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What is a lease contract under Dutch law?
Dutch law has no separate statutory lease contract. An operational lease of an asset is generally treated as hire (huur): the lessor gives the lessee the use of an asset in return for payment (Article 7:201 Dutch Civil Code). A financial lease in which ownership passes to the lessee can qualify as hire-purchase (huurkoop). Below we explain both, and leases of buildings.
What is a leasing contract under Dutch law?
Dutch law does not define a leasing contract as such. The closest statutory contract is hire: one party, the lessor (verhuurder), undertakes to give the other party, the lessee (huurder), the use of an asset or part of it, and the lessee undertakes to pay in return (Article 7:201(1) DCC). Hire can also relate to property rights (Article 7:201(2) DCC).
Although a leasing agreement under Dutch law does not require any particular form, it is nevertheless advisable to draw up a written agreement, as is the case with other types of agreement. The lawyers at MAAK Advocaten specialise in contract law and are happy to advise you on drawing up or amending a (rental or leasing) contract in the Netherlands.
What is the difference between operational and financial lease?
In an operational lease, the lessor remains the owner of the asset. The lessee pays for its use during a fixed period and then returns it. The statutory rules on hire (Articles 7:201 and further DCC) apply, insofar as the parties have not validly agreed otherwise.
In a financial lease, the contract in essence finances the acquisition of the asset. The lessee usually bears the risks and often becomes the owner at the end. If ownership passes only after the last instalment, the lessor in fact retains title until payment. Under Article 3:92(1) DCC, the agreement is then presumed to be a transfer subject to the condition precedent of full payment.
If the lessee is a consumer, the consumer credit rules in Title 7.2A DCC can apply. Hire and lease contracts are excluded from those rules, unless they contain an obligation to buy the asset or qualify as goods credit (Article 7:58(2)(c) DCC). Goods credit includes hire-purchase, which the law defines as an instalment sale in which the seller retains title to the goods delivered (Article 7:84(3)(b) DCC). The former hire-purchase provisions in Book 7A (Articles 7A:1576 and further) lapsed on 1 January 2017. Separately, offering credit to consumers in the Netherlands requires a licence from the Dutch Authority for the Financial Markets (AFM) (Article 2:60(1) Financial Supervision Act), unless an exception applies, for example for banks (Article 2:61), or the AFM has granted an exemption (Article 2:60(2)). Under that Act, credit also includes giving a consumer the use of a movable asset in return for one or more payments (Article 1:1, definition of krediet). However, the Act does not apply to credit consisting of a hire agreement, unless the agreement concerns goods designated by order in council and gives the use for more than six months, including by renewal or a new agreement (Article 1:20(1)(c)). So check whether a consumer lease falls under the Act and, if so, whether a licence is required.
Which obligations does the lessor have?
First of all, the lessor is obliged to make the leased asset, for example a leased car, available to the lessee (Article 7:203 DCC).
In addition, during the leasing period, the lessor must deal with defects. A defect is a condition of the asset, or another circumstance not attributable to the lessee, that prevents the lessee from having the enjoyment it could expect of a well-maintained asset of that kind (Article 7:204(2) DCC). At the lessee’s request, the lessor must remedy defects, unless this is impossible or requires expenses that cannot reasonably be expected of the lessor (Article 7:206(1) DCC). Small repairs are for the lessee.
Which obligations does the lessee have?
In return, the lessee must pay rent or a leasing instalment in the agreed manner and at the agreed times (Article 7:212 DCC). Whether payment is due in advance and at what intervals is for the parties to agree in the contract.
The lessee must behave as a good lessee (Article 7:213 DCC) and may only use the asset as agreed or, failing an agreement, for its normal purpose (Article 7:214 DCC). Under the general rules, the lessee may give the asset to someone else for use, unless it should assume that the lessor will have reasonable objections (Article 7:221 DCC). For residential space, the reverse applies: subletting is not allowed, but a tenant who has its main residence in a self-contained dwelling may let part of it (Article 7:244 DCC). The lessee is liable for damage to the asset caused by an attributable failure to perform its obligations. All damage is presumed to be caused that way, except fire damage and, for buildings, damage to the exterior (Article 7:218 DCC).
Which rules apply to leasing buildings in the Netherlands?
Contracts can relate to movable goods (e.g.: the operational leasing of a car), immovable goods (e.g.: the rent of a house) or even property rights.
Tenancy law in the Netherlands regulates: (1) the letting of movable property (2) the letting of residential property (3) the letting of business premises, and (4) the letting of other property (i.e. all types of (immovable) property that cannot be classified as residential or business premises, office space, warehouses and industrial buildings).
For buildings, Dutch law has three regimes: residential space (woonruimte, Articles 7:232 and further DCC), retail and hospitality premises (Articles 7:290 and further DCC) and all other buildings, such as offices and warehouses (Article 7:230a DCC). The mandatory rules differ per regime, so check which regime applies before you draft or amend a lease.
The Dutch Council for Real Estate (Raad voor Onroerende Zaken, ROZ) publishes model leases for residential, retail and office space and for garage boxes and parking spaces. They are widely used, but their general conditions are not law: check how they relate to the statutory rules for your type of lease. Office and other commercial premises leave much room for negotiation; residential and retail leases are more strictly regulated.
The primary use of the property is decisive in determining the type of lease. When entering into a lease agreement under Dutch law, it is important to be aware of the mandatory rules that apply to that type of lease agreement. Our lawyers in Holland will be happy to help you with this and answer your questions about leasing and tenancy law in the Netherlands.
How does a commercial lease work in the Netherlands?
