The Senate this week approved the bill "Fixed Leases Act". With this law, the possibilities of temporarily letting residential property are significantly restricted. In principle, concluding temporary leases that end automatically is no longer possible. An exception has been made for a limited number of cases.
In 2016, the Rent Market Transition Act came into force. One of the changes was the introduction of temporary leases for up to two years for independent living accommodation and up to five years for non-independent living accommodation. The tenant is not entitled to rent protection in this context. These contracts end by operation of law if the landlord notifies the tenant within the prescribed period that the lease will end. No notice or court action is required. The new law will remove this possibility.
The idea was that more rental properties would become available for people looking for a house urgently. However, an evaluation showed that hardly any additional space was created in the rental market. The new rules were used by landlords to substantially increase the rent each time tenants changed, making renting in the free sector unaffordable, especially in big cities. The new law removes this possibility.
As of the new law, temporary housing leases can in principle only be terminated by mutual consent, by dissolution or by termination on limitative grounds (such as bad tenancy). A terminated tenancy agreement will only end when the court has irrevocably decided so, unless the tenant agrees to the termination. This will make the route for termination almost the same as indefinite-term leases, the only difference being that a fixed-term lease will have the additional requirement that it cannot be terminated by a date earlier than the end date.
However, it remains possible to temporarily rent housing to specific target groups without rent protection. The draft decree designating the target groups is currently still up for internet consultation and may still be amended.
The intention is to retain the possibility of temporary letting:
- For rentals that by their nature are short-term, such as holiday rentals;
- If the landlord or previous tenant will re-occupy the residential property after the temporary letting ends (the diplomatic clause);
- To prevent and reduce unnecessary vacancy;
- For target group contracts for young people, students, PhD students, the elderly, the disabled and large families;
- When renting to tenants belonging to one of the categories established by General Measure of the Board (AMvB) to which temporary renting is allowed. For example, (foreign) tenants who are going to work or study temporarily in another municipality for work or study; tenants who have to leave their home due to demolition or renovation and need to move into a temporary home; tenants from social care who need temporary housing in a social emergency situation or tenants with a second or last-chance lease.
Furthermore, a new ground for termination will be added for partners who start living together. Those who do not yet dare to sell may temporarily rent out the property. If the cohabitation fails, urgent own use can be invoked, and if the cohabitation is successful, the lease can be terminated in order to sell the property free of rent.
In addition, the ground for termination "urgent own use" is extended.
The tenancy agreement may provide that the tenancy will be terminated if the property is needed after a certain period for a relative by blood or marriage in the first degree. Again, this must be agreed in advance and the termination will have to be ordered by the court. The judge will test whether the blood relative's interest outweighs the tenant's interest.
Entry into force
The date of entry into force of the law is not yet fixed. It is expected to be as of 1 July 2024. If the Act enters into force in 2024, it will immediately apply to all leases concluded from that time onwards.
Want to know more or have questions about your lease? If so, please feel free to contact one of our lawyers without any obligation. We will be happy to assist you and keep you informed of further developments!