News: Free sector rent increases capped

Until now, it has been possible in the free rental sector to increase the rent practically indefinitely each year. As a result, rents in the free sector have risen considerably in recent years. Some leases already have an indexation clause linking the rent increase, and thus limiting it, to the rate of inflation. Minister Ollongren of the Interior and Kingdom Relations is now coming up with measures to ensure that rents in the free sector are capped by default at inflation plus 2.5%.  An indexation clause therefore remains an advantage for the tenant, now that it does not include an additional 2.5% increase, but tenants can no longer be faced with an almost unlimited rent increase if the measures come into effect.

You can read the message from the central government here.

Do you have any questions about this news item or about rent increases? Please feel free to contact M2 Advocaten.

Lawyer Ginio Beij (beij@m2advocaten.nl)

Paralegal Arjan Ang (ang@m2advocaten.nl)

Duty of investigation

How far does the obligation to investigate go when purchasing a home?

We still have to deal with an overheated housing market in which buyers often feel compelled to decide hastily whether or not to buy. Even in Corona time, the buyers’ market is busy. Where it used to be customary to carry out research before buying a property, this is now often skipped. But doesn’t a buyer lose any rights if he doesn’t do (enough) research? In this blog we look at the duty of investigation of the buyer of a house.

Non-conformity

When buying a property one may expect that the property possesses the properties necessary for normal use. If this is not the case, there is non-conformity (Article 7:17 of the Dutch Civil Code). Normal use is understood to mean that it must be possible to live in the home in a sufficiently safe manner, with a reasonable degree of durability, without the enjoyment of living being substantially affected.[1] If this is not the case, then in principle there is non-conformity and the buyer is entitled to have the defects repaired or even dissolution of the purchase agreement can be demanded.

Purchaser’s duty of investigation

Before a buyer can invoke non-conformity, it is checked whether the buyer has fulfilled his obligation to investigate. In principle, a buyer cannot invoke non-conformity in the case of visible or apparent defects[2].

Visible defects

If, for example, a buyer was able to see with the naked eye that there was a leak in the attic, he cannot invoke non-conformity after the purchase. In that case, he has violated his duty of investigation since he has been able to observe the visible defect himself before the sale.

Apparent defects

In addition to visible defects, there may also be noticeable defects. These are defects that the buyer knew or should have known were present. If, for example, you buy a 150-year-old farmhouse, which was last renovated in 1950, more defects must be taken into account in advance than when buying a new house. Another example of noticeable defects are defects of which the seller has explicitly notified in advance or when the defects are included in the sales contract. At that time, the defects are known to the buyer. In that case, too, the buyer cannot invoke non-conformity. Obvious defects may also be subjective in nature. For example, a professional party is expected to have more knowledge and will therefore be more likely to become aware of a known defect.

Seller’s duty of notification

The buyer’s duty of investigation is offset by the seller’s duty to provide information. In most cases, this obligation to provide information outweighs the buyer’s obligation to investigate. This means that if the seller is aware of a significant defect, but fails to notify the buyer, the buyer can still invoke non-conformity despite the fact that the buyer has not carried out any or sufficient investigation. Incidentally, if the seller was not aware of a defect, the buyer can still invoke non-conformity if this makes the property unsuitable for normal use.

Advice

When purchasing a house, it is wise to have an survey carried out. The costs often outweigh the possible misery it saves. But even if the buyer is unable or unwilling to have an architectural survey carried out, he can still do what is necessary to safeguard his rights. In addition to viewing the property, it is wise for the buyer to ask the seller many questions about the property. In this way, the buyer not only meets his obligation to examine the property, but also increases the seller’s duty of disclosure. After all, the seller will have to answer all questions truthfully in order to fulfil his duty of disclosure. If possible, it is preferable to record these questions and answers (afterwards) by means of, for example, e-mail correspondence. Real estate agents also often use a standard questionnaire on which many subjects are discussed.

