The Lower House recently passed the Fixed Leases Bill. To give tenants more security, the permanent lease will become the norm again. From 2024, the conclusion of temporary leases that end automatically will in principle no longer be possible. An exception has been made for a limited number of cases.
Current situation
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.
Entry into force
When the law enters into force in 2024, it will apply directly to all leases concluded from then onwards. For leases concluded before the Act comes into force, the current legislation will continue to apply. However, temporary leases will then no longer be possible on subsequent leases. The temporary contracts will thus naturally die out.
The new rules will be of mandatory law, so that deviation from them by landlord and tenant will not be possible.
Exceptions
Introduction of the new law means a far-reaching limitation of the possibilities for the landlord to vacate living space after the agreed term. Under specific conditions, a temporary contract may nevertheless be agreed that ends by operation of law upon timely notice from the landlord:
1. Cohabitation
A new ground for termination is 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 to sell the property free of rent. This ground for termination must be explicitly included in the lease. The condition is that the landlord has owned the property for at least two years. Moreover, the landlord must marry or enter into a registered partnership and this ground can be used once, no later than two years from the effective date of the lease.
2. Family
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.
3. Categories to be designated by AMVB
These may include (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 temporary accommodation; social care tenants who need temporary accommodation in a social emergency or tenants with a second or last-chance lease.
The current legislation to allow temporary contracts for specific housing types and target groups (e.g. students, young people) will remain in place as well as the Diplomacy Clause for those who will temporarily study or work abroad.
Temporary contracts will also remain possible for properties with temporary rental destination such as holiday homes and properties rented out under the Vacancy Act.
Conclusion
Time will tell whether the new legislation will have a positive impact. Although the aim of the bill is to strengthen the position of tenants, the question is whether the number of available properties will decrease. Many landlords, to avoid not vacating the property in time, will be tempted to take their property off the market if, for instance, there are plans to sell or remodel the property in the short term.
Now that the Lower House has agreed to the proposal, the Upper House has yet to consider it.
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!