Renovation & Tenants’ and Owners’ Rights
What are the rights of the tenants and what are the rights of owners when it comes to renovation?
Renovation is a term that lacks precision. As it is, it could be applied to everything; from tearing down a building and replacing it with a new one to adding a layer of paint – or an extra room, for that matter. Until 2003 the tenants’ rights in The Netherlands were such that a renovation was conditioned by the tenants’ explicit agreement. The fact that there were no legal means to carry out a renovation against the will of the tenant led to a situation in which owners paid considerable amounts to their tenants in order to get their much needed signature.
This status quo ended in 2003 when the legislator stipulated that both the tenants’ as well as the owners’ interests have to be taken into consideration in the case of a pending renovation. Thus, as a first step towards an agreement, the owner must present the tenant with a ‘reasonable’ proposal concerning the renovation, mentioning the nature of works to be carried out, the necessity of the repairs, the financial consequences for the owner, the possible increase in rent for the tenant and the possibility of renting alternative living space for the duration of the renovation.
What sounds easy in theory can sometimes present unexpected difficulties in the everyday practice. In the case of a large property, as from 10 flats and more, a proposal is considered to be reasonable and must be accepted when 70% of the tenants have agreed to the owner’s proposal.
Reasonability can be enforced through a court ruling, as well, should the parties not be able to find a common stance. The owner can unilaterally end a tenancy agreement should the tenant refuse collaboration following a court ruling, which gives the owner the right to proceed with renovation. The owner can also unilaterally terminate the tenancy agreement in case the destination of the building changes following renovation (eg. from office space into hospitality)
Without going into further detail, the lesson to be learned is, that a tenancy agreement can be unilaterally terminated if the tenant and the owner cannot agree upon the terms of renovation.