The consequence of these questions is that the buyer can no longer complain about defects that have already been reported by the seller. In that case, it is important for the buyer to take good note of the answers to the questionnaire and to ask if there are any ambiguities. In that case, the defects are deemed to have been taken into account in the purchase price. Therefore, if the investigation shows that there are defects, the buyer will have to negotiate about the price.

Do you have any questions about this blog or would you like advice on a purchase agreement? Please feel free to contact M2 lawyers.

Lawyer Ginio Beij (beij@m2advocaten.nl)

Paralegal Arjan Ang (ang@m2advocaten.nl)

1] See e.g. Hof Amsterdam 3 September 2019, ECLI:NL:GHAMS:2019:3226

2] See e.g. HR 7 October 2016, ECLI:NL:HR:2016:2287

House sharing with two people possibly forbidden?

At the beginning of this year, the Council of State issued a remarkable ruling that holiday rentals (AirBnB) without a permit are prohibited under the Housing Act. Until then, holiday rentals had been allowed in a number of municipalities without a permit provided that the lessor met a number of conditions. As a result of the ruling, the municipality of The Hague has now banned holiday rentals altogether, and in Amsterdam it has since been banned in a number of neighbourhoods. In this blog, however, we will discuss certain forms of housing that may also be prohibited by this ruling without a permit.

The ruling

Before we discuss the possible effect of the ruling, we will first return to the essence of the ruling. The Council of State has confirmed that, pursuant to Section 21 under a Hw (Huisvestingswet = Housing Act), it is prohibited to withdraw residential property from its intended use without a permit issued by the municipality. To that extent, there is no news, but the Council also ruled that the Housing Act does not provide the authority to grant an exemption from that prohibition. In short, the policy of allowing holiday rentals without a permit under certain conditions, as was the case in Amsterdam, for example, does not comply with the law. The municipalities will therefore have to introduce a permit system to make holiday rentals possible again.

Municipalities allow house sharing with 2 persons

Therefore, it is not possible to withdraw residence without a permit, but Article 21 of the Hw mentions more activities that are prohibited. For example, pursuant to Section 21(c) of the Hw, it is also not permitted to convert or keep self-contained living accommodation into non-self-contained living accommodation. This conversion is, for example, the case if a home that is originally intended for one household, is being rented out to more than one household. Conversion is already subject to a permit requirement in Amsterdam, for example, but just as in the case of holiday rentals, it is permitted under certain conditions.

“A permit requirement does not apply to conversion due to occupancy by two persons. After all, the municipality of Amsterdam does not want to treat two friends who live together any differently than a couple”[1]

The municipality of Nijmegen implicitly states the same thing by only explicitly prohibiting conversion to more than two non-self-contained dwellings.[2] The municipality of Utrecht also only imposes a permit requirement in the event of conversion for the benefit of more than two persons.[3] The municipality of Rotterdam, on the other hand, takes an even more flexible attitude. It argues that a conversion permit is only required if there are 4 or more people living in a room.[4]

Despite the fact that these municipalities have the apparent aim of (restrictively) admitting house sharing without a permit, the Housing Act, if we follow the decision of the Council of State, offers no opportunity for this other than with a permit, just as in the case of holiday rentals.

Hospita (landlady) rental

In addition to room rental, hospita rental is also a form of housing. Hospita rental is a form of room rental in which the landlord also lives in the house. The housing ordinance of, for example, Nijmegen includes a special exception for hospita rentals.[5]

“The licensing requirement referred to in paragraph 1(b) of this Article does not apply to a situation with a hospess/hospita”.

But also in other municipalities hospita rental is allowed without a permit. However, again in view of the ruling of the Council of State, it seems to us that this is not possible under the Housing Act.

The concept of household

Whether a permit is required is crucial whether the dwelling is inhabited by more than one household. Although the concept of household is not defined in the Housing Act, it appears from the legislative history that the legislator assumes that in the case of a house being let by a room, the house as a whole no longer constitutes a separate dwelling. In addition, the Council of State has interpreted the term ‘household’ to mean a household if it can be assumed that there is an intention among the occupants to form a household for an indefinite period of time.[6]

The latter is not necessarily the case when, for example, a daughter who is studying shares a house with another fellow student, since there is usually no intention of letting her stay indefinitely. In short, strictly speaking, a conversion permit should also be applied for in this situation.

