Rent reduction for Dutch commercial tenants in corona time
Enschede, 2021-02-19
Due to government measures, amongst others hotels, shops and catering establishments closed their doors for several months during the first lockdown and now, February 2021, the Netherlands are in the midst of a second lockdown. Due to the declining or even completely disappearing turnover, it is almost impossible for tenants of industrial space to continue to pay the (full) lease installments.
In the Netherlands, various proceedings have been brought in preliminary relief proceedings about the question if the tenant can reduce its monthly lease towards the landlord. The outcome of these proceedings in the first half of 2020 were rejective resulting in the tenant baring all the risks of the corona crises not being allowed to reduce its rent. This has changed meanwhile, in the second half of 2020 and start of 2021 tenants often receive a temporarily rent reduction of 25-50%.
The legal ground of this discount varies. In the majority of the proceedings, provisional judges have ruled that the government measures that restrict the exploitation of a business premises are defective for the lease. Based on the legal defect regulation a tenant can request a rent reduction in case he cannot have the rental enjoyment that he could expect normally. The legal question is whether the government measures can be regarded as a defect in the rented property. Some judges have meanwhile ruled in favor of the tenants based on this ground.
Another legal ground is rent reduction due to unforeseen circumstances. In recent months, several tenants have taken the view that the lease must be amended due to the corona crisis. These tenants invoked article 6: 258 of the Dutch Civil Code. This article of the civil code provides that if due to an unforeseen circumstance the unaltered maintenance of a (rental) agreement cannot be expected, the agreement can be adjusted. The question is whether in the case of the corona crisis there is an “unforeseen circumstance”. Some provisional judges believe that the corona crisis and the subsequent government measures are an unforeseen circumstance. This is because the parties did not consider a pandemic with far-reaching consequences when concluding the lease.
Recently, January 2021, the first normal (not preliminary relief) proceedings concerning such a rent reduction have ended in a positive result for tenants meaning that the judge allowed a rent reduction for the tenant. This means that the trend will continue and landlords will have to deal with this more often.
Author: Irith Hoffmann, I.K.M., attorney at law
Damsté lawyers – civil law notaries