarily until the property is completed;
- Social housing and/or tenants in a social emergency (with urgent housing needs);
- Certain deceased blood relatives (tenants through a housing corporation).
Expansion of grounds for termination 'urgent own use'
When a landlord wants to terminate the lease, the ground for termination "urgent own use" is often invoked. This ground for termination is now extended to allow the landlord to terminate the tenant if he wants to assign the rental property to a blood relative in the first degree, such as parents, children, spouse and adoptive parents.
It is important that this option be included in the lease at the start of the lease. If the tenant does not agree, a termination procedure will follow. In that case, you as the landlord must also take into account possible (moving) compensations, which a tenant can invoke.
Sale after cohabitation
A new ground for termination is the possibility of termination for a landlord, who has occupied his own home himself and actually wants to sell this home, but then temporarily rents it out. In this case, the landlord temporarily rents out his own home because the landlord himself has started to live together. This allows the landlord to go "trial cohabitation.
Is the trial successful? If so, the landlord does not need his own property back and the landlord may terminate the lease. In that case, the landlord wants to sell his home. One of the main conditions attached to this is that the maximum term of the lease is two years.
Temporary rentals remain
Despite the abolition of the regulation of temporary leases, there are still options to rent temporarily or use specific termination options. For example, there are certain categories of tenants to whom temporary rentals are still allowed.
Examples include:
- Rent out on the basis of the Empty Property Act;
- Letting on the basis of a contract by its nature of short duration;
- Renting out flex housing (for which a temporary environmental permit has been granted);
- Lease with an eviction clause (diplomatic clause/intermediate lease);
- Renting for the benefit of certain target groups (senior housing, students, PhD students or large families, for example)
Advantages of indefinite leases
As a landlord, there is nothing wrong with entering into a long-term rental agreement, especially if you plan to rent the property long-term and have no other plans for the property or its surroundings, and you have a good property and a reliable tenant.
Some landlords deliberately choose longer terms to have certainty about rental income. Having as few changes in the rental stock as possible also gives landlords a sense of security. Tenants have a quicker chance to get to know each other and the chance of nuisance is reduced. However, if there is serious nuisance from a tenant or if a tenant defaults on their obligations, in both temporary and permanent rentals, a judge may consider a request to terminate the lease.
Exception situations
Temporary rentals are considered a special situation, usually involving circumstances known in advance and where the law provides various options that can be taken advantage of. However, it is essential to establish this situation in writing and clearly in advance, as also required by the Good Landlord Act, which will take effect July 1, 2023.
Conclusion
While the bill strengthens the position of tenants, concerns have also been raised about the potential negative impact on the supply in the free rental sector. It is important to strike a balance between protecting tenants and preserving the supply of rental housing. Minister Hugo de Jonge indicated that he thinks the sharpest edges have been taken off the bill, but also stressed the importance of preserving rental housing.
With the introduction of the Fixed Leases Act, which is also expected to be passed by the Senate, the temporary leases as introduced in 2016 will be abolished. Current leases will simply continue under the existing rules.
Moreover, additional options are offered for terminating a lease, but in most cases a permanent contract will have to be entered into. However, this need not have adverse consequences for either the landlord or the tenant. If there are special circumstances that require a temporary lease, these options still remain.
This change will prevent the need to find a new tenant for a property every two years because the temporary lease will expire and renewal is not allowed. This provides more stability and peace of mind for both the tenant and the landlord.