Enforcement

Finally, we come back to the current situation. As explained above, the consequence of the ruling of the Council of State that the sharing of housing by two (or more) persons each forming a separate household is thus prohibited and exemption without a permit is in fact not possible. Nevertheless, it is unlikely (and as far as we are concerned also undesirable) that municipalities would enforce the same if only because they see no need to do so for practical reasons. It therefore only becomes problematic when, for example, local residents request enforcement. In principle, municipalities are then obliged to enforce, which can lead to rather undesirable situations. Another option is, of course, to actually include all these situations in the permit system, but given the increasing bureaucracy, it would probably be even better if the legislator reviewed the Housing Act on this point. It will definitely be interesting to see in the coming period whether the line taken by the Council of State is actually consistently pursued.

Do you have any questions about this blog or would you like to know more about the (im)possibilities of house sharing? Please feel free to contact M2 advocaten.

Lawyer Ginio Beij (beij@m2advocaten.nl)

Paralegal Arjan Ang (ang@m2advocaten.nl)

 

1] Explanatory notes Housing Ordinance Amsterdam 2020 p. 34

2] Housing Ordinance Municipality of Nijmegen 2020 Article 13 (1)

3] Housing ordinance Utrecht Region 2019, municipality of Utrecht article 3.1.2.

4] “Verordening toegang woningmarkt en samenstelling woningvoorraad 2019” (Rotterdam) article 3.2.2.

5] Housing Ordinance of the Municipality of Nijmegen 2020 Article 13 (2)

6] ABRvS 13 March 2013, ECLI:NL:RVS:2013:BZ3977

Supreme Court imposes restrictions on service charges

6Last year you could read a blog on our website about a judgment in which the Court of Appeal of Amsterdam ruled that a landlord of a dwelling in the free sector was almost completely free to determine the level of service costs, as long as there was an agreement with the tenant. In cassation, however, the Supreme Court decided differently.

What was the case?

Tenant and landlord have agreed a rent of €740,- per month. In addition to the bare rent it has been agreed that €450,- per month will be charged for the rent of the furniture and €200,- per month in VvE contributions. The tenant will pay €1.500,- per month Including an advance payment for the energy costs. During the rental period the tenant will not receive a specification of the costs.

After termination of the tenancy agreement, the tenant will reclaim the fully paid furniture costs (€11,055.28) and VvE contributions (€5,500.-) because the landlord did not comply with the obligation to disclose the actual costs incurred. The tenant argues that the VvE contributions should not be charged anyway.

Progress of the procedure

The court rules in favor of the tenant. The court ruled that no more than €48,- per month should have been charged for the furniture. With regard to the VvE contributions, the court ruled that no costs may be charged that are not directly related to the use of the property.

On the other hand, in the appeal, the court of appeal made a U-turn with respect to the prevailing doctrine and ruled that, in view of the history of the law, the freedom of contract in the case of liberalized rent should also apply with respect to the agreed service costs. In other words: if the parties have agreed on a certain fee for the service costs, this agreement does apply. In fact, it does not matter whether the charged costs have actually incurred. An agreement is an agreement. According to the Court of Appeal, only if no agreements have been made in this respect, it is necessary to fall back on what has been laid down by law or what is considered reasonable.

Supreme Court

In the meantime, the highest court in the Netherlands, the Supreme Court, has ruled on the matter. The Supreme Court refers to the first sentence of Section 7:259 (1) of the Dutch Civil Code:

“The tenant’s payment obligation in respect of costs for the utilities with an individual meter and the service costs shall be the amount agreed between the tenant and the landlord”.

In the opinion of the Supreme Court, this phrase should be understood to mean the agreement between the tenant and the landlord on the charged costs as a result of the (annual) specification to be provided to the tenant. In that case, the tenant has the opportunity to check whether the costs that were charged are correct, after which ‘agreement’ can be reached.