Commercial leases are the least strictly regulated type of lease under Dutch law. A commercial lease is usually suitable for factories, offices, warehouses, etc. Renting rather than leasing follows different rules, set out in lease agreement under Dutch law.
The parties are free to agree the term and the rent. A fixed-term lease ends when the term expires, without notice (Article 7:228(1) DCC). A lease for an indefinite term ends by notice of at least one month, given against a rent payment date (Article 7:228(2) DCC). After the lease has ended, the tenant can ask the court to extend the period for vacating the premises. The request must be filed within two months after the date by which the landlord has, in writing, required the premises to be vacated. The court can grant up to one year, which can be extended twice by up to one year each (Article 7:230a DCC). This protection does not apply if the tenant gave notice itself, expressly agreed to the termination, or has been ordered to vacate for failure to perform its obligations (Article 7:230a(2) DCC). The statutory requirement of a bailiff’s writ or registered letter applies to retail premises, not to offices or warehouses.
Given the freedom of contract that parties to a commercial lease have, it is advisable to engage the services of a English-speaking specialist lawyer in the Netherlands to assist in drafting the lease.
Which rules apply to retail premises?
Retail premises (290-bedrijfsruimte) are buildings used for a retail business, a restaurant or café, a takeaway or delivery service or a craft business, provided they include a space accessible to the public for the direct supply of goods or services. Hotels and campsites also fall under this regime (Article 7:290(2) DCC).
A retail lease runs for at least five years and is then renewed by law for another five years (Article 7:292 DCC). A lease of two years or less falls outside these protective rules. If the use continues for more than two years, a five-year lease applies by law, minus the two years already passed (Article 7:301 DCC).
How do you terminate a retail lease?
Parties to a rental agreement can mutually agree to terminate the lease at any time.The possibilities of unilateral termination by the landlord are much more limited in order to protect the tenant, who often finds his livelihood in retail.
The landlord can only give notice against the end of the term, by bailiff’s writ or registered letter and with a notice period of at least one year (Article 7:293 DCC). A notice by the landlord that does not state its grounds is void (Article 7:294 DCC). Unless the tenant agrees in writing, the lease continues until the court has decided on the landlord’s claim (Article 7:295 DCC). At the end of the first five years, the court can only end the lease if the tenant did not operate its business as a good tenant, or if the landlord urgently needs the premises for its own lasting use (Article 7:296(1) DCC). After that, the court weighs the interests of both parties.
Which rules protect residential tenants?
Another important area of tenancy law is the letting of residential property. In the Netherlands, residential tenancy law contains a large number of regulations that protect tenants. In principle, the parties are free to agree on the rent.
However, the rent rules in Articles 7:246 and further DCC and the Rental Prices (Housing) Implementation Act (Uitvoeringswet huurprijzen woonruimte) limit the rent for many dwellings. For self-contained dwellings with an initial rent above the statutory threshold, most of these rules do not apply (Article 7:247 DCC).
Furthermore, a fixed-term residential lease does not end automatically when the term expires (Article 7:271(1) DCC). An exception applies to leases of two years or less with designated categories of tenants (Article 7:271(2)). Unless the tenant agrees in writing, the lease continues until the court has decided (Article 7:272 DCC). The court can only end the lease on statutory grounds, for example if the tenant did not behave as a good tenant, the landlord urgently needs the dwelling for its own use, or the tenant refuses a reasonable offer for a new lease (Article 7:274(1) DCC).
Frequently asked questions about leasing agreements under Dutch law
Is a lease contract a rental agreement under Dutch law?
There is no separate statutory lease contract. An operational lease is generally treated as hire (huur) under Article 7:201 DCC, so the statutory rules on hire apply unless the parties have validly agreed otherwise. A financial lease can also be a hire-purchase or a financing arrangement.
Does retention of title protect the lessor in a financial lease?
Yes, if ownership is to pass only after full payment. Article 3:92(1) DCC then presumes a transfer subject to the condition precedent of payment, so the lessor remains the owner until the lessee has paid. Retention of title can only secure claims relating to the goods supplied or related work (Article 3:92(2) DCC).
Do Dutch consumer credit rules apply to leasing?
Hire and lease contracts with consumers fall outside the consumer credit rules, unless they contain an obligation to buy the asset or qualify as goods credit, such as hire-purchase (Articles 7:58(2)(c) and 7:84 DCC).
Can a lessee sublet or lend the leased asset?
Under the general rules, yes, unless the lessee should assume that the lessor will have reasonable objections (Article 7:221 DCC). Many lease contracts exclude this. For residential space, subletting is not allowed, except part of a self-contained dwelling in which the tenant has its main residence (Article 7:244 DCC).
Who is liable for damage to a leased asset?
The lessee, if the damage results from an attributable failure to perform its obligations. All damage is presumed to have been caused that way, except fire damage and, for buildings, damage to the exterior (Article 7:218 DCC).
Primary sources
- Dutch Civil Code Book 3: Article 3:92
- Dutch Civil Code Book 7: Articles 7:58, 7:84, 7:201, 7:203, 7:204, 7:206, 7:212, 7:213, 7:214, 7:218, 7:221, 7:228, 7:230a, 7:232, 7:244, 7:247, 7:271, 7:272, 7:274, 7:290, 7:292, 7:293, 7:294, 7:295, 7:296 and 7:301
- Dutch Civil Code Book 7A: Articles 7A:1576 and further (hire-purchase; lapsed on 1 January 2017)
- Uitvoeringswet huurprijzen woonruimte
Specialized lawyers for a leasing contract under Dutch law
The specialist lawyers in the Netherlands at MAAK Advocaten have acquired expertise in the field of tenancy law over the years and are happy to assist you with regard to both residential and commercial tenancy agreements.