According to the Supreme Court, this phrase does not mean that a landlord and a tenant can agree on a service charge without any relation to the actual costs. After all, this would render the annual specification which is imposed useless. Section 7:259 of the Dutch Civil Code also applies to deregulated dwellings.

Conclusion

The service costs should be calculated as a reasonable fee in relation to the actual costs. The amount of the service costs can be assessed on the basis of this criterion, even if it concerns a liberalised dwelling.

For tenants of a liberalised dwelling, it is (again) important after this ruling to obtain a good insight into the costs that are stated. It is therefore quite possible to challenge these costs at a later stage, if they are disproportionate to the actual costs. However, it is also important for landlords to actually provide a clear overview of the extra costs that are incurred annually. This prevents them from being suddenly confronted at a later stage with a large claim from a tenant comparable to this case.

Do you have any questions about this blog or would you like to know more about service costs? Please feel free to contact M2 lawyers.

 

Lawyer Ginio Beij (beij@m2advocaten.nl)

Paralegal Arjan Ang (ang@m2advocaten.nl)

Possible temporary extension of temporary rental agreements due to Corona crisis

Now that the world is plagued by the Corona virus, many people stay at home as much as possible. But what if somebody has to leave his house right now because his temporary lease is expiring? After all, searching for other housing during this period can be made very difficult by, for example, quarantine, illness or loss of work. To alleviate these problems, a bill has been proposed to extend temporary rental agreements.

 

Act “Wet Doorstroming Huurmarkt”

What was the deal? On 1 July 2016, the Wet Doorstroming Huurmarkt came into force and it is possible for landlords to enter into a temporary lease for a maximum period of 2 years (in the case of non-self-contained housing a maximum of 5 years). Contrary to a tenancy agreement for an indefinite period, the landlord does not need a legal ground for termination and the tenancy agreement will end on the fixed end date.[1] However, if the temporary tenancy agreement is extended at any time, it will in principle automatically be converted into a contract for an indefinite period.

Bill on temporary rental agreement extension rules

Because it is by no means always desirable for landlords to enter into a contract for an indefinite period of time, a temporary law has been proposed in connection with the Corona crisis, which should make it possible to extend temporary leases, which end between 31 March 2020 and 1 July 2020, for a maximum period of three months. In that case, there will be no open-ended contract. For the time being, it can only be extended until 1 September 2020 at the latest. This means that if, for example, the lease would end on 1 July, it can be extended by a maximum of two months. It is not excluded that the measure will be extended if the situation so requires.

Timely notification remains relevant

In the case of a temporary lease, notice of termination is not required, but it is important that the lessor informs the lessee in good time of the date on which the lease is terminated, otherwise a contract for an indefinite period of time will be created. This notice must always be given to the tenant no more than three months and at least one month before the end date of the tenancy agreement. This is not different during the Corona crisis. It is therefore very important (!) for landlords to send this notification on time, even if there is an intention to extend the rental agreement in advance, otherwise a rental agreement for an indefinite period will still arise.

Obligation to provide information, realization of an extension

During the Corona crisis, the landlord will also be obliged, when sending the notification, to inform his tenant of the temporary renewal options. The tenant will then have one week to request an extension for the period of one, two or three months. The landlord is also free to make an offer for a temporary extension. In that case, the tenant is not obliged to agree to the offer. Furthermore, the statutory provisions regarding temporary leases remain fully applicable. This means, for example, that during the extension the tenant retains the option to terminate the temporarily extended lease with taking consideration of the notice period.

Refusal of extension

Only under certain circumstances may a lessor refuse a tenant’s request for an extension. If the landlord:

  1. has sold the property to a third party and has undertaken to transfer ownership of the property free of rent and use;
  2. has relet it and the tenancy agreement commences;
  3. wishes to move in himself and no longer has any other accommodation;
  4. wishes to renovate, which is not possible without termination of the lease, and has undertaken vis-à-vis third parties to make the accommodation available free of rent and use for that purpose;
  5. wishes to demolish and has undertaken vis-à-vis third parties to make the house available free of rent and use for that purpose, on a date prior to the expiry of the extension requested by the tenant and the landlord has undertaken before 1 April 2020.

On the advice of the Council of State, it will be added to these circumstances that a landlord may also refuse an extension if the tenant does not behave like a good tenant.

Do you still have questions regarding these measures? Please feel free to contact M2 Advocaten.

 

Lawyer Ginio Beij (beij@m2advocaten.nl)

Lawyer Arjan Ang (ang@m2advocaten.nl)

1] https://www.m2advocaten.nl/valkuilen-bij-tijdelijk-huurcontract-woonruimte

Home Owners’Association (VVE): How to have a VvE decision annulled in time

If an individual VvE member cannot agree with a VvE decision, this person has the option of requesting the subdistrict court judge to have the decision in question annulled. Recently, the Supreme Court has provided more clarity about the period within which such a request must be made. In this blog we take a brief look at the legislation on this subject and discuss the Supreme Court ruling .

VvE decision annulment

Suppose your VvE has made a decision that you have major objections to. In that case, there are various reasons why you could have such a decision annulled (Section 2:15 of the Dutch Civil Code):

  • The decision is contrary to the legal or statutory rules of the making of the decision (eg meeting not convened correctly);
  • The decision is contrary to reasonableness and fairness;
  • The decision is contrary to the rules of procedure.

A request to have a VvE decision annulled must be submitted to the subdistrict court judge within one month after the applicant has taken cognizance or has been able to take cognizance of the decision (Article 5: 130 paragraph 2 of the Dutch Civil Code). With regard to a decision to amend the division deed, a different period of three months applies to claim the annulment of the relevant decision (5: 140 sub b BW). If a request is submitted too late, the sub-district court will declare the apartment owner inadmissible.

Moreover, a voidable decision should not be confused with a void decision. A decision may, for example, be void because it violates the deed of division, the law or the articles of association. Unlike a voidable decision, a void decision is deemed not to exist and therefore no annulment can be requested.

Case                                                         

The rules regarding the time limit for requesting annulment seem simple and unambiguous, but practice has proved more difficult. However, the Supreme Court recently issued a judgment providing the necessary tools for assessing issues related to this period.

In the case in question, the apartment owner had taken note of a VvE decision on the day, 10 December, that the VvE had announced the decision via its website and by sending an e-mail. The owner did not attend the meeting of November 23 where the decision was originally taken. The owner therefore stated that the period for requesting the annulment of the decision had only started to run on 10 December because he had only then taken note of the decision.

Not only the subdistrict court judge, but also the court of appeal ruled wrong with the owner in question. The court of appeal states that an owner / member of the VvE can generally be expected, if he cannot be present at the meeting, to find out as quickly as possible which decisions have been taken , so that the one-month period already starts one day after the meeting. However, the owner did not leave it at that and brought the case before the Supreme Court.

 Judgment of the Supreme Court

First of all, the Supreme Court states that the period starts as soon as the owner has reasonably been able to take cognizance of the decision. The circumstances of the case are decisive. The Supreme Court is of the opinion that if it is customary within the VvE to make decisions known through publication on a website, or through the distribution of an e-mail, that the owner could only reasonably have been informed of the decision from the moment when the announcement has taken place. This of course only applies if the owner has not attended the meeting himself. If it is not customary within the VvE to announce decisions among its members, it can be expected that information will be obtained about the decisions taken within one week after the meeting. In that case the period starts one day after the expiration of that week.

Explanation HR schematically shown:

Present at a meeting (or proxy) → 1 month after the meeting

Not present, no VvE announcement of decisions → 1 week to retrieve a decision, then 1 month 

Not present, but permanent VvE announcement of decisions → 1 month after the decision was announced

Conclusion

If we look at the literal text of article 5: 130 paragraph 2 “within one month after the applicant has become aware or has been able to take cognizance”, the last part of this sentence seems to imply that quite a bit can be demanded of the individual VvE member to find out decisions as quickly as possible. With the judgment of the Supreme Court this picture is nuanced, so that in some cases the period will only start later. Moreover, this does not affect the fact that if an owner finds out earlier in another way that the period starts from that moment (eg because another member had already informed the owner). In that case it is up to the VvE to prove that the relevant owner was already aware.

If you also disagree with a decision of your VvE or you want to defend yourself as a VvE against objections from individual members, you can contact M2 Advocaten.

 

Lawyer Arjan Ang (ang@m2advocaten.nl)

Lawyer Ginio Beij (beij@m2advocaten.nl)

Squatting: What are the rules?

Because of the group WE ARE HERE, the phenomenon of squatting has gained a lot of attention again after the squatting of a company building in Westpoort. When the owner came to assess the situation, he was denied access, which led to a lot of indignation.

But what about the legislation on squatting? In an article published in the magazine Huurrecht in Praktijk (HIP) I explain this and discuss developments in the field of squatting up to and including 2018.

The article discusses, among other things, that there are 3 ways to achieve eviction of squatters:

– Criminal eviction

The initiative lies with the Public Prosecutor’s Office. According to the policy rules of the Public Prosecution Service, a criminal eviction is announced, but not within 7 days after the announcement. The squatters can then contest the proportionality of the eviction in summary proceedings.

The advantage for the owner of this type of eviction is that the costs are for the State. Disadvantage is that the owner is dependent on the Public Prosecutor’s Office as to whether and when the eviction will take place.

– Civil law eviction

With this form, the owner himself starts summary proceedings against the squatters. The judge will then assess whether the interest of the squatters’ right of residence outweighs the interest of the owner to have the property at his disposal. Such an interest may be that the owner has concrete plans for the property in the short term.

Advantage for the owner of this type of eviction is that it is possible to determine when this means is being used, the disadvantage is the costs.

– Administrative eviction

In the case of administrative law evictions, squatting is also contrary to public law regulations. If, for example, the zoning plan does not have a residential purpose (but, for example, a business), then squatting is contrary to the zoning plan. The owner can then request enforcement. This was applied, for example, to the squatting of the ADM site in Amsterdam North.

Here again, the advantage for the owner is that the costs are, in principle, for the enforcing authority; As well, the disadvantage is again that the initiative does not lie with the owner.

Read more  

You can read more in this article about these types of evictions and many examples of the trade-off between the squatters’ rights and the interests of the owner. It also discusses case law on, among other things, the definition of squatting, the identity of the squatter and government liability for squatting.

Read the article here.

Any questions? Please contact us.

Advocaat Ginio Beij: beij@m2advocaten.nl

Student nuisance: Municipality has to withdraw permission for a roof terrace

Recently we discussed another case in which the owner of a roof terrace successfully appealed against a decision of the municipality to remove the roof terrace. In this blog, however, we discuss a case in which someone successfully appealed against a permit granted by the municipality for a rooftop terrace by the neighbours.

Case

The owner of a property rents his building to students. For some time the students have been using the roof of the building as a roof terrace. However, according to the municipality’s zoning plan, the use of the roof as a terrace is not permitted. Following complaints from local residents, the municipality has informed the owner of the property that enforcement actions will be taken if the use of the roof as a terrace is continued.

The owner of the property then applied for an environmental permit in order to legalise its use. The application includes the construction of a fence on the roof of 185cm in height. The municipality decided to grant the environmental permit despite the fact that a roof terrace is not permitted according to the zoning plan. The planned fencing is also higher than permitted. A neighbour who overlooks the roof terrace from the back of his house, and who claims to experience serious noise nuisance from the students, appeals to the court after the municipality has previously declared his objections unfounded.

Conflict with zoning plan

Many people assume that if a permit has been granted in violation of the zoning plan, the permit was wrongly granted in that case. This assumption is often incorrect. After all, the municipality has the right to deviate from the zoning plan, but must take into account good spatial planning. In short, this means that the competent authority must ensure the maintenance of an acceptable living and residential climate.

In this case, the municipality stated that because it concerns an urban environment, local residents must tolerate some noise nuisance from each other. According to the municipality, the fact that the roof terrace has been reduced in size due to the placement of the fencing also contributes to the reduction of possible nuisance. The municipality also stated that, when granting a permit for a roof terrace, it does not want to make a distinction between use by a family or by students, since that there are also very quiet students.

Ruling

The court states that the municipality should take all the interests involved into account. The degree of noise nuisance is important in this respect. As the municipality indicates, it is plausible that the noise nuisance has decreased due to the placement of the fencing. As a result, fewer people can enter the roof terrace at the same time. However, this has not established that the remaining degree of noise nuisance should be considered acceptable. The court takes into account that the municipality did not take into account the fact that the nuisance providers in question are students with a higher chance of a deviating rhythm of life (night hours), and therefore nuisance.[1] According to the court, the municipality should have taken this into account in its decision. The court annulled the municipality’s decision.

Conclusion

Despite the court’s judgment, the environmental permit for the roof terrace has not yet been definitively dismissed. The municipality will have to take a new decision taking into account that the roof terrace will (mainly) be used by students. The municipality could also attach conditions to the use of the roof terrace by, for example, prohibiting the use of the terrace after a certain time. For local residents, the lack of conditions could therefore also be a means of challenging the municipality’s decision. In any case, it seems that municipalities will have to take more account of the presence of students in maintaining an acceptable residential and living climate in their policy.

Do you also suffer from noise nuisance from neighbours, for example, or do you disagree with an environmental permit granted to your neighbours? In that case you can contact M2 Advocaten without engagement.

Paralegal Arjan Ang (ang@m2advocaten.nl)

Lawyer Ginio Beij (beij@m2advocaten.nl)

[1] Also see ECLI:RVS:2018:2276 en ECLI:NL:RVS:2012:BV3229

Penalty clauses in housing rental contract

In 2013, a ruling of the European Court of Justice revealed that many penalty clauses in leases with private tenants are not valid because they are considered unreasonable under European law. However, the District Court of Amsterdam recently issued a nuanced judgment, ruling that if the landlord is also a private individual, there is not necessarily a disrupted balance of power, as a result of which the landlord can still claim the fine.  

ROZ model and penalty provisions

When a house is rented out, usually a written rental agreement is drawn up. Often landlords use a standard Council for Real Estate Affairs (Raad voor Onroerende zaken, abbreviated: ROZ) model drawn up by specialists. Not surprisingly, many landlords assume that they have established a solid contract with this document. The ROZ-model also includes various penalty provisions to ensure that the tenant meets his obligations. But it was precisely these penalty provisions that proved to be far from ideal.

Unfair terms directive

In 2013, the European Court of Justice issued a judgment[1] which showed that the Unfair Terms Directive applied to rental contracts for residential premises. According to the Court, the aim of the Unfair Terms Directive is to provide consumers with effective protection against abuse by a commercial party of its dominant position.

Penalty clauses such as those in the ROZ-model were often found to be unfair according to this standard. An important consequence of this was also that the penalty clause turned out to be completely invalid, which meant that moderation was no longer an option. In short, the user of the ROZ-model could suddenly no longer claim a fine, even though the tenant in question was clearly at fault.

Judgment of the District Court of Amsterdam

The Directive thus aims to protect consumers against abuse by companies that are their landlord. But what if the landlord is a private individual? Until recently, this situation was uncertain, but recently the Court of Amsterdam ruled on this matter.[2] In this particular case, the landlord had only one property available for letting and it was apparently the first time that the landlord rented out housing. The court ruled that under these circumstances the lessor was entitled to claim the fine because there was no question of a disrupted balance of power.

Although the judgment as described above can be interpreted as a relaxation with regard to penalty clauses, our opinion is that in this case there were very special circumstances. We consider the scope for a broader application to be small.  For the majority of landlords, it is therefore particularly important to ensure that the penalty clauses comply with what is considered reasonable. For example, the penalty amount should not be unreasonably high, should be capped and should preferably be agreed in the lease itself and not in the general provisions[3].

Incidentally, the Council for Real Estate Affairs has meanwhile adopted a new ROZ-model for home rentals that has been adapted with due observance of current case law. If you would like a tailor-made rental agreement and/or would like to have checked whether your penalty provisions are valid, please contact M2 Advocaten.

[1] HvJ EU 30 mei 2013, EECLI:EU:C:2013:341

[2] Rb. Amsterdam 22 januari 2020, ECLI:NL:RBAMS:2020:291

[3] Hof Den Bosch 24 september 2013, ECLI:NL:GHSHE:2013:4346

 

Service costs for liberalised rent: more freedom of contract for landlord of living space

Earlier we published a blog about a landlord of a free sector property, who had to repay €16,500 to her tenant because she had charged far too much for furnishing and because she had not specified Owner’s Association costs. In the meantime, it seems that a turnaround in case law has taken place and that lessors of houses in the free sector are being given more freedom to make agreements at their own discretion. 

Determination of service costs

In short, service costs are the costs of the property that the landlord charges on top of the basic rent for supplies and services. Landlords are required by law to provide their tenants with an annual overview in which all service costs charged are being specified, including the method of calculation (Section 7:259(2) of the Dutch Civil Code). In practice, landlords of privately owned dwellings do not always use an exact approach when determining the service costs. They have simply included an amount in the tenancy agreement for the service costs which they believe adequately cover their efforts.

Old situation

Determining the service costs by estimation could sometimes be expensive for the landlord in the past. When the tenant challenged the level of the service costs, it was not uncommon for the landlord subsequently to have to pick up the tab because it could not be demonstrated that the service costs charged were related to actual costs. The Amsterdam Court of Appeal ruled on this in 2017:

“The Court of Appeal deems (…) if the parties have agreed an amount for service costs, that amount must be reasonable, in the sense that it must be in reasonable proportion to the value of what is offered for it”.

In other words, the service costs charged by the lessor should be based on actual costs. Therefore, if the tenant could make it clear that the service costs were not based on actual costs, the lessor had to reimburse the service costs that were overcharged.

Current state of affairs

Remarkably enough, the Court of Appeal of Amsterdam has come to an entirely different conclusion on the basis of the legislator’s explanation of Section 7:259 of the Dutch Civil Code and is of the opinion that only when no or incomplete agreements have been made about the service costs, it should be determind that the service costs should be considered to be at least. For the rest, however, the Court of Appeal reasoned as follows:

“In the case of liberalized dwellings (…) contractual freedom with regard to (the level of) service costs (…) is the starting point, just as this freedom in principle also applies to the determination of the rent. (…) There is no need for a relation to the actual costs’.

In short, according to the last judgment of the Amsterdam Court of Appeal, in case of a liberalized dwelling the parties are free to agree on a compensation for service costs at their discretion without necessarily having to make a connection with the actual costs. In short, a landlord may charge €350 per month for the rent of a couch of €300, – provided the tenant has agreed to this.

Note

One may wonder whether the verdict of the court of appeal actually makes much of a difference. After all, even before this ruling it was possible for the landlord of a liberalized dwelling, if he was of the opinion that he was insufficiently compensated for the service offered, to increase the (bare) rent at will, provided the tenant only agreed to the higher rent. This ruling, on the other hand, forms a safety net for those landlords who, in the subdivision between bare rent and service charges, had wrongly included too much of the rent in the service charges.

However, with this ruling one may wonder what the function of the mandatory overview (Section 7:259 (2) of the Dutch Civil Code) still is, with the exception of the service charges part where the final amount is determined afterwards, as is the case for the use of utilities. There was already no statutory sanction for failure to provide an overview, and with this ruling landlords of liberalized dwellings seem to have even less reason to actually provide it, which does not improve transparency towards tenants.

Questions about service costs? Feel free to contact M2 Advocaten.

Lawyer Marius Rijntjes rijntjes@m2advocaten.nl

Paralegal Arjan Ang (ang@m2advocaten.nl